Star Health and Allied Insurance Company Ltd IPO Message Board (Page 14)

Valuations fair or expensive?
“At the higher price band of Rs 900, Star Health is demanding a MCAP-to-net premium earned multiple of 10.3x, which is at premium to the peer average,” said analysts at Choice Broking. The brokerage firm has ‘Subscribe with Caution’ on the issue. On the other hand, Angel One termed valuations as fair. “The valuations commanded by Star Health at ~5.5x FY21 Mcap/GWP, are in-line with recent deals in the SAHI (standalone health insurers) space and appears fair considering its positioning,” they said while pinning a ‘Subscribe’ rating on the issue with a long-term perspective. Analysts at ICICI Direct have not rated the IPO but value the company at ~5.9x AUM on the.

Structural play on health insurance:
ICICI Direct has said that the Star Health and Allied Insurance is a Play on structural health insurance opportunity. “Star is a leading player in the health insurance industry with a strong distribution network, diversified product suite,” they added. Star Health and Allied Insurance is the largest private health insurer in India with a market share of 15.8% in the Indian health insurance market as of FY21.

I have allergy for private insurance companies. So , it is an avoid for me unless I see any prospect of listing gain.

But can anyone explain why the revenue is - ve .
My knowledge of - ve revenue is limited to the followings:-
1) Return of goods is more than the revenue of this current year.
But insurance companies take premium in advance , so no question of return of
goods.
2) Adopting changed a/c procedure . Revenue which is a credit a/c, is represented by - ve and expenditure which is a debit a/c is represented by +ve . In that case -ve figure in profit means genuine profit. But everybody speaking that they have incurred huge loss in the covid period. So, this contention is not valid.
3) Unlike mediclaim it is a long term contract , hence at the time of preparing revenue a/c insurance companies make provision for o/ s revenue and expenditure which is reversed at any time next financial year not earlier than six months.
If the reversion is more than the present year revenue, it may show - ve figure.
But the figure is so huge, it can not for that reason

If anybody go into details, he will see , it was a profit making company uptill 09/2020 . Whatever damage is in the period 10/20 onwards. In one year from 10/20 to 09/21 revenue is -ve 1241cr and profit -ve 1024 cr

If any friend can explain the matter for academic interest.

Correct me if I´m wrong but accounting policy changes have been retrospectively applied for FY19 FY20 FY21 and half year FY22
Auditor´s notes mention increase in loss 57.61 lac and 48.32 lac due to change in accounting treatment. These are small amounts compared to overall loss
It does appear that covid claims adversely affected performance
In the long run this could well become a dark horse outperformer in post covid years.

@ Ultrasnow
Thank you for the useful information.

Now I think that I have understand the matter.
Actually what has happened that they have brought a change in the a/c procedure relating to claim payment only. Insurance companies generally credit the premium to the respective head of premium a/c and make claim payment debiting respective head of claim payment a/c as the premium is thought to be an income and claim payment is thought to be an expenditure .
Now , they have brought a change in this procedure and making claim payment debiting an a/c in revenue head .
As the claim payment is very high due to covid , the figure has heavily overshadowed the revenue . So huge - ve revenue.
However this change has no significance and only help to create confusion .

Star premium 38 seller only 0 buyer...

Why the call it GMP if only sellers there?
Also I see different terms for same meaning
"Subject to" and "Lageli"
..wonder if these have to do with which part of India the company belongs to

LAGELI is a Gujarati word ,@lokesh
meaning of LAGELI = allotted application 😅😅

@chittorgarh team, this site is viewed by many small investors, so you may add extra sentence for small investors that
(1) "Small investors should apply this ipo"
(2) "Cash surplus, risk taker and long term investors may apply
etc.

@chittorgarg team, wrongly mark your comment as spam.

I read all the message related to Star Health regarding to apply or not. Looking the earlier experience at the time of Gland Pharma, Sona BLW, Macrotech (loadha developer), Angle Broking, Craftsman Automation etc , we did not apply due to Analyst Comment, now see the performance of all these IPOs. After listing and passing some time, everyone was recommending to buy these avoided IPOs at the higher rate for more benefit. At that time it looks that we have stopped to apply, intentionally for others profit ?????? So please follow your own study and Dil ki Awaaj .

The same is going to happen with this IPO too. But anyways it’s good for us those who are applying more allotment chances 🤭

@ Dinesh badada
It is the function of the experts to prevent you from buying at lower price and make you chase the running ones. A trader can buy any stock at any price but an investor can not.

For this ipo, I have different view. It is my problem.

Issue price is unreasonably high and financial performance is not impressive. It is AVOID.

star premium 9 rs. buyer

Big Avoid just like paytm

GMP here is 25

GMP in anand rathi is 80 (550)
GMP in TEGA is 300 (453)

Dilip Davda says Avoid? Yeh kya padh liya maine?!

Thanks for clarifying Mr.Dilip Davda & kudos for Chittorgarh team for resisting temptations and standing up to threats.

