Star Health IPO Opens on 30th Nov 2021 – Should You Invest in Star Health IPO?

The initial public offering of Star Health and Allied Insurance Company Ltd. (Star Health), a leading player in the private health insurance space in the country, is all set to hit the markets on 30th November 2021. Star Health IPO will be open for subscription till the 2nd December 2021. The company offers health insurance for retail and corporate clients as well as travel insurance and accident insurance.

According to the Red Herring Prospectus, the proceeds from the Star Health IPO would be utilized by the company towards the augmentation of its capital base.

Some quick facts about the Star Health IPO:

Price band of Star Health IPO

The price band for the Star Health is between Rs. 870 to Rs. 900 per share.

Lot size

The minimum lot size for the Star Health IPO is of 16 shares.

Issue size

The issue size for Star Health is Rs. 7249.18 crores.

Listing date

Shares of Star Health are likely to be listed on 10th December 2021.

Key strengths and opportunities

• The penetration rate of health insurance in India is very low compared to other developing and developed nations. This offers a huge potential for growth to companies in the health insurance business in India.
• India’s young population with a median age of 28 years and rising incomes provides an enormous business potential.
• The outbreak of Covid-19 pandemic in the year 2020 has increased the awareness of health insurance substantially.
• Retail health insurance business is expected to growth at a CAGR of 23% between FY21 to FY25 as compared to 15% and 11% CAGR growth in Group and Government business respectively.
• Star Health has the largest number of individual agents and the largest market share of 16% among private health insurance companies.
• Star Health has the lowest expense as proportion of gross premium amongst the Standalone Health insurers.
• The company has one of the largest and well spread distribution networks in the health insurance industry and integrated ecosystem.

Key factors to consider while investing in IPO:

In its Red Herring Prospectus, the company has listed some factors which may impact the future performance of the company, such as:

• Failure to continue to adapt to technological change and the evolving use of data in the health insurance industry in India, could adversely affect the company’s ability to maintain or increase its business volumes, profitability and market share.
• Pandemics, such as COVID-19, and other disastrous events, such as natural disasters could materially increase the company’s liabilities for claims raised by policyholders, resulting in losses in the company’s investment portfolios, and adversely affect its business, financial condition and results of operations.
• The company has incurred losses in Fiscal 2021 and may incur losses in the future, which could adversely affect its operations and financial conditions.
• For detailed information on the risks associated with the Star Health IPO, please refer to the Red Herring Prospectus.

To invest in the Star Health IPO, click here.

– Written and contributed by Pradeep Sukumaran.