Buy Max Financial Services; target of Rs 1925: Prabhudas Lilladher

Prabhudas Lilladher's research report on Max Financial Services

2QFY26 APE grew 15% YoY driven by NPAR and protection and company expects the momentum to continue. We build an APE growth of 16% in FY26 driven by a strong uptick in retail protection post GST exemption, new launches in NPAR/ annuity and recovery in credit life segment. Q2 VNB margin saw a significant expansion to 25.5% and company expects the drag from GST exemption to be offset by a favorable product mix. We revise our margin estimates upwards to 24.2%/ 24.6% for FY26/ FY27E as the share of NPAR/ protection improves.

Outlook

We value Max Life using the Appraisal Value framework with a TP of Rs1,925 (2.1x FY27E P/EV vs. 2.0 earlier). Strong outlook on growth and margin trajectory to be key positives. Retain BUY.