Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company's shares are set to make their debut on stock exchanges BSE and NSE on Friday. Ahead of their listing, the shares continued to trade at a discount in the grey market, an unofficial market for unlisted securities. Dealers said Star Health's GMP continued around a negative Rs 60-70 (discount) in the grey market early on Friday.
Star Health erased the premium days ahead of the D-Day for the stock on Dalal Street. Around its IPO, which was open for subscription from November 30 to December 2, Star Health and Allied Insurance had commanded a grey market premium (GMP) of around Rs 15.
The Star Health IPO saw a subscription of 79 percent, receiving bids for 3.6 crore shares as against the 4.5 crore shares on offer. The portions reserved for retail investors and qualified institutional buyers were subscribed 1.1 times and one time respectively. The non-institutional investors' category saw a subscription of 19 percent.
The listing of Star Health, which is owned by a consortium of investors such as Jhunjhunwala and Westbridge Capital, comes at a time when most IPOs have received a robust response from investors.
Most analysts expect Star Health shares to make a weak debut on D-Street.
Here's what experts say ahead of the listing of Star Health shares on BSE and NSE:
Aayush Agrawal, Senior Research Analyst-Merchant Banking, Swastika Investmart:
"Star Health, the largest private sector health insurance company, got a poor response due to expensive valuations, a dent in profitability due to COVID and fragile sentiments after the weak listing of Paytm. The listing is expected to be poor."
"However, the long-term outlook for the industry and Star Health Insurance is promising. Therefore, we can expect buying interest at lower levels."
Ravi Singh, Vice President and Head of Research, ShareIndia:
"Star Health may list at discount due to low subscription, however, taking in view the business parameters, the long-term outlook of health insurance sector is positive."
"Investors may buy at lower levels and keep their holdings for better gains."
Abhay Doshi, Co-Founder, Unlisted Arena:
"Star Health's IPO got a tepid response in the times where IPOs get highly oversubscribed and this may have a negative impact on its debut. The expensive pricing made investors wary... The debut most probably should be at a discount of possibly 8-10 percent to its issue price."
Manoj Dalmia, Founder and Director, Proficient Equities:
"The Star Health IPO received a poor response. It is overvalued at a price of Rs 870-900 per share despite the company suffering losses due to huge claims in pandemic."
"The GMP is negative at Rs 70, which means we can expect a discounted listing of 8-10 percent."
"Immediate selling is recommended considering its high valuation. One can expect price falls like that of Paytm. Buying at a fair valuation or lower price is suggested."
First Published: IST