This Jhunjhunwala stock is down 6% post weak Q2 numbers. Should you book profit?

"The competitive environment in the retail health segment (on pricing and commission fronts) along with accelerated consolidation and corporatisation of hospitals in India will continue to put pressure on profitability over the medium term," the brokerage said in a note.

Following the quarterly results, Emkay has downgraded the stock to 'Sell' with a target price of ₹510, while Nuvama has maintained a ‘Buy' rating but cut its target to ₹710 from ₹770 earlier.

The management commentary on loss ratio also dented prospects. "Management explained that there were outbreaks of dengue and malaria in various parts of the country, which had a negative impact on loss ratios. Combined ratio increased 134 and 141 basis point year-on-year and quarter-on-quarter to 99.2%," Nuvama said.

Further, the management explained that there could be some delay in the company achieving target loss ratio of 65% but guided that they did not see any risks to its business model.

Motilal Oswal Securities has trimmed Star Health's earnings estimates for FY24 and FY25.

"As compared to the earlier guidance of 63-65% loss ratio, the management now expects to exceed the same given the rising incidences of fever and respiratory diseases. We have cut our EPS estimates 13% and 4% for FY24 and FY25 to factor in higher claims ratio and expense ratio as reported in 1HFY24," Motilal said.

Given the long term growth potential for the industry along with investments by Star Health in profitable channels and products, Motilal reiterate 'Buy' call on the stock with a target price of ₹730.

The stock opened at ₹569.55 but fell 4.5% to hit a day's low of ₹543.4 in today's trade. Rekha Jhunjhunwala and late Rakesh Jhunjhunwala owned shares (as per September quarter shareholding data) worth ₹5,627 crore as of Wednesday's intraday levels against ₹5,854 a day ago.