New Delhi: Rakesh Jhunjhunwala-backed Star Health, whose initial public offer (IPO) struggled to sail through, is all set for listing on Friday, December 10.
Demand for the company’s shares has remained weak even in the grey market. The stock, since the closure of the issue on December 2, is commanding a negative premium of Rs 70-80 in the unofficial market, signalling debut at a discount for the company.
The largest private health insurer sold its shares in the price range of Rs 870-900 apiece.
The company was eyeing to raise Rs 7,249.18 crore via the initial stake sale, including the issuance of fresh equity shares worth Rs 2,000 crore and Rs 5,249.18 crore offer for sale (OFS) from existing promoters and shareholders. However, the issue was merely subscribed 79 per cent during the three-day book building process as institutional and HNI bidders gave IPO a miss.
Eventually, Star Health had to trim its IPO size to Rs 6,400 crore to make it sail through. The OFS size was pruned to Rs 4,400 crore from Rs 5,249 crore.
Abhay Doshi, co-founder, UnlistedArena said the issue was aggressively priced and there was nothing left on the table for investors. “Despite reporting losses due to Covid-19 pandemic, the company kept the pricing elevated” he added.
Star Health logged a loss of Rs 380.27 crore in six months to September 30, in addition to Rs 825.58 crore loss in FY21. FY20 profit stood at Rs 268 crore.
Aprajita Saxena, Research analyst at Trustline Securities said the company’s financials have deteriorated as it posted losses in FY21 and H1FY22. “Valuation-wise, Star Health’s IPO was overvalued, compared to its listed peers. Due to weak sentiments, there is unlikely to be any listing gains for investors.”
Further, Aayush Agrawal, Sr. Research Analyst – Merchant Banking, Swastika Investmart said that while the listing is expected on a poor note, long-term outlook for the industry and Star health is promising; therefore one can expect buying interest at lower levels.
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