Last week the final (3rd) company from Max India demerger exercise got listed on bourses, we started tracking this story in Jan 2016. A lot has happened over last six months and it’s time to take stock and understand how this spin off / demeger has played out.

In Jan’ 2016 we conservatively estimated that then market cap was a 5% premium to our calculated value of 3 sub-divisions. Let me do a memory jog for you

Max India - 7

On date of spin off the insurance business was valued at about ~INR 10,500 crores even lower than our conservatively calculated value.

Was this expected ?

This is what Joel Greenblatt has to say on Spin offs in his book “You can be a stock market Genius”


Investors who didn’t want Life insurance simply dumped the stock. However our conclusion in Jan 2016 was a bit different

life insurance business is not directly listed in India so may see some traction with investors.

And hey ! what happened in June 2016

max india part 2 -1

One of largest merger in Indian Insurance industry was announced .

Again was this expected ? I will go back our Guru Joel Greenblatt this is what he had to say in “You can be a stock market Genius”


With Hospital, Real estate and Max venture business operations all tied in original company the above transaction was not possible. However post spin off the bride got a suitable suitor 🙂

Value unlocking happened with this spin off in spite of #Brexit 😉 The Nifty returns between this period was 7%

max india part 2 -2

What have we learned ?

Next time you see a demerger announced open Joel Greenblatt’s “You can be a stock market Genius” and start analysing using his simple checklist /framework and/or read our learnings here and here