Neutral MAX Financial Services; target of Rs 1,040: Motilal Oswal

Motilal Oswal's research report on MAX Financial Services

Gross written premium grew 17.3% YoY (in line) in 4QFY24. The renewal premium grew 15% YoY (5% miss). In 4QFY24, total APE grew 13% YoY to INR28.7b (14% beat). The par products reported an exponential growth of 66% YoY. Retail protection jumped 60% YoY, whereas Group protection declined 42% YoY. Total protection increased 52% YoY, while ULIP business surged 87% YoY. Nonpar savings declined 29% YoY, but grew 65% QoQ during the quarter.

Outlook

MAXLIFE reported a better-than-expected performance in 4QFY24. Going forward, if surrender charges are altered by the regulator, margins would be under pressure. In terms of growth, agencies and online channels are expected to maintain their strong growth momentum. Axis Bank channel growth will be critical given the new partner tie-ups as well as the challenge to grow the deposit base. We prune our VNB margin estimates for FY25/FY26, in line with the management’s guidance. Reiterate Neutral with a TP of INR 1,040, premised on 2.0x Mar’26E EV and a holding company discount of 20%.