Neutral MAX Financial Services; target of Rs 750: Motilal Oswal

Motilal Oswal's research report on MAX Financial Services

MAX Financial Services (MAXLIFE) reported a stable quarter on the back of healthy VNB margin of 30.3%. VNB margin was aided by strong growth in VNB (16% beat) and APE (7% beat) due to increased demand before the budgetary changes. Non-PAR maintained its robust momentum, led by the annuity business, while other segments also saw a sequential recovery.  Growth in APE was driven by the proprietary channels, which rose 90% YoY and contributed ~41% to overall APE. The banca channel’s APE also recovered with 13% YoY growth (+41% QoQ). Management expects the banca channel’s growth to improve further.

Outlook

We estimate a 15% APE CAGR over FY23-25, leading to a 13% VNB CAGR. Maintain Neutral with a revised TP of INR750, premised on 1.8x Sep’24E EV and a holding company discount of 20%.