Neutral MAX Financial Services; target of Rs 1030: Motilal Oswal

Motilal Oswal's research report on MAX Financial Services

MAX Financial Services (MAXLIFE) reported a weak performance in 1QFY25, mainly due to a sharp contraction of 470bp in VNB margin. Total APE grew 30.5% YoY to INR14.5b (in line), and absolute VNB rose 3% YoY to INR2.5b (22% miss) during the quarter. Surrender charges are likely to impact VNB margins by 100-200bp for the company. Management will distribute the impact among all stakeholders – customers, distributors, and shareholders.

Outlook

We raise our APE growth estimates as 1Q momentum got stronger in Jul’24. However, we cut our VNB margin assumptions given the adverse product mix trends (higher share of ULIPs). Reiterate Neutral with a TP of INR 1,030, premised on 2.0x Mar’26E EV and a holding company discount of 20%.