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Motilal Oswal Report
Max Financial Services Ltd. reported a healthy profit after tax of Rs 1.6 billion in Q2 FY24 (36% beat) with annual premium equivalent/value of new business growth of 39%/12% YoY.
In Q2 FY24, total APE grew 39% YoY to Rs 16.5 billion (in line). Max Life's absolute VNB grew 12% YoY to Rs 4.2 billion (16% miss) and VNB margins came in at 25.2% in Q2 FY24 (declined 615 bp YoY, our estimate of 30.1%).
Margin pressure was seen in unit linked insurance plans, owing to the new product (index fund), which has lower margins. Annuity margins were lower due to the change in the mix within the segment.
We have cut our absolute VNB estimate by 6.2%/3.8% for FY24/25, resulting in a VNB margin of 28.1% in FY25 (versus 29.2% earlier).
We reiterate our 'Neutral' rating on the stock with a target price of Rs 900, premised on 2.0 times March-25E enterprise value and a holding company discount of 20%.
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