- Target
- ₹2,025
- At report
- ₹1,512+34% printed
- Vs our close
- +45.4%
PL Capital reiterates BUY on Max Financial Services after Q1FY27 APE grew 15% YoY with VNB margin expanding ~315bps to 23.2% on favourable yield curve and protection mix. The broker trimmed APE/VNB estimates marginally (-0.9%/-0.8% for FY27E) but kept its VNB margin forecast unchanged at 25.0%/25.1% for FY27E/FY28E, valuing the stock via the Appraisal Value framework at 1.9x FY28E P/EV for a TP of INR 2,025.
- Q1FY27 APE grew 15% YoY to INR19.2bn, led by PAR (+48% YoY), protection (+44% YoY) and annuity (+116% YoY); broker expects 16%/17% APE growth in FY27E/FY28E
- VNB grew 33% YoY to INR4.4bn with margin expanding ~315bps YoY to 23.2%, driven ~70% by favourable yield-curve movement and ~30% by protection mix/operating leverage
- FY27E/FY28E VNB margin retained at 25.0%/25.1% as protection and annuity share increases
- Tier 2/3 expansion and diversification beyond Axis Bank (partnership channel +16% YoY, other partners +21% YoY) seen supporting distribution growth
- Embedded value grew 15% YoY to INR304.1bn with solvency comfortable at 198%, aided by Axis Bank's additional 0.98% stake purchase for INR3.8bn
- Valued using Appraisal Value framework at unchanged 1.9x FY28E P/EV multiple for TP of INR2,025
- 13M persistency dropped to 83% for 2MFY27 (vs 86% for 2MFY26) due to residual impact of a discontinued product variant
- NPAR declined 41% YoY on a high base; recovery timing uncertain
- Lower yield curve in Q2 likely to reverse part of the margin benefit seen in Q1
- Axis Bank's intent to raise stake to 30% pending regulatory evaluation creates ownership/capital structure uncertainty
- Total APE INR19,220mn, up 15.2% YoY (vs INR16,680mn in Q1FY26)
- VNB INR4,460mn, up 33.1% YoY; VNB margin 23.2%, up 315bps YoY
- New Business Premium INR29,680mn, up 17.6% YoY
- Gross Written Premium INR76,070mn, up 18.9% YoY
- AUM INR2,026.2bn, up 10.6% YoY
- Embedded Value INR304.2bn, up 14.87% YoY; Op RoEV 14.9%
- Newly launched Smart Rise variable annuity product expected to provide additional growth catalyst
- Continued traction in protection and annuity segments and recovery in NPAR growth
- Increasing contribution from newer banca partnerships and expansion into Tier 2/3 markets
| Broker estimates | Unit | FY25 | FY26 | FY27E | FY28E |
|---|---|---|---|---|---|
| APE | INR mn | 87,700 | 1,05,020 | 1,22,011 | 1,42,199 |
| VNB | INR mn | 21,070 | 26,470 | 30,503 | 35,692 |
| VNB Margin | % | 24 | 25.2 | 25 | 25.1 |
| EV | INR mn | 2,51,920 | 2,88,710 | 3,39,981 | 4,00,051 |
| EVOP | INR mn | 37,300 | 47,200 | 54,541 | 63,340 |
| RoEV | % | 19.1 | 18.7 | 18.9 | 18.6 |
| P/EV | x | 2.6 | 2.2 | 1.9 | 1.6 |
| PAT | INR mn | 4,064 | 2,773 | 153 | 271 |
| EPS | ₹ | 9.5 | 6.5 | 0.4 | 0.6 |
Valuation: Appraisal Value framework: 16.5x FY28E VNB + FY27E Embedded Value, applying 81% MFSL stake and 7% holding company discount. Structural value of INR588,106mn plus FY27E EV of INR339,981mn gives an appraisal value of INR928,087mn, implying a value per share of INR2,025 (1.9x implied FY28E P/EV). APE and VNB estimates for FY27E/FY28E were trimmed marginally by -0.9%/-0.8%, EV was cut -0.1%/-0.2%, while VNB margin estimates were left unchanged at 25.0%/25.1%; TP was revised down slightly from INR2,035 to INR2,025.
Extraction note: Standalone financial statements are in INR mn (crore not used in this report). CMP and price date are taken as the report date (August 14, 2026) since no separate price-as-of date is printed.