Max Financial Services Shares Rally On Buzz Of Merger With HDFC Life

Max Financial Services shares rallied nearly 19 per cent on Friday after a media report speculated that the insurer is in talks with HDFC Life for a possible merger. Max Financial holds 68 per cent stake in Max Life.

According to The Economic Times, a merger between HDFC Life and Max Life will create the country's biggest private life insurer. HDFC Life's board will meet on Friday to discuss the proposal, the report added.

The two companies declined to comment on the story.

According to analysts, the merger between Max Life and HDFC Life will create a behemoth with a market cap of Rs 50,000 crore. Together, the companies will have a market share of 12.4 per cent, more than ICICI Pru's market share of around 11 per cent.

Mahantesh Sabarad, deputy head of equity research at Mumbai-based SBI Cap Securities told NDTV Profit that he is bullish on the insurance sector because of the value creation taking place right now.

"This is a consolidation phase within life insurance companies... Max is a pure insurance play," he added.

As of 09.40 a.m., Max Life shares traded 16 per cent higher at Rs 497.50, outperforming the broader Nifty, which was up 0.35 per cent.

HDFC owns 61.63 per cent in HDFC Life, while 35 per cent stake is held by UK's Standard Life. HDFC shares traded 1.5 per cent higher at Rs 1,219.45. The stock was among the top Nifty gainers.