Max Financial surges 10% on strong Q1, further stake hike by Axis in Max Life

In Q1 FY24, Max Financial Services reported consolidated revenue of Rs 4,730 crore, up 19 percent year-on-year

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Max Financial Services gained 10 percent on August 10, after the company reported a good set of numbers for the quarter ended June 2023. Furthermore, investors cheered Axis Bank’s remaining ~6 percent stake acquisition in Max Life Insurance, a material subsidiary of Max Financial.

Axis Bank will be acquiring the stake at Rs 1,612 crore. Axis entities collectively already held 12.99 percent of the equity share capital of Max Life. Post this acquisition, their stake will go up to 19 percent.

What makes Max Financial investors happy is the value of the current deal. In 2020, Axis Bank had announced its intention to acquire 30 percent in Max Life for a sum of around Rs 1,530 crore.  The current deal for one-fifth of the stake is at a higher proposed value than that.

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At 9:45 am, the stock was quoting at Rs 851 on the NSE, higher by 7.7 percent from previous close. Trading volumes at 40 lakh shares were seven times the 20-day average volumes.

The financials

In Q1 FY24, Max Financial Services reported consolidated revenue of Rs 4,730 crore, up 19 percent year-on-year. Consolidated net profit at Rs 101 crore, was higher by 48 percent YoY on account of higher investment income, said the company.

Max Life’s new business premium grew 25 percent to Rs 1,857 crore and Annualised Premium Equivalent (APE) went up 10 percent to Rs 1,113 crore driven by strong growth in proprietary channels.

Gross written premium came in at Rs 4,871 crore, an increase of 19 percent YoY. Furthermore, new business margin expanded 110 basis points to 22.2 percent in Q1 FY24.

Foreign broking firm CLSA has issued a Buy rating for Max Financial Services and has raised target to Rs 1,025. Despite a cyclical quarter, a commendable VNB margin of 22.2 percent was achieved, said CLSA.

Similarly, Jefferies has also assigned a Buy Rating with target price at Rs 800. The growth trajectory was predominantly steered by segments such as non-par savings and retail protection, with the agency channel displaying accelerated expansion.

Focusing on improving contribution holds the potential to fuel growth, with a careful watch on margins, Jefferies said.

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