Instead of using "May Apply'' I would like to suuggest "May Apply for Risk Taking Investors"

Its not the experts mistake who is giving advice but its those people''s mistakes who are following blindly. They should understand no expert is god who can predict exact future moves always so wherever some guru/expert is not certain they will tell "may apply" based on individual''s risk instead of direct recommendation of "avoid" or "apply". May apply simply means unsure of movement after listing, it can become sona/gland/macrotech/barbeque or it can become cartrade/GLS/krsnaa/windslar/paytm etc. For me, Wherever i am avoiding any ipo in HNI weather its paytm/SJS or even sapphire, then it means that ipo is not worthy to apply for me atleast but i may jump into fire for these ipo in just 1 retail application for my ipo craze or to gain experience or to take risk whatever but i have definitely not recommend them to my family/friends in my watsapp group because i know how to handle these after listing, when to exit or how long to hold but for everyone its not the same case. For every individual, investment differs based on his risk capacity and holding period and funds availability or funds need in future. Some people just want spoon feeding to them, they just want free money without doing any analysis on their own so for them, they shouldn''t apply for "May apply" and apply only in "apply" case.
@team chittorgarh @dilip sir: you are doing great job, no need to worry about such comments and no different recommendation needed other than you are already using.

What a joke primary market is now. Log kuch bhi be bechne aa jaate aur sab bik bhi jaata he. Such valuations are asked now-a-days that the company might never reach actually at that valuation.

This is with regard to ipo recommendations.
An analyst can analyze the balance sheet and financials.But is this enough to make investment recommendations in clear cut words like apply or avoid?. No, because there are so many other factors to look in to like corporate governance standards, promoter track record,honesty and commitment, government policies, pricing of the issue vs peers, future prospects of the business, history of the company, related party transactions ,contingent liabilities and impact on business if they devolve etc etc. As a basic principle of investment ,for every rupee of investment you need a return which beats the inflation. It can be capital appreciation and or dividends in case of equity investment. A ipo recommendations may be completely negative based on pure financials but may be offset by other positives.
Some ipo may be good investment for people with deep pockets like QIB or real HNI but not good for retail investors.
If you try to understand these factors you will understand that an analysis and investment recommendation is a tough job . Taking in to account that most are not investors but speculators who are there for listing gains the analysts job becomes more difficult.
In this background Mr.Davda is doing an OK job. Ultimately it is your money and your call. All reviews and recommendations are only broad guidelines and not very sacrosanct.

@ Chitra Kamath
Well explained , mam .

But the analyst is offen overpowered with the fear of being proved wrong . So he happens to say everthing except where he is unequivocal ''Avoid /Apply/Apply ff etc''

Can anybody help me to understand what does '' RISKTAKERS for long term investment '' actually mean to understand.
As per my understanding, he at this point of time does see neither any present nor any future.

One can avoid Star health IPO. After listing and as and when price stabilize one can relook. Now one buy one issues coming with offer for sale to grab as much as possible. be cautious.

S T A R
P M 1 1 B U Y E R

Strongly avoiding

yes

Star Health Insurance IPO

- Neutral

Incorporated in 2006, Star Health and Allied Insurance Company Ltd is one of the largest private health insurers in India with a market share of 15.8% in Fiscal 2021.

| Negatives |

- There are about 6 cases running against the company. And about 3 cases running against the promoters of the company.

- The claims have increased in the covid times which has made the company incur losses in the covid years.

- Its one of the most talked about IPO just because of the name of Rakesh Jhunjhunwala associated with it. Rakesh Jhunjhunwala has already made about 5x returns within one year from the company.

- Issue size is too big ( 7249 Crs) so there will be huge float in the market.

- The company will get 2000 crores only from the issue, rest of the issue is OFS. And in the objects of the issue they have mentioned they will be using this fund to augment company’s capital base & insolvency level which is does not look convincing.

- It has witnessed negative revenue of 1071 crs in FY 21 from Misc. Insurance & the total loss has been about 825 crores for FY21.

- Due to the recent bloodbath in the market it may open in discount.

| Positives |

- The company has got good network of hospitals under its claim redressal schemes.

- It has presence in over 25 states & 5 UTs.

- 1878 crores of Cash & Bank Balances in FY21. Reserves & Surplus of 3675 crores in FY21.

- Rakesh Jhunjhunwala not taking part in the OFS.

- Long term borrowings of 250 crores in FY21 which is not quite high considering the market cap of the company.

- A strong brand in retail health insurance.

@shareHunterz
Industry outlook
1. All insurance companies are going to raise their premium in a few months time.
2. The cash and bank balances combined with 2k crore which they are raising gives them a war chest to combat covid uncertainties.
3. The insurance sector is highly under penetrated, huge growth opportunity.
4. Insurance companies are favourite of FII’s.

People are worried about reviews and recommendations. Hence apply your own intelligence before investing.
We do forget to read fine lines when GMP is shinning.
Also ...Apart from this paytm bounce back, has anyone seen where macrotech developers is now . More than 3x from April low , with average financials...😂
Hold the big names, FIIs can also be idiots investing in poor companies. Hence making stocks a multibagger.

Avoid as market is already in beer mood. Most of the ipo’s already pushed them back to 2022 as because of the market correction mood.

Beer pekar dance kareli hai.

Lol yeah! Better to just watch star. For bad luck experts like me its sure shot allotment.

Mrkt in correction mode. Retails and hni player plz time to avoid this overvalued loss making stock....just apply for tega and wait for adani Wilmar pricing.....nothing left on table in star for investors ....time to teach gready promoters a lesson.....hope retails and hni players will follow and do homework wisely ..

All the best.

@Prasen bin,

you may go long term for Latent view, the shares can still be find at reasonable price.

Thanks amit chheda sir