Stocks To Buy: HSBC bets on this 'consensus buy', projects 32% upside

Shares of Max Financial Services Ltd. will be in focus on Wednesday, June 10, after HSBC initiated coverage on the stock with a "Buy" rating, naming its subsidiary one of India's fastest-growing life insurers.

The brokerage set a price target of ₹2,120, implying an upside potential of about 32% from Tuesday's closing price of ₹1,600.5.

HSBC said Max Financial's key operating subsidiary, Axis Max Life Insurance (AMLI), is among the fastest-growing life insurers in India and is well-positioned to deliver sustainable growth through a diversified distribution model and expanding product mix.

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The brokerage believes the company's focus on broadening distribution channels beyond bancassurance and strengthening its product portfolio will support predictable growth while maintaining stable margins.

HSBC also identified sustained operating performance and progress on the proposed reverse merger between Max Financial and Axis Max Life as key catalysts for the stock.

According to the brokerage, life insurance sector valuations have de-rated over the past few years due to regulatory headwinds. However, it believes Max Financial's resilience and execution track record are reflected in its underlying fundamentals.

Max Financial Services is a "consensus buy" on the street, with all 30 analysts covering the stock having a "buy" recommendation on the same. The consensus price target of ₹2,063, implies an upside potential of 29% from current levels.

However, HSBC also flagged some risks to its investment thesis, including potential delays or regulatory hurdles in the proposed reverse merger, the possibility of restrictions on bancassurance arrangements, and any reduction in Axis Bank's focus on selling insurance products.

Shares of Max Financial Services ended 1.5% higher on Tuesday at ₹1,600.5. The stock is down 6% over the last one month and 5% for the year so far. The stock is also 15% below its recent 52-week high of ₹1,892.