Jhunjhunwala stock from insurance space falls over 5% post Q2 results
Star Health and Allied Insurance Company fell over 5% to Rs 550 in Wednesday's trade on BSE after the firm reported lower-than-estimated earnings for the September quarter.
The company reported a 34% increase in net profit to Rs 125 crore in Q2 FY24. Its total income in the second quarter of the ongoing fiscal rose to Rs 3,357 crore against Rs 2,918 crore in the year-ago period.
However, the numbers failed to meet the Street expectations because of higher-than-expected claims and expense ratios.
Meanwhile, its gross written premium increased to Rs 3,732 crore during the quarter as against Rs 3,193 crore a year ago.
Following the Q2 results, domestic brokerage firm Motilal Oswal, said, «PAT was 32% below our estimate due to a higher-than-expected claims and expense ratio. Incurred claims were broadly in line with our estimate, but the claims ratio at 68.7% was higher than our estimate of 67%.
It was up 50bp YoY/ 330bp QoQ. Claims ratio was elevated owing to severity more than frequency.»
«Star Health had taken a price revision in Family Health Optima (w.e.f from 1st May 2023 on renewal book), which will be reflected over the next 12 months.
The policy renewals (both volumes and value) are in line with Company’s expectations,» Motilal said.
Considering the long-term growth potential for the industry, brokerage firm Motilal Oswal has reiterated a 'Buy' rating on Star Health stock with a target price of Rs 730.
At 11.34 a.m., the scrip was trading 5.1% lower at Rs 550 on BSE. The stock has also declined 23% in the past one year.
Technically, the stock's day RSI (14) is at 40.3.
The RSI below 30 is considered oversold, and above 70 is overbought, Trendlyne data showed. MACD is at -7.6, which is below its Center Line,
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