Buy Max Financial Services; target of Rs 1020: Sharekhan

Sharekhan's research report on Max Financial Services

Max Life reported absolute VNB of Rs. 373 Crore (flat y-o-y) however, VNB margin expanded to 31.3% in Q2FY2023 (up 217 bps y-o-y) due to higher share of non-PAR savings. Total APE de-grew by 7% y-o-y to Rs. 1,190 crore. Individual APE also declined by 7% y-o-y. Among segments, non-PAR savings grew by 5% y-o-y. Retail Protection grew by 11% y-o-y, while Group Protection declined by 42% y-o-y. Thus, overall protection segment declined by 24% y-o-y, while PAR also declined by 23% y-o-y. ULIP was flat on y-o-y basis. The share of non-PAR savings in the mix increased to 38% (vs 34% in Q2FY22); while Protection (12% vs 16% in Q2FY22) and PAR (17% vs 20% in Q2FY22) declined. The share of ULIPs stood at 32% versus 30% in Q2FY22.

Outlook

We maintain a Buy rating on the stock with an unchanged PT of Rs. 1,020.