CLSA retained a 'buy' rating on life insurer Max Financial Services but brought down its target price to Rs 1,030 per share from Rs 1,100. The brokerage said Max Financial's valuation is getting undemanding.
Max Financial Services shares rose as much as 3.5 percent to Rs 728.1 on BSE, rebounding after a series of 52-week lows in the past few sessions.
Max Financial appears to be in a tough spot though its valuation is cheap, according to CLSA.
The brokerage said the Max Financial stock implies just 4-5 percent terminal growth from FY23.
The stock, the brokerage said, has underperformed the index by 20-25 percent due to protection tightening, a slowing overall annual premium equivalent (APE) and promoter issues.
However, the protection price hike has taken place and industry sum assured growth is finally turning around, it said.
"Operating entities may be insulated from a promoter group feud but this could be a short-term headwind with the promoter pledge at 64 percent. The ramp-up in Axis Bank’s Bajaj partnership is having an impact but the strategic relationship with Max group implies Max Life will continue to get the lion’s share of Axis’s volume," CLSA said in a research report.
The recent news flow about a family feud and allegations of misappropriation in the promoter’s holding company may not impact the listed company Max Financial and the operating life company Max Life but could be a short-term overhang, it added.
First Published: Mar 29, 2022 10:20 AM IST
