Buy Max Financial Services; target of Rs 1550: Motilal Oswal

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • Max Financial Services' APE growth is expected to strengthen in 2H, supported by recovery in Axis Bank channel and improving business momentum.
  • VNB margin expansion of 150bp YoY is led by healthy protection demand, rising rider attachments, and cost efficiencies.
  • The company's EoM ratio stands at ~25%, and management expects to achieve 5-7% reduction through commission and GST optimization.
  • A new retirement product launched in 2Q has received a favorable response and already contributes ~8% of APE.

Thesis Validation Checklist

  • APE growth is expected to strengthen in the second half, supported by recovery in Axis Bank channel and improving business momentum.
  • VNB margin expansion is expected to continue, driven by a better product mix and improving product-level margins.
  • The company's ability to maintain its market share and improve its distribution network will be key monitors.
  • Regulatory changes and their impact on the industry will also be closely watched.