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stock to buy: Ownership change drives up this unlisted stock 400% in 18 months

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stock to buy: Ownership change drives up this unlisted stock 400% in 18 months 2

New Delhi: If health insurers have been some of top beneficiaries of Covid-19 pandemic, then this company has been an out-and-out winner. Its shares have quadrupled in the unlisted space in last one-and-a-half year.

Care Health Insurance is the new avatar of Religare Health Insurance. Religare Enterprises informed bourses earlier this month that it has changed the name of its health insurance subsidiary to Care Health Insurance. But the firm emerged as a star performer even before that.

Dealers of unlisted shares said the stock, which debuted at Rs 26-28 in early 2019, used to trade at Rs 35-40 at the start of 2020. They have since risen to Rs 100-105. They see even more upside.

Jasbir Singh of Meera Associates, a Pune-based firm that deals in unlisted shares in the unofficial market, said the name change was on the cards, as the firm’s ownership changed in June 2020. “As the company decided to shun the name of previous promoters, this boosted sentiment. The new owners are trying to build a new brand image. However, it’s too early to predict a change in management,” he said,

Homegrown private equity fund Kedaara, through group entity Trishikur Ventures, acquired more than 72 per cent stake in the health insurer last month for Rs 567.31 crore, which also comprised primary capital infusion of Rs 300 crore. “Name of Religare Health Insurance Company Ltd, subsidiary of the company, has been changed to Care Health Insurance Ltd with effect from August 19, 2020,” Religare Enterprises told the bourses in a regulatory filing last month.

Religare Health Insurance offers products in the retail segment for critical illness, personal accident, top-up coverage, international travel insurance and maternity covers along with group health insurance and group personal accident insurance for corporates.

In FY18, the company posted a topline of Rs 782.85 crore and generated Rs 20.85 crore PAT. In FY19, it managed Rs 1,222.5 crore revenue and Rs 61.34 crore PAT.

Singh of Meera Associates is bullish on the stock, as awareness and demand for healthcare-related products are on the rise in the country. Other dealers, too, vouched for it. Laxmikant Kabra, Managing Partner, Plutus Capital Management, says Care (Religare Health) is a pure healthcare player, with a focused business, which is a big positive.

“Growing awareness about health insurance due to Covid-19 has been a boon for the company, with Kedaara entry providing an added advantage,” he said. “Online sale of insurance via new-age aggregators will help revenue growth of the company.”

Insurance as a sector has a very less penetration in India. However, the recent pandemic has put everyone on alarm, leading to robust sale of health policies.

Sandip Ginodia of Abishek Securities believes health insurance has a lot of steam left in it. Compared with developed markets, Indians do not spend much on insurance even when hospital bills are rising. “Treatment in private hospitals is a luxury now. One must need a decent health cover for it. Government hospitals have always been under scanner. However, investors must wait for a correction to enter the stock,” he said.

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