MFSL - Max Financial Services Limited Share Price

Question: "As you highlighted the impact of GST, if you do nothing, would be a 300, 350 basis points annual Y-o-Y impact that we are talking about. So I just wanted to understand that when it comes to cost, what kind of negotiations are we done with our distributors or what kind of timelines do we have when it takes us 1 quarter, 2 quarters, etc.?"

Answer: We are indeed targeting a range of strategies beyond simple distributor negotiations, which we prefer to keep confidential, to address the 300-350 bps impact. These include cost controls and product tweaks intended to optimize the overall impact, and we expect some changes to materialize over the next couple of months.

Question: "If you can help us understand in your product suite, which product gets impacted the most, which product gets impacted the least. And how would you manage the impact across the product category?"

Answer: Structural products like ULIPs and participating designs are significantly affected. We are adjusting these products and focusing on more tactical, short-term impacts for others. We aim to leverage tactics to mitigate these effects while still offering competitive products.

Question: "... within the partnership channel, what has been the trends with the banca partners and particularly with Axis Bank?"

Answer: We've seen solid performance with the proprietary channel growing 46% of total business. Axis Bank has posted approximately 7% growth, but overall, our partnership channel has performed even better, driven by strong traction in recent partnerships, potentially contributing to future growth.

Question: "So if I see a material divergence this quarter between the accounting profit or PBT of Max Financial, Max Life, is it just that IndAS and Indian GAAP divergence?"

Answer: Yes, the difference between Max Financial's accounting profit under Ind AS versus Indian GAAP stems from fair value changes affecting profits. Specifically, this quarter's figures reflect a decline largely driven by the GST impact on Axis Max Life's profits.

Question: "Now if I were to ask, do you have that kind of same sort of confidence or kind of aspirations to repeat that last 5 years in the backdrop?"

Answer: I'm confident we can maintain sustained growth higher than the industry average by focusing on segments like NRI, digital initiatives, and operational efficiency, thereby achieving growth that exceeds the industry performance by 300-500 basis points over the next five years.

Question: "Can you break down between how much has come from the product mix, how much may be product-level improvements and if there has been any operating leverage that has played out during this quarter?"

Answer: The improvement is heavily driven by product mix improvements, which constitute 60-70% of the margin increase. The remainder is attributed to operational efficiencies, although we aim to keep expenses aligned without significant operating leverage at this stage.

Question: "In terms of growth, are we being conservative in kind of maintaining and not upgrading our growth guidance?"

Answer: We are holding onto our guidance of 15-17% APE growth. Given the strong performance against tough year-on-year comparisons, we're cautious but remain optimistic about second-half growth potentially outperforming expectations if conditions allow.

Question: "What is the long-term plan for Max Financial beyond quarterly number or distribution expansion?"

Answer: Our immediate focus is becoming a leader in key markets while targeting digital enhancement. The strategy includes integrating data and digital platforms that provide distinctive advantages, positioning us effectively amidst competition and driving long-term growth.

Question: "What margin strategies do you have in place to ensure steady margins during rising costs?"

Answer: We aim to maintain margins around 25%. We'll pursue cost optimization, smart sourcing, and execution discipline. Monitoring our expense ratios and product categories remain vital, ensuring we take proactive measures to adapt as the market evolves.