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Max India demerges life insurance business. Max India has proposed to demerge its life insurance business into a separate company. This will likely make the stock directly comparable with other insurance companies, primarily HDFC Life, which will likely initiate an IPO after the regulatory framework is in place. Max has announced an ambitious expansion plan in the healthcare segment that will utilize a large part of its surplus cash. After the 3Q results, we will revisit our estimates and target price (`450 on September 2016 and `490 on March 2017 basis).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Max India announces a vertical demerger Max India has proposed to demerge its business into three holding companies: Max Financial Services, Max India and Max Ventures and Industries. The demerger will be executed over the next 5-6 months and will be effective from April 2015. There are no changes at the senior management level as all the businesses are managed independently. The senior management of Max India group will have a role in all demerged entities. Max Financial Services will host 72% stake in the life insurance business. This holding company will have cash of `1.5 bn of the total cash of `6 bn currently with Max India. Max India will house most of its businesses, viz. Max Healthcare, Max Bupa and Antara Senior Living. Max India will have cash of `4 bn of the total cash of `6 bn with the group. Max Ventures and Industries will host the specialty plastics business. The promoters of Max India propose to make an open offer for this business with EV of `4.67 bn and equity value of `1.68 bn. Max Financial Services will be directly comparable to listed insurance companies Max Financial Services will have 72% stake in the life insurance business and hence be a pureplay life insurance stock. We expect the company to be directly compared with HDFC Life, one of the first life insurance companies that has also approached to be listed. In our valuation matrix for life insurance companies, we compare P/EV with RoEV of life insurance companies. Max Life reported RoEV of 15.6% in FY2014, lower than 19.9% reported by HDFC Life. We expect the RoEV for Max Life to increase to 19% in FY2017E. HDFC recently sold 1% stake in HDFC Life to the Azim Premji Trust valuing the business at 2.4X EV FY2017E. In our FY2017E-based fair value estimate, we value Max Life at 2X EV, which will be 20% discount to this valuation multiple for HDFC Life. Expansion in RoEV of Max India will reduce the discount between Max and HDFC Life. Higher premium growth will improve (1) NBV, (2) VIF unwinding and (3) cost overruns thus boosting RoEV of Max Life, in our view.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28012015po.pdf
Max India demerges life insurance business. Max India has proposed to demerge its life insurance business into a separate company. This will likely make the stock directly comparable with other insurance companies, primarily HDFC Life, which will likely initiate an IPO after the regulatory framework is in place. Max has announced an ambitious expansion plan in the healthcare segment that will utilize a large part of its surplus cash. After the 3Q results, we will revisit our estimates and target price (`450 on September 2016 and `490 on March 2017 basis).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Max India announces a vertical demerger Max India has proposed to demerge its business into three holding companies: Max Financial Services, Max India and Max Ventures and Industries. The demerger will be executed over the next 5-6 months and will be effective from April 2015. There are no changes at the senior management level as all the businesses are managed independently. The senior management of Max India group will have a role in all demerged entities. Max Financial Services will host 72% stake in the life insurance business. This holding company will have cash of `1.5 bn of the total cash of `6 bn currently with Max India. Max India will house most of its businesses, viz. Max Healthcare, Max Bupa and Antara Senior Living. Max India will have cash of `4 bn of the total cash of `6 bn with the group. Max Ventures and Industries will host the specialty plastics business. The promoters of Max India propose to make an open offer for this business with EV of `4.67 bn and equity value of `1.68 bn. Max Financial Services will be directly comparable to listed insurance companies Max Financial Services will have 72% stake in the life insurance business and hence be a pureplay life insurance stock. We expect the company to be directly compared with HDFC Life, one of the first life insurance companies that has also approached to be listed. In our valuation matrix for life insurance companies, we compare P/EV with RoEV of life insurance companies. Max Life reported RoEV of 15.6% in FY2014, lower than 19.9% reported by HDFC Life. We expect the RoEV for Max Life to increase to 19% in FY2017E. HDFC recently sold 1% stake in HDFC Life to the Azim Premji Trust valuing the business at 2.4X EV FY2017E. In our FY2017E-based fair value estimate, we value Max Life at 2X EV, which will be 20% discount to this valuation multiple for HDFC Life. Expansion in RoEV of Max India will reduce the discount between Max and HDFC Life. Higher premium growth will improve (1) NBV, (2) VIF unwinding and (3) cost overruns thus boosting RoEV of Max Life, in our view.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28012015po.pdf
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