Motilal Oswal has given Buy recommendation for MAX Financial Services recommended buy rating on the stock with a target price of Rs 1200 in its research with a target price of Rs. 1200 in its research report issued on Jun 09, 2021

Motilal Oswal’s research report on MAX Financial Services

MAXLIFE continues to demonstrate resilient performance amid a challenging macro environment, led by healthy (36%) APE growth, aided by robust growth in Non-PAR savings and recovery in the ULIP segment. After witnessing robust Protection growth over 1H, the same moderated during 2HFY21. Healthy product mix towards high margin segments and strong APE growth aided VNB growth of 44% YoY during 4QFY21. Strong push via the bancassurance channel has aided premium growth, while the proprietary channel is showing healthy traction. We expect 22% CAGR in APE growth over FY21-23E, with VNB margin improving to 26.8% by FY23E. This would enable 26% VNB CAGR over FY21-23E, while operating RoEV sustains ~22%. Maintain Buy.

Outlook

We estimate APE growth at 22% CAGR over FY20-23E and VNB margin to improve to 26.8% in FY23E. This would enable 26% VNB CAGR over FY21-23E, while operating RoEV will sustain ~22%. We maintain our Buy rating with a TP of INR1,200/share (3.1x FY23E EV/3.8x FY23E EV after a 20% holding company discount).