Accumulate Max Financial Services; target of Rs 995: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Max Financial Services with a target price of Rs 995 in its research report dated February 25, 2021.

February 25, 2021 / 02:39 PM IST
 
 
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Prabhudas Lilladher's research report on Max Financial Services


Max Financial Services got a much awaited regulatory approval for acquisition of stake in Max Life by Axis Bank and its capital market subsidiaries. Axis bank & subs will together acquire 12% stake and have a right to acquire additional 7% stake over one or more tranches which it intends to do over next few years. Deal approval ends uncertainty on Axis & Max Life partnership, which has been a major driver of growth. Max Life has consistently delivered on APE growth throughout the pandemic led by protection & non-par savings mix improvement coupled with sharp VNB rise of 37% YoY in 9MFY21 with near to industry leading margins of ~26%. We believe there is further room for improving protection mix (16% currently) with higher retail share (10% currently) and gradually move towards long term margins of 26-28%. We eliminate regulatory risk discount while we retain holdco discount of 10% (from 25%).



Outlook


We increase VNB/VNB margins and growth estimate leading to increase in multiple to 2.8x (from 2.4x) FY23E EV with revised TP of Rs995 (from Rs760). Retain Accumulate.

For all recommendations report, click here

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first published: Feb 25, 2021 02:39 pm

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