MFSL - Max Financial Services Limited Share Price

During the earnings call on May 14, 2025, management provided a positive outlook for Max Financial Services. CEO Prashant Tripathy highlighted that despite the regulatory challenges and market volatility in FY '25, Axis Max Life Insurance demonstrated resilience, achieving a rank of 4 for the full year and rank 3 for Q4. The company's individual adjusted first-year premium grew by 20%, outpacing the private sector's growth of 15% and the overall industry's rate of 10%.

Management reported an impressive growth trajectory over two years, with an 18% CAGR compared to 12% for the private sector and 8% for the total industry. The company's Prop Channels flourished, showing a 27% increase, with e-commerce leading in growth across both Protection and Savings segments.

Looking to FY '26, management reaffirmed their internal mission "Uday", aiming for leadership in online acquisition, growth in Prop Channels, and further enhancement in Protection and Annuity offerings. The management estimated a desire to grow by at least 300-400 basis points above industry growth, aiming for margins to be slightly higher than last year's 24%.

Major forward-looking points include:

1. Protection Business Growth: Management anticipates a 25% CAGR over the next five years, supported by low current penetration rates in top cities.
2. Margin Stability: FY '26 margin guidance is targeted at around 24-25%, with efforts to adjust the product mix away from ULIPs, which currently constitute 44% of the offering.
3. Innovation Pipeline: Ongoing product innovations, such as a non-PAR Savings Proposition, are expected to enhance the overall product mix and margins.
4. Technology Integration: Continuous improvement in digital capabilities, including mSpace, is expected to drive productivity and customer engagement, further boosting growth and operational efficiency.

Overall, management's confidence reflects a strategic focus on sustainable growth and enhanced customer-centric offerings against a backdrop of improved financial performance, as evidenced by a consolidated PAT of Rs. 403 crore and gross premiums at Rs. 33,223 crore for FY '25.

Q&A Section Summary from Max Financial Services Limited Earnings Call (May 14, 2025)

Question 1: What is driving the growth in April 2025, and how do you see growth and margins for FY '26?

In April 2025, we achieved around 24% growth, significantly outperforming the industry average of about 2%. This growth was broad-based across all lines and channels, including agency, which saw a delta of about 20%. For FY '26, we aspire to outpace the industry by 300-400 basis points; margins are targeted to be slightly above 24%, but we prioritize growth.

Question 2: Has there been any formal discussion regarding regulatory changes around bancassurance?

We haven't received official communication on changes in bancassurance. While there's ongoing regulatory noise, I believe the current regulatory framework is expected to remain stable, providing confidence to the industry.

Question 3: What has enabled the surge in rider sales this year, and what is expected for the future?

The surge in rider sales is attributed to the industry's evolution, where customers are now seeking more value and coverage. The competitive and regulatory landscapes have prompted companies to focus on product categories that generate margins, enabling successful execution of rider sales. We expect this trend to sustain as customer needs evolve.

Question 4: Have you made any pricing changes to reflect brand strength post-rebranding?

We are currently maintaining competitive pricing, but we haven't made any adjustments in response to the rebranding. Our focus is on building brand strength in Tier-2 and Tier-3 cities before considering pricing changes.

Question 5: What is the contribution from Axis Bank to your sales, and why is growth slowing?

Axis Bank contributed around 7% growth in Quarter 4, with a full-year growth of about 10%. The slowing growth mirrors broader trends in the industry where banks are focusing more on deposits due to past economic pressures. We are optimistic about future growth given ongoing discussions with the bank.

Question 6: What is the impact of surrender value changes on margins?

The impact of surrender guideline changes in Quarter 4 was less than 50 basis points on blended margins. We took corrective actions to mitigate this effect, and we don't expect further significant impacts in FY '26.

Question 7: Can you provide insights on the e-commerce channel's growth driver and sustainability?

The e-commerce channel has grown over 50% CAGR, driven by an emphasis on innovative product designs and a strategic focus on both Protection and Savings. However, we recognize a base effect concern for future years but believe sustained innovation and customer focus will help maintain robust growth.

Question 8: What share of premium is coming from the new bancassurance partnerships?

We have diversified our bancassurance partnerships significantly, contributing to a growing share of sales. We are among the top 2-3 players in new banks, benefiting from strong distribution capabilities and targeted training initiatives.

Question 9: What is your dividend strategy?

Our dividend strategy remains firm as we need capital for growth. We won't be paying dividends until Axis Max Life gets listed, as retaining capital is essential for our long-term strategy.

Question 10: Can you break down the operating variance?

The operating variance recorded a positive of Rs. 5 crore, influenced by recalibrations and minor adjustments across various segments. Notably, there were positive variances in mortality and expense but marginal negatives tied to persistency and lapse.

These insights summarize key topics discussed during the Q&A, reflecting on growth drivers, strategic adjustments, and financial performance expectations.