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Buy MAX Financial Service; target of Rs 950: Motilal Oswal

Motilal Oswal is bullish on MAX Financial Service recommended buy rating on the stock with a target price of Rs 950 in its research report dated August 02, 2022.

August 04, 2022 / 10:16 PM IST
The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

 
 
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Motilal Oswal's research report on MAX Financial Service


MAXF reported a 24% YoY growth in VNB, led by APE growth of 15% and a 140bp improvement in VNB margin. Within segments, Non-PAR continues to see strong momentum, led by the Annuity business. Other products, except Retail Term, saw a healthy traction. In 1QFY23, the proprietary channel grew 32% YoY and now contribute 34% (up 400bp YoY) of overall APE. On the other hand, the banca channel grew at a mere 8% YoY and dragged overall APE growth. This is due to true adoption of open architecture at AXSB and YES and a high base of last year. The management said it will take an additional two more quarters for the base to settle down. We expect VNB margin to sustain ~27% and 20% APE CAGR over FY22-24. This will imply a 20% VNB CAGR over FY22-24E.



Outlook


We maintain our Buy rating with a TP of INR950, based on 2.5x FY24E EV and a holding company discount of 20%.

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MAX Financial Services - 030822 - moti

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first published: Aug 4, 2022 10:16 pm
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