Star Health IPO: A SWOT (strengths, weaknesses, threats and opportunities) analysis

The company is the largest private health insurance player as well as the largest retail health insurance company in India by health GWP (gross written premium). Star Health has a 15.8 percent health insurance market share and a 31.3 percent retail health insurance market share in F21, according to CRISIL Research.

The company is the biggest private insurance player in the country and is the foremost player in the important retail health insurance space

Star Health’s network has a well-spread distribution network that allows it to tap into the growing retail health insurance market pan-India.

The company offers a strong and diverse portfolio of products, which extends its lead against its peers

Star Health is perfectly poised to take advantage of the growing insurance market in India. Health insurance penetration in India stood at 0.36 percent of GDP in 2019, against the global average of 2 percent of GDP globally. The COVID-19 pandemic has Indians more willing to invest in health insurance, leading to better opportunities for growth.

The company continues to adapt quickly to the post-COVID-19 pandemic environment while also focusing on SME sales for retail health insurance.

The company has reported losses for the past 18 months, with a loss of Rs 825.58 crore in FY21 and of Rs 380.27 crore in FY22 until September 31.

Based on negative earnings and past losses, the issue price appears to be aggressively valued and may cause a repeat of the One97 IPO debacle

The renewed risk from COVID-19 variant Omicron may be a potential threat as increased claims eat into income for one more financial cycle

Unfavourable government policies and regulations may further hamper efforts to improve profitability amidst a post-pandemic environment

With only 10 percent of the issue being reserved for retail investors, it is highly likely that most investors will not be allotted a lot in the IPO. Axis Capital has recommended investors to subscribe to the issue, with Angel One recommending the same.