Max Financial: Brokerages remain bullish after strong Q1; check price targets

Max Financial’s strong Q1 performance has kept brokerages positive on the stock, with target prices ranging from ₹2,080 to ₹2,250. Bernstein, HSBC and Jefferies have retained positive calls on the stock, citing stronger-than-expected new business profitability at Axis Max Life, led by a sharp improvement in margins alongside healthy business growth.

Axis Max Life’s Value of New Business (VNB) rose 33% year-on-year to ₹446 crore, while Individual Adjusted First Year Premium grew 17% to ₹1,810 crore. Total Annualised Premium Equivalent (APE) increased 15%.

New business margin expanded 315 basis points to 23.2% from 20.1% a year ago. Bernstein attributed the improvement to yield-curve movements, favourable product mix and cost optimisation. Jefferies also pointed to product mix and the yield curve as key drivers.

The margin improvement resulted in a stronger-than-expected VNB performance.

Jefferies said Q1 VNB was 17% above its estimate and 10% ahead of consensus, while the VNB margin was 360 basis points above its estimate. HSBC said APE growth was broadly in line with expectations, but the stronger margin uplift led to a VNB beat.

What brokerages expect from Max Financial

Bernstein has retained an Outperform rating on Max Financial with a target price of ₹2,080 per share. The brokerage expects the margin improvement, supported by the favourable product mix and cost optimisation, to remain an important driver of new business profitability.

Bernstein also highlighted the parent bank’s increased stake in Axis Max Life and its intention to raise ownership further. It expects the higher stake to strengthen the insurer’s solvency position and push out the need for a potential capital raise for now.

HSBC has maintained a Buy rating with a target price of ₹2,100 per share. The brokerage said APE growth was broadly in line with its estimates, while the stronger-than-expected margin uplift drove the VNB beat.

HSBC expects continued diversification of the distribution network and product portfolio to support sustainable medium-term growth. It has also tweaked its embedded value estimates for FY27-FY29.

Jefferies is the most positive among the three brokerages, with a Buy rating and a target price of ₹2,250 per share. It said Axis Max Life’s June-quarter APE and VNB growth of 15% and 33%, respectively, was ahead of private-sector peers.

Jefferies expects Axis Max Life to deliver an 18% VNB CAGR over the next three years, supported by a projected 16% APE CAGR and around 140 basis points of margin expansion.

Growth broadens across channels and products

The positive brokerage view also reflects the breadth of growth across Axis Max Life’s distribution and product segments.

The proprietary channel grew 15% in APE, while online business increased 27%. Partnership channels grew 16%, with the Axis channel up 14% and other partnerships rising 21%.

Protection and health business grew 44%, supported by a 57% rise in riders. Annuity business jumped 116%, while Group Credit Life grew 57%.

The company also gained 13 basis points in private market share to 10.1%, while its assets under management crossed the ₹2 lakh crore mark.

What to watch from here

The brokerage commentary suggests that the key question for Max Financial is no longer just the pace of new business growth, but how sustainable the margin improvement will be.

VNB is currently growing significantly faster than APE, indicating stronger profitability from new business. However, part of the margin expansion was linked to yield-curve movements, making the sustainability of these gains an important factor to track.

For now, the brokerage targets remain positive: ₹2,080 from Bernstein, ₹2,100 from HSBC and ₹2,250 from Jefferies, with all three maintaining positive ratings on the stock.