Max Financial Services Limited — Q1 FY26 earnings call

Call held 8 Aug 2025

Management summary

Max Financial Services Limited reported a strong Q1 FY26, with individual adjusted first-year premium growing 23% and VNB increasing 32% to INR 335 crore, driven by product mix rebalancing and margin expansion to 20.1%. While consolidated profit after tax was INR 86 crore due to new business strains, the company demonstrated robust growth across key metrics, improved customer service, and advanced digital adoption, maintaining a positive outlook for FY26.

Highlights

  • Individual adjusted first-year premium grew by 23%, nearly 3x the private sector growth of 8% and 4x the overall industry growth of 5%.

  • Value of New Business (VNB) grew by 32% to INR 335 crore for Q1 FY26.

  • Net Business Margin (NBM) expanded from 17.5% in Q1 FY25 to 20.1% in Q1 FY26.

  • Individual death claim paid ratio achieved a highest-ever 99.7% in FY25.

  • eKYC adoption increased from 35% to 70%, significantly reducing manual efforts.

Concerns

  • Consolidated profit after tax was INR 86 crore, largely impacted by strains from strong new business sales momentum.

  • 13th-month persistency saw a slight dip to 86% compared to 87% in Q1 FY25, attributed to economic effects and reduced high-ticket sizes.

  • Online APE remained flat, contributing to a divergence between adjusted FYP and APE growth, though this gap is expected to narrow.

Key financials

2 periods

Headline

  • Individual Adjusted First-Year Premium Growth
    23%
  • APE Growth
    15%
  • MFSL Revenue (excl. investment income)
    ₹6,194 Cr
    YoY +18%
  • Consolidated PAT
    ₹86 Cr
  • Renewal Premium
    ₹3,873 Cr
    YoY +17%
  • VNB
    ₹335 Cr
    YoY +32%
  • NBM
    20.1%
  • Embedded Value
    ₹26,478 Cr
    YoY +20%
  • AUM (Axis Max Life)
    ₹1.83L Cr
    YoY +14%
  • 13th-month Persistency
    86%
  • 25th-month Persistency
    75%
  • Annualized Operating ROEV
    14.3%
  • EV Positive Economic Variance
    ₹431 Cr

FY25

  • Individual Death Claim Paid Ratio
    99.7%

What they filed

Q1 FY27: revenue up 16.8%, net profit up 37.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue13,372 8,923 12,376 12,822 9,792 −27%14,259 +60%10,802 −13%14,970 +17%
EBITDA173 89 20 119 21 −88%78 −12%-6 −130%167 +40%
Net profit139 70 38 86 6 −96%45 −36%-32 −184%118 +37%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Proprietary Channels
    18% APE Growth
  • Bancassurance Channels
    16% APE Growth
  • Axis Bank
    11% APE Growth
  • Other Banca Partners
    54% APE Growth
  • Protection Segment
    36% Growth
  • Pure Protection Portfolio
    26% Growth
  • Annuities and Strategic Focus Area
    40% Growth

Capital allocation

medium confidence
  • M&A Axis Bank 1% stake Acquisition · Pending regulatory · Consideration ₹[object Object] (undisclosed)

    Strengthening partnership and potential capital infusion.

    On the 1%, yes, there are discussions. I mean, that's something Axis Bank is pursuing with the RBI. And as soon as that approval comes through, Axis Bank will be doing either a primary or secondary investment. We are awaiting an approval.
  • Liquidity Liquidity disclosed Solvency at the end of this quarter stands at 199%.
    Our solvency at the end of this quarter stands at 199%.

Guidance & targets

Margin

  • Net Business Margin (NBM) Margin · FY26 · High confidence 24-25%
    I think we would like to remain in this healthy range of margins, which is between 24%-25% for FY'26 as we continue to invest in our distribution channels.

