Max Financial Services shares hit 52-week high; surge 56% in 4 months

Shares of Max Financial Services rallied over 6% in early trade on Wednesday to hit a 52-week high on the bourses, driven by strong volume trade. The stock has risen in the last 11 out of 14 sessions, adding nearly 22% during the same period as Axis Bank raised stake in Max Life, a subsidiary of Max Financial Services, through preferential allotment.

Early today, Max Financial Services shares opened 3.8% higher at ₹915.05 against the previous closing price of ₹881.65 on the BSE. In the first hour of trade so far, the share price of the life insurance company gained as much as 6.3% to touch a new 52-week high of ₹937.50, with 1.13 crore shares changing hands over the counter as compared to a two-week average of 0.89 lakh stocks. The market capitalisation of the largecap stock climbed to ₹31,515 crore.

The stock witnessed a spurt in volume trade as 1.13 crore shares, or nearly 3.7%, of the total equity transferred hands in the pre-market block deal. As per the report, shares exchanged hands at an average price of ₹883, while the total value of the transaction is estimated to be above ₹1,000 crore.  While the buyer and sellers were not known immediately, it was reported that the promoter entity was looking to offload stake in the company.

Max Financial Services shares have jumped 56% in the last four months after touching its 52-week low of 599.30 on April 24, 2023. In the last one year, the stock has risen 13.6%, while it gained 33.5% in the calendar year 2023. In the past six months, the counter registered a growth of 31.6%, whereas it added 13% in a month and 5.6% in a week.

The recent Max Financial Services shares rally can be attributed to stake buying by private lender Axis Bank. Axis Bank with its entities (Axis Securities and Axis Capital) picked up a 12.99% stake in Max Life in 2021, and recently announced to buy an additional 6.23% shares in the company, raising total stake in the company to 19.02%.

Early this month, the board of directors of the private sector lender informed exchanges that it will infuse ₹1,612 crore in Max Life Insurance through preferential allotment of shares, resulting in Axis Bank’s stake in Max Life increasing to 16.22% and the collective stake of Axis entities increasing to 19.02%.

The proposed transaction will include 5 nominee directors of Axis Entities and three nominees’ directors of Max Financial on the board of Max Life Insurance. According to the private sector lender, quorum rights for Axis Entities with the participation of 2 directors nominated by the Axis Entities and 1 director nominated by Max Financial to form the quorum for board/committee meetings of Max Life is also agreed upon in the proposed transaction. 

In 2021, the private sector lender initially proposed to acquire a 30% stake in the life insurance company. However, it subsequently cut the stake purchase plan due to regulatory approval roadblocks.

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