Max Financial Stock Hits A Record High As Analysts Up Targets After Axis Deal

Shares of Max Financial Services Ltd. jumped to a record high as analysts raised price targets after the insurance regulator approved Axis entities’ stake acquisition in its life insurance subsidiary.

Max Financial, in an exchange filing on Wednesday, said the Insurance Regulatory and Development Authority of India has given its formal approval for the acquisition of up to 12% stake in Max Life Insurance Co. by Axis Bank and its subsidiaries—Axis Capital Ltd. and Axis Securities Ltd.

According to the proposed transaction, Axis entities have the right to acquire up to 19% stake in Max Life. Of which, Axis Bank proposes to acquire up to 9%, while Axis Capital and Axis Securities together intend to buy up to 3% of the share capital of Max Life in the first leg of the transaction.

Axis entities also have the right to acquire an additional stake of up to 7% in Max Life, in one or more tranches, which they intend to acquire over the course of the next few years, the filing said.

Analysts said the joint venture transaction, which was first announced in April 2020, is very crucial as bancassurance channel of distribution drives almost 60% of new premiums and brings scale benefit as well.

Shares of Max Financial rose as much as 10%—the most in six months—to a record Rs 938.65 apiece in early trade on Thursday. The stock is up for the third straight day. Of the 20 analysts tracking the company, 18 have a ‘buy’ rating and two suggest a ‘hold’, according to Bloomberg data. The stock crossed its 12-month consensus price target of Rs 907.3 on Thursday.

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