Neutral MAX Financial Services; target of Rs 1300: Motilal Oswal

Motilal Oswal's research report on MAX Financial Services

MAX Financial Services (MAXLIFE) reported a steady performance in 2QFY25. New business APE grew 31.3% YoY to INR21.7b (in-line), while for 1HFY25, it grew 31% YoY to INR36.2b. MAX reported a VNB growth of 23.1% YoY to INR5.1b (in-line) and for 1HFY25, it grew 16% YoY to INR7.7b, due to strong growth in rider attachment. VNB margins expanded sequentially to 23.6% in 2QFY25 from 17.5% in 1QFY25 (~600bp jump) due to operating leverage and strong growth in volumes and rider attachment. The management guides to maintain a double-digit VNB growth and margin in the range of 23-24% for FY25.

Outlook

we have cut our VNB margin assumptions given the adverse product mix trends (higher share of ULIPs). Reiterate Neutral with a TP of INR 1,300, premised on 2.3x Sept’26E EV and a holding company discount of 20%.