I appreciate that retail investors might feel whether any deal is beneficial to them or not. But, if we go by past track record, its evident that Max group has created wealth for its shareholders over time. The first demerger that split Max India into 3 biz - MFSL, Max India & Maxvil - made all shareholders, including retail, happy.
The second demerger of Max India into Max Healthcare & the new Max India (housing Antara biz) & divestment of MaxBupa, also seems to be good, given that sum of share prices of the two listed entities trades above the all-time-high price of pre-demerger entity. And both, MHIL & Max India, seem to be doing well with long runway for growth. Some would have preferred MaxBupa to be still in the group, but capital constraint forced management to choose between Antara and MaxBupa. They went with Antara (housed in the current listed Max India) . It remains to be seen, but looks like Antara might be a multi bagger too.
So, overall it seems they have done alright.
Maxvil is creating real assets generating inflation linked yields which are in high demand globally by long term patient capital such as -IF, PF, SWF & endowments. As such, I expect significant interest in its stock by these players going forward.
I appreciate your response and agree retail investors have not lost their capital if patiently held through various uncertainties that each of these multi deals presented. However, if you take the CAGR and lost opportunities over the wait for such deals to fructify to present real value of the underlying business you like or even the sudden exit of some business that might have been your reason to invest (Max Bupa for eg.) and multi lost deals because of less benefit to maybe promoters (HDFC Life deal called off after almost year of ifs and buts), Max healthcare also had its share of Ifs and buts and its recent rise is because of the focus of new promoter and not the Max group. Max Venture was listed at a much higher price post demerger and we had open offer from promoters at I think less than half the price it was quoting then. Add to that its investors - the New York Life - They do not buy stake in max Venture, do not hold single equity in the listed entity but hold it in rent generating asset. They will walk away with their regular rent, and retail investor might get more debt - based on past experience. I maybe completely wrong, but there have been a lot of uncertainity in every max group company and with past experience I now would prefer business and management with certainity. Max Healthcare maybe a good company now with a new focussed non-max promoter. Also, with new phase of business, even max Venture may improve on this aspect proving me wrong.
Your thoughts are most welcome as they present a different perspective I am happy to learn from. Thanks
If I am not wrong, HDFC Life deal was called off due to “not receiving regulatory approval” for merger. From what I read in this forum, people appreciate the Max financial for the ethical “Term Insurance” based insurance company they built & the right decision taken to merge it with HDFC after recognizing the huge advantage banks are having in insurance space. Though there were lot of discussions on the way “non competing compensation” given to Max promoters, which is not yet satisfied retail investors despite what ever explanations given by Max promoters.
Disc: novice top of mind opinion.Don’t make your investment decision considering this info. Not invested in MaxVentures. Invested in Max India.
Thanks, I, too, am glad to learn a different perspective.
See, stock price tracking underlying biz performance is a different issue. All stocks suffered between 2017 to early 2020. In a holding company structure, with multiple underlying businesses, holding company discount is always an issue, and sometimes, this discount can become exaggerated due to market conditions & volatility. The big picture is, if you held on to the Max India stock from 2013, you would have done quite well. Patience is the key.
Sometimes, all the nitty gritty of complex deals, such as in insurance sector, are not easily understandable, even by biz TV anchors, and can raise doubts. But, that doesn’t mean something wrong is done. MFSL is doing quite well and Motilal Oswal has called it the next wealth creator in its WC study.
Most institutions backed Max India’s decision to divest MaxBupa. Those institutions would have lost or gained same as any retail investor. I personally feel it was a good decision to divest MaxBupa because 1) there was a direct challenge on the horizon from Ayushmann Bharat/ gov. providing insurance 2) narrowing down and focusing on Antara as growth driver and letting MHIL being run by KKR. It has unlocked good value.
As for New York Life, they bought in 2017 & hold about 24% equity in Maxvil, with a board seat. So not sure why you feel NewYork Life are not equity holders of Maxvil.
They do provide segment wise assets and liabilities. For “Business Investments”, the assets is down 45 cr (from 147 cr to 102 cr) which I think is majorly on account of Nykaa Sale. But the P&L statement is not reflecting that.
This is because most of the profits today come from the BOPP packaging JV, where Toppan owns 50%
If one subtracts out Toppan’s share of profits, they company is barely breaking even at this point because of their RE investments that are still in nascent stage
The issue is, on the RE side as well, they have a number of JV’s (say with new york insurance) - so again, the JV partner takes a cut of the profits. The main hurdle I see in this company, which is being built of the long term, is the fact that there’s a big conglomerate style feel to a sub 1,000 crore company and while we all can see “value”, the realization of that is going to be a long road.
The company’s disclosures are good but it’s very complex and quite some work to get to an underlying value estimate that is a few years away
Strange. @kvpadhu3390 wanted to ask you: As per regulations, balance sheet and cash flow statements are not required to be disclosed in quarterly financials is it?
And also, segment assets - liabilities divided by 14.7 crore outstanding shares gives you around Rs. 72-73 per share. Is this the right book value?
I think companies disclose balance sheet and cash flow statements half yearly (September and March quarter results). That is the general trend based on my observations.
As per screener.in, the book value is 59.2 per share. Rough formula is (Total assets - Borrowings - Other Liabilities) / Number of shares.
What a beautiful explaination in simple words! Precisely the reason I was once invested in all three max group firms but now no more. All are doing well and will continue but the journey of holding the shares have not been so pleasant with me that I ended up not gaining out of it. Lesson learnt. Maybe these are excellent investments at opportune and right time… something I am very bad at…
If one sees value and the investment looks excellent, one should buy and hold with patience, at least I would. The issue with timing the market is sometimes one can get it right, but in most cases I end up missing the opportunity. To me, the bigger the deviation from intrinsic value, the bigger is the margin of safety (provided the actual biz is performing and most importantly growing). I know few people are good at this timing game, but not me.
The worst feeling is when I do the hard work, find something of value and then wait for the “perfect time” to buy, but that “perfect time” never comes, while the stock flies up and away, catches momentum and even goes past its intrinsic value.
(The key is not to look at the stock returns regularly or compare with benchmark indices, but instead play the waiting game patiently).
