Buy Max Financial; target of Rs 1030: Emkay Global Financial

Emkay Global Financial's report on Max Financial

We hosted Max Financial Services’ top management in Mumbai on June 7, 2022 for meetings with DIIs to discuss the company’s business performance and growth trajectory, as well as investor concerns. Mr. Prashant Tripathy, CEO of Max Life, and Mr. Amrit Singh, CFO, were present. The key highlights: 1) the plan to simplify the corporate structure is on track and updates from the regulator’s end are awaited; 2) the promoter is working on plans to reduce the pledge on MAXF shares; 3) Max Life’s share in the Axis Bank channel should improve and stabilize in FY23; and 4) overall medium-term APE and VNB growth of above 20% remains an achievable target.

Outlook

Due to the changing competitive landscape, the company is prioritizing growth over profitability, and has guided for a slightly lower VNB margin in FY23 than 27.4% in FY22. However, the company is confident of delivering ~16-18% VNB growth, driven by APE growth.