RESEARCH: CREDIT SUISSE
RATING: OUTPERFORM
CMP: RS 194
Credit Suisse expects 26% upside in Max India’s stock price from the current levels. Max’s recent bancassurance tie-up with Axis Bank will drive a sharp acceleration in its new business sales. This tie-up alone will boost insurance sales for Max NYL by 25%. Credit Suisse, therefore, expects Max NYL to be the fastest growing large private life insurers in FY11. Max India is also now adequately funded post the recent $152-million private placement and warrant issue, to meet capital needs of all its subsidiary businesses. Max India stock’s performance over the past few months has been weak as growth in its life insurance business was lacklustre. It is now available at an attractive 1.8x FY09 embedded value. Max NYL is also relatively better positioned compared to peers due to its superior product mix (high proportion of traditional policies) which will absorb the impact of Insurance Regulatory and Development Authority’s 2009 guidelines
capping fees on unit-linked products.