The view that life insurance segment is seeing a surge in business can be wiped out completely. For instance, stocks of Max Financial Services and HDFC, which saw an exponential rise in their prices when the HDFC Life-Max Life merger was announced, haven’t seen much incremental gains after the initial surge. This goes for Aditya Birla Nuvo and Exide Industries too. They are just sustaining gains after re-rating of 7–15 per cent following the merger of HDFC Life and Max Life.
Also, ICICI Prudential Life is marginally above the upper end of its IPO price. In fact, State Bank of India, too, didn’t react much to its recent stake sale which placed it (Rs 46,000-crore valuation) a notch above ICICI Prudential Life in the pecking order. All this indicates that the market has probably lost interest in life insurance-oriented stocks.
As R Sreesankar, head, institutional equities, Prabhudas Lilladher, puts it, “Till the time HDFC Life-Max Life deal happened, we didn’t have any valuation benchmark in the life insurance sector. But from here on, we need to monitor how the sector grows and growth may not be secular across companies.”
