Max India can move to Rs 268: Aashish Tater

Aashish Tater, Head of Research at Fortunewizard.com told CNBC-TV18, "We recommended Max India last time around Rs 185 odd mark and we said that the stabilization level would be around Rs 225 for this fiscal. The stock made a high of around Rs 265 and we advised our clients to book around at Rs 250 odd mark."

He further added, "Now it has again come to that stabilization level of Rs 212-215 where we have a target of Rs 225 for last fiscal. When you try to factor in growth for this particular year we are factoring at least 20-22 percent return even for this fiscal which is taking the stabilization levels around Rs 268 odd mark. When you talk about stabilization levels, the stock tends to move a bit higher from that level and then corrects itself and finds a base around these levels. So on conservative side also you are making a 26-27 percent growth."
"What will justify this fundamental shift even for next fiscal, if you see Max is into five businesses of which three are of very promising prospects even for next year where we feel a lot of money can be made. If you see the life insurance business itself it has been growing substantially. To compensate that they have also catered into the health insurance Max Bupa Insurance which is just a one and half year old business for them which is doing very well. And even going forward we expect a very good exponential growth of over 40-50 percent at least for next 8-10 quarters which will add onto the valuation aspect," Tater said.
"Apart from this the company’s foray into healthcare business where they roughly own around 68-70 percent, values the hospital business of 1,900 plus beds at least Rs 1,900 crore, given their stake that will roughly work out to be Rs 1,500 crore odd. What we have seen in case of Apollo Hospitals, Fortis and others, the valuations are getting rerated and it is being adjusted around at Rs 1.4-2.3 crore (per bed) depending on the quality of hospital. So, even if we add that Rs 1.4 crore per bed there is a likely possibility that 30-40 percent upside is also there in terms of valuation. It is a separate investment so we cannot factor in right now."
Tater further said, "If you consolidate all this market cap should be around  Rs 7,200 crore odd which gives us our answer of around Rs 268 for this particular stock from next 12 months perspective. Commenting on the results that is expected on 29th we expect very good set of numbers from this particular company where we expect that the management will give a better guidance. And the company gave an interim dividend of Rs 10 for this fiscal, we feel that will be handsomely rewarded by another 30 percent dividend payout of Rs 3 as final dividend for this stock. So giving you a Rs 13 dividend which actually included a special dividend of Rs 8-10 because of hiving off a part of their insurance business."