Shares of a financial services company gained 6.52 percent to reach a 52-week high of ₹ 937.50 apiece on the Bombay Stock Exchange (BSE) after large deals took place on the counter. Approximately 10 million shares changed hands as per reports.
A combined 17 million shares of Max Financial Services changed hands on the exchanges during the day and its shares settled at ₹ 906.25 apiece on the BSE.
Max Financial Services is part of India’s leading business conglomerate – the Max Group. The company is primarily engaged in growing and nurturing business investments and providing management advisory services to Indian group companies. It owns and actively manages an 81.83 percent majority stake in Max Life Insurance, India’s largest non-bank life insurer and fourth-largest private life insurance company.
Axis Bank along with its subsidiaries, on August 09, 2023, announced that it would acquire the remaining 7 percent stake in Max Life Insurance.
According to its exchange filing, “the Acquisitions, Divestments and Merger Committee of the Board of Directors of the Bank at their meeting held on August 9, 2023, has approved the proposal for the Axis Bank to infuse ₹ 1,612 crores in Max Life through preferential allotment, resulting in Axis Bank’s direct stake in Max Life increasing to 16.22 percent and the collective stake of Axis Entities increasing to 19.02 percent.”
Since this announcement, the share price of Max Financial, which is the parent company of Max Life Insurance has increased by 15 percent.
Analysts from Motilal Oswal Financial Services noted, “After the Axis Bank deal, the solvency margin is expected to increase by 39 per cent, providing ample capital for future growth. Although growth has been muted within the Axis Bank channel, the counter share has not declined for Max Life.”
With a market capitalization of ₹ 30,422 crores, Max Financial Services is a mid-cap company. It has a low return on equity of 10.16 percent. Its shares were trading at a price-to-earnings ratio (P/E) of 74.21, which is higher than the industry P/E of 19.00 indicating that the stock might be overvalued as compared to its peers.
Foreign institutional investors hold a 48.46 percent stake in the company, followed by mutual funds with 30.19 percent, promoters with 10.15 percent, retail investors with 8.11 percent and other domestic institutions with 3.09 percent.
Written by Simran Bafna
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