Prabhudas Lilladher has given Accumulate recommendation for Max Financial Services with a target price of Rs. 1120 in its research report issued on Jun 09, 2021

Prabhudas Lilladher’s research report on Max Financial Services

Max Life’s overall APE grew by 36% YoY in Q4FY21 ending FY21 with 19.5% YoY growth best among peers and given the pandemic impact which was led by led by 18% FYP premium. Also protection growth of 10-12% YoY was better than peers, while product launches at start of FY21 augured well with non-par savings mix improving by 12% with doubling of APE in FY21. Max has done well at start of FY22 despite challenges from second wave. It should continue to gain market share with continued focus on non-par savings/protection and gradually move towards medium term margins of 27-28%. We increase VNB on back of sustained higher growth and retain VNB margins of 26%/27% for FY22/FY23. In past three years Max has caught up with peers in most parameters and has witnessed strong re-rating. It trades at 15% premium to SBILI and 30% premium to IPruLI and is only 12% discount to HDFCLI.


Hence we see limited risk-reward and retain our Accumulate rating with revised TP of Rs1,120 (from 995) based on 3.2x (from 2.8x) FY23 EV.