Max Financial Services Ltd. share price target

IPru Life posted a 7% YoY growth on overall APE and 6% on individual APE, a first positive growth in 13 months. On FYTD21 new business de-grew -27% and is likely to end in negative growth for second consecutive year. IPru Life...

Growth momentum reviving in the proprietary channel MAX Life Insurance (MAXLIFE) has demonstrated a resilient performance amid a challenging macro environment, with 21% APE growth, led by robust growth in Non-PAR savings and a recovery in ULIP. After witnessing robust Protection growth over 1HFY21, the same has moderated during 3Q. Shareholders' PAT grew at 43% YoY during 3QFY21. Absolute VNB growth stood robust (65% YoY), led by a VNB margin of 28.6%. This has been supported by robust trends in Non-PAR savings and...

Traditionally a Par player, MAXLIFE has significantly diversified its product mix and has made significant strides to capture the protection and non-par segment. MAXF has been able to build a strong franchise with a profitable agency channel. AXIS bank transaction will also give more comfort to the renewal on the bancassurance tie-up which is due to expire in September 2021. MAXF has already delivered strong growth thus far and we believe stock price largely reflects the positives from the AXIS deal as well as top-line growth. As most positives are already...

Value of New Business (VNB) written during H1FY21 grew by 20% y-o-y, while New Business Margin (NBM) expanded by 320 bps y-o-y to 24.2%, helped by a shift in product mix towards NPAR- Savings and Protection products. EV was at Rs 11,047 Cr., with RoEV at 17.5%. We believe the Indian insurance sector has a long growth runway; and Max Life, with strong metrics, stable bancassurance partnership with Axis Bank, etc is well-placed to benefit from growth opportunities. Max Financial is available a reasonable valuation of 1.7x / 1.5x FY2022E / FY2023E MCap / EV; We maintain Buy with a revised PT of Rs. 750....

Max Financial Services' (MFS') deal with Axis Bank appears to be progressing positively, even though the lender will now buy a lower stake in Max Life Insurance Co. Ltd. (MLIC). Mutually altering the deal, Axis Bank now will acquire 17% in MLIC to increase its holding to 18% (lower than a 29% stake buy announced earlier). The companies have executed a definitive agreement to the effect but are yet to approach regulatory authorities with the revised applications. Axis Bank is one of the key bancassurance partners for Max Life, contributing ~57% (as...

Max Life's overall APE de-grew 4% YoY supported by decent growth in single & regular premiums. Protection segment remains the key focus with shift of Product mix to NPar savings and Protection as Par share is reduced. Margins disappointed and fell to 17% for 1Q21 despite of favorable product mix on account of lower interest rates and higher cost overruns. Approvals with respect to Axis/Max/MSI deal should not get into hurdle post queries from IRDAI/RBI but should take time. We retain HOLD with revised TP of Rs545...

Max Financial Services (MFS) posted modest numbers for Q4FY2020,with below expectations operating performance, and posted slower business growth in Value of New Business (VNB) and Annualised Premium Equivalent (APE) due to impaired collections because of the lockdown. The life insurance business, Max Life Insurance (MLIC, MFS has 72.5% shareholding) saw gross written premium (GWP) rise by 6% y-o-y, despite the lockdown, which impacted the last part of March, which typically is a seasonally important period for life insurance players. The 13th-month...

Max Life's overall APE grew 5% YoY supported by decent growth in single & regular premiums. Protection segment remains the key focus with shift of Product mix to NPar savings continuing. Margins remained stable YoY at 21.6% for FY20 (but improved sequentially to 22.8% in 4Q20) on account of support from NPar growth. Persistency has improved across all buckets except the 61m persistency (upto Mar'20 i.e.11m) being affected by the ULIP segment. We retain BUY with revised TP of Rs518 (Rs610) valuing Max Life based on 2.3x Mar-22 EV (from 2.6x Sep-22 EV), we reduce Holdco discount...

Max Financial Services Limited (MFS) announced that it had signed definitive agreements with Axis Bank Limited (Axis Bank) where the companies will be joint venture partners in Max Life Insurance Company Ltd (MLI). As per the agreement, Axis Bank will hold a 30% stake in Max Life once the deal is finalized in 12-18 months (expected), pending regulatory approvals. Due to the cap on the stake that a bank may hold in a life insurance company, Axis Bank stake is likely to remain at 30% in the JV. However, shareholders of MFS...

With a new indiv. tax code and Axis Bank embracing open architecture we expect business growth momentum to slow down in FY21-22E. Additionally, we continue to watch out for the renewal of partnership with Axis Bank. We rate MAXF a BUY with an changed TP of Rs 560 (MAXL: Dec-20E EV + 18.8x FY22E VNB). We use a holding company discount of 30%, continue with a 22% discount on VNB for Axis Bank deal, and a 10x multiple to annual leakage at the holding co level. Key risks include lower growth, higher cost over-runs, and supply overhang as a result of promoter pledges. MAXL reported in-line nos with total APE growing 16.0% YoY and 9MFY20 VNB margin was at 21.0% (+60bps YoY)- high costs continue to weigh on margins. We maintain our BUY with TP of Rs 560.