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Motilal Oswal Financial
Max Financial Services Ltd (Buy)
Target: ₹1,250
CMP: ₹966.45
We hosted an investor day for Max Life Insurance. The company was represented by MD and CEO Mr. Prashant Tripathy, CFO, Amrit Singh, and other members of the senior management team.
The management highlighted the progress that it has made over the past years and how it is positioned to capitalise on the exciting opportunities that lie in this space. The areas of discussion ranged around: a) future outlook and strategic roadmap, b) innovation in customer segments and building distribution for the future, c) pervasive intelligence and automation across the enterprise, and d) strategic risk management.
It expects growth to pick up over the next five years, which is likely to be better than the past five years. Growth via the proprietary channel is likely to remain strong, while banca will continue to deliver healthy growth. Persistency trends have improved, while cost ratios should remain modest.
We estimate 21 per cent APE CAGR over FY21-24, with VNB margin sustaining at 25-26 per cent. This would enable 24 per cent VNB CAGR over FY21-24, while operating RoEV would sustain about 22 per cent. We maintain our Buy rating with an unchanged target price of ₹1,250 a share (3.6x Sep'23 EV with a 20 per cent holding company discount).
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