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Max Financial Services shares extended their rally on Monday after HDFC Life and Max Life opened merger talks. Max Financial Services jumped as much as 12% adding to its over 10 gains on Friday. Including today's gains its shares have rallied nearly 24% in last two trading sessions. The gains follow Max Financial's announcement on Friday that it has agreed to open exclusive talks with HDFC for merger of their life insurance units - Max Life and HDFC Standard Life Insurance.
Max Financial owns 68% stake in Max Life. HDFC Life is currently the third-biggest private sector life insurer in India, while Max Life is fourth-biggest. Bhavik Hathi of A&M India told NDTV Profit that if the merger happens, it would be positive for Max financial Services as it would get access to HDFC Bank's bancassurance network to increase its market penetration. Bancassurance enables insurance companies to sell their products to the bank's client base.Analysts say that the product portfolio of both Max Life and HDFC Standard Life complement each other."HDFC Life is largely a unit-link insurance player while Max Life is a traditional insurance player. From that point of view it is a good portfolio match as well," said Mr Hathi.
Max Financial Services shares closed 5.55% higher at Rs 500.15 apiece compared to 0.91% gain in the broader Nifty. HDFC shares closed flat at Rs 1,227.55.
