Neutral Max Financial Services; target of Rs 1020: Motilal Oswal

Motilal Oswal's research report on Max Financial Services

Max Financial Services (MAXLIFE) is seeing pension as a big opportunity over the medium term. The company is investing in its pension subsidiary and has set up a dedicated vertical to grow the annuity business.  Protection demand has been strong, and with supply-side pressure moderating, growth is likely to be strong as well. The return of premium products has enabled strong growth in the offline channel as well. RoP accounts for 20% of MAXLIFE’s retail protection. The group-term business is becoming challenging with hypercompetition, and MAXLIFE is playing this conservatively. The non-par segment has seen price correction recently, and profitability has moderated. MAXLIFE expects the share of non-par to be stable in FY25. MAXLIFE has invested in the agency channel (fourth-largest net addition in FY24 at 32k agents) and related branch expansion (132 branches in FY23 and FY24), which will result in productivity improvement going forward.

Outlook

We expect a 13% CAGR in APE and VNB margins for MAXLIFE during FY24-26. RoEVs would be maintained in the 18-19% range. Reiterate Neutral with a TP of INR1,020, based on 2.0x Mar’26E EV and a holdco discount of 20%.

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