CLSA upgrades Max Financial; shares surge 13.5%

CLSA upgraded shares of Max Financial Services and raised target price to Rs 720 from Rs 640 on Tuesday.

Private lender Axis Bank will now buy a 17% stake in Max Life versus 29% earlier, which CLSA sees as another step towards deal closure.

Shares of Max Financial Services were up 13.5% in noon trade at Rs 624 on Tuesday.


From Axis Bank’s perspective, the stake is lower but Axis Bank retains control/right, said CLSA.

For Max Financial, the revision further reduces uncertainty of a long-term distribution tie-up with Axis Bank and Max Financial retains a higher stake in the life insurance company, it added.

"Max Financial has steadily gained share; clarity on long-term distribution and a change in control to Axis Bank may drive further rerating," the global brokerage said.

"We factor in an 82% stake in Max Life from 70% earlier and a reduced regulatory discount to arrive at a new Rs 720 target price, implying a conservative 2.35 times Jun-22 P/EV," said Max Life.