Motilal Oswal's research report on MAX Financial Services
MAX Life Insurance (MAXLIFE) continued to demonstrate a resilient performance in a challenging macro environment, led by healthy 32% APE growth. This was owing to robust growth in Non-PAR Savings and recovery in ULIP. However, Protection growth has moderated, similar to that for peers. On the distribution front, the strong push via the bancassurance channel has aided premium growth, while proprietary channel growth was impacted by COVID 2.0. The VNB margin declined to ~19.7% in 1QFY22 (v/s 24% in 4QFY21), largely affected by seasonality due to the drag from operating cost and rising ULIP mix. Overall, we expect the VNB margin trajectory to remain stable and estimate a 21% CAGR in APE over FY21-23E. This would enable a 23% VNB CAGR over FY21-23E. Maintain Buy.
Outlook
We estimate a 21% APE CAGR over FY21-23, with the VNB margin remaining stable at ~26% in FY23. This would enable a 23% VNB CAGR over FY21-23E, while operating RoEV would sustain at ~22%. We maintain our BUY rating, with TP of INR1,250 (4.0x FY23E EV with 20% Holdco discount).
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