Buy Max Financial Services; target of Rs 950: Sharekhan

Sharekhan's research report on Max Financial Services

Max Life reported a strong ~38% y-o-y growth in APE in Q4FY23. VNB grew by 31% y-o-y. VNB margin reported were lower at 30.3% in Q4FY23 versus 31.9% in Q4FY22 and 31.8% in 9MFY23. APE growth was muted in 9MFY23, but higher business volumes from the sale of higher ticket value non-linked products in the last two months of the quarter, ahead of the change in union budgetary provision lifted FY23 APE growth to ~12%. The company is guiding to achieve double-digit APE growth in FY24 led by a rise in share of the proprietary channel and other partners along with bancassurance channel with VNB margin of 27-29%.

Outlook

Stock trades at 1.5x/1.2x its FY24E/25E EVPS. Valuations are inexpensive. We maintain a Buy rating with an unchanged PT of Rs. 950.

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