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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