MUMBAI: Shares of Max Financial Services hit a 52-week high of Rs938.65 apiece on Thursday on the National Stock Exchange, rising 6.3% from previous close, following the insurance regulator’s approval for its deal with Axis Bank.
As part of the deal, Axis Bank with its subsidiaries, Axis Securities Limited and Axis Capital Limited, will acquire up to 19% stake in Max Life Insurance, part of Max Financial. Of the total stake to be bought, Axis Bank proposes to acquire up to 9% and Axis Capital Limited and Axis Securities Limited together will acquire up to 3% of the share capital of Max Life in the first leg of the transaction.
Axis Bank and its entities have the right to acquire an additional stake of up to 7% in Max Life, in one or more tranches.
Analysts at Motilal Oswal Financial Services prefer Max Life in listed life insurance space.
“The partnership improves the long-term growth visibility/cross-sell opportunity for Max Life. It increases focus towards higher margin products and productivity improvements from the distribution mix. We expect value of new business to grow at 21% cumulative annual growth rate over FY20-23 estimates and operating return on embeded value to grow 20% in FY23 estimates. We maintain our Buy rating on the stock with 3.3 times FY23 estimated enterprise value,” brokerage Motilal Oswal Financial Services said.
In August last year, Axis Bank had announced its intention to acquire up to 29% in Max Life. But, in due course, said will acquire 17% share.
Max Financial Services Ltd reported a 54% jump in its consolidated net profit to Rs227 crore in for the three month period to December. Axis Bank, on the other hand, reported a 36% year-on-year drop in its net profit to Rs1,116.6 crore in the last quarter.
News Source:- Livemint