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

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Motilal Oswal's research report on MAX Financial Services

MAXLIFE posted a sharp growth in VNB even as APE dipped 4% YoY. Within segments, Protection/Non-PAR grew strongly while ULIP/PAR declined. As a result, Protection mix increased in 4QFY22. On the distribution front, both bancassurance and proprietary channels witnessed pressure. VNB margin improved to 31.9% in 4QFY22 (from 24.9% in 3QFY22), driven by an improved pricing and higher mix of Protection/Non-PAR business with management guiding for margin to remain in ~25-26% range. We expect VNB margin to sustain at 26-27% and estimate 20% APE CAGR over FY22-24. This would imply a 19% VNB CAGR during FY22-24E.

Outlook

Maintain BUY with a TP of INR950 (based on 2.5x FY24E EV and a holding company discount of 20%).

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