Max Financial Services Ltd.'s share price hit a record high on Wednesday due to the growth in new business, which counterbalanced the impact of a decline in net profit from July to September. The value of new business grew 23% to Rs 513 crore in the second quarter, the company said in an exchange filing on Tuesday.
Max Financial Services' VNB margins contracted less than what CLSA expected for the first half, which ended in September. It came at 21.1% in the first half ended in September, compared to 24.00% in the first half of financial year 2023–24. CLSA estimated a 20% VNB margin for the period.
"Strong growth in retail protection and non-par savings supported its margin, which otherwise is under pressure due to high Ulip (unit linked insurance plans) sales," CLSA said in a note. It hiked the target price to Rs 1,405 from Rs 1,335 as it maintained the 'Outperform' stock rating. The current target price implied 20.03% upside from Tuesday's closing price.
CLSA also noted annual premium equivalent growth momentum is strongest among listed peers and raised its estimates for financial year 2025 to 25%.
Max Financial Services has maintained a strong growth in the property channel because of account of agency, cross-sell, and e-commerce. On an annualised basis, the persistency trend improved, Motilal Oswal Financial Services said in a note on Wednesday.
Max Life Insurance, a joint venture between Axis Bank and Max Financial Services, can now have 'Axis' in its brand name, which CLSA deems an important development. This development will make Max Life Insurance a bank-backed insurer, deserving of higher multiples, the brokerage said in the note.
Max Financial Services's consolidated net profit fell 18.2% on the year to Rs 139 crore from Rs 170 crore.
Max Financial Q2 Results: Key Highlights (Consolidated, YoY)
Total income grows 31.3% at Rs 13,376 crore.
Net profit down 18.2% at Rs 139 crore.
Max Financial Services was trading 7.26% higher at Rs Rs 1,255.45 apiece.
Max Financial Services was trading 7.26% higher at Rs Rs 1,255.45 apiece.
Max Financial Services share price rose 7.82% to Rs 1,262.00 apiece, the highest level since its listing on May 17, 2000. It was trading 7.59% higher at Rs 1,259.30 apiece as of 10:38 a.m., compared to a 0.20% advance in the NSE Nifty 50 index.
The stock rose 38.98% in 12 months and 29.76% on a year-to-date basis. Total traded volume so far in the day stood at 15 times its 30-day average. The relative strength index was at 64.75.
Out of 19 analysts tracking the company, 17 maintain a 'buy' rating and two recommend a 'hold', according to Bloomberg data. The average 12-month consensus price target implies an upside of 6.8%.
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