    — Amrit Singh

Growth

  • Adjusted FYP vs APE growth delta Growth · coming quarters · High confidence 2-4%
    I must state that it's going to plateau, and I don't expect a delta of more than 2% to 4% between the adjusted FYP and APE numbers going forward.

    — Amrit Singh

Operational Efficiency

  • Customer service volumes automated by Gen AI bot Operational Efficiency · High confidence 30%
    we have launched a Gen AI-powered e-mail bot, which is expected to automate 30% of the customer service volumes and enable 20% headcount optimization

    — Prashant Tripathy

  • Headcount optimization by Gen AI bot Operational Efficiency · High confidence 20%

    — Prashant Tripathy

Product

  • Return on Premium (ROP) levels Product · Medium confidence Improvement from 10%

    From 10% today

    Our return on premium has come down to more like 10% levels. So, we do expect, as we focus in our own channels, that this mix should improve.

    — Amrit Singh

What to watch in Q2 FY26

AFYP vs APE growth gap

Next quarter
Current 23% (AFYP) vs 15% (APE)
Target Narrowing to 2-4%

Why it matters

Indicates stabilization of product mix and e-commerce channel performance, impacting reported premium growth metrics.

I must state that it's going to plateau, and I don't expect a delta of more than 2% to 4% between the adjusted FYP and APE numbers going forward.

Risks & concerns

  • Impact of new business strains on profitability

    medium

    Consolidated profit after tax was INR 86 crore, largely impacted due to strains because of strong new business sales momentum.

    Management acknowledged

  • Weakness in 13-month persistency

    medium

    13th-month persistency declined slightly to 86%, attributed to overall economic effects and reduced high-ticket sizes, though collection efforts are improving.

    Analyst acknowledged

  • Divergence between AFYP and APE growth

    low

    The gap between AFYP and APE is due to online business moderation and ULIP demand volatility, but is expected to narrow to 2-4%.

    Analyst acknowledged

Q&A highlights

6 direct
Divergence between AFYP and APE growth Direct
The difference between the methods is in the annualized premium equivalent. You recognize the entire premium of a policy for the first 12 months in the first instance itself, whereas in the AFYP, it is actually basis the collection that is received on a month-to-month basis... The gap has come because of the fact that overall, the online business, especially on the savings side, has seen a moderation in momentum, largely due to the volatility in markets, which has impacted a little bit of ULIP demand during the quarter. And that's why the mobilization of APE in e-commerce is slower.

Clarifies the discrepancy in reported premium growth metrics, attributing it to product mix (ULIP moderation) and channel (e-commerce monthly modes), with an expectation for the gap to narrow.

Asked by Shreya Shivani

Agent productivity Direct
I think one, our proprietorship business, largely led by agency, remains very strong, and the same has been disclosed as part of the numbers also. There have been a number of measures taken into account. But to answer your specific question, Shreya, in fact, our overall productivity has gone up by 4% over quarter 1 of last year.

Addresses concerns about agent productivity, confirming an increase for active agents despite overall book size.

Asked by Shreya Shivani

Insurance Bill and Axis Bank stake increase Partial
The latest update, as far as we know, is that the bill is ready to be presented in parliament... But there is no change as far as the Section 35 provision is concerned... So, it may be just market speculation, and there is no point in talking about that.

Provides an update on the regulatory environment (insurance bill) and dismisses speculation about Axis Bank's stake increase as market rumor.

Asked by Shreya Shivani

Margin expansion and FY26 guidance Direct
For this particular quarter, the product mix has aided... In addition to it, all the actions taken post 1st October, which in the run rate have continued, which are around pricing actions and rider contributions, et cetera, continues to aid the margin expansion process... I think we would like to remain in this healthy range of margins, which is between 24%-25%.

Explains the drivers of margin expansion (product mix, pricing actions, riders) and reiterates the full-year margin guidance, indicating a willingness to reinvest any outperformance into growth.

Asked by Swarnabh Mukherjee

Solvency and need for external capital Direct
Our solvency at the end of this quarter stands at 199%. But given this business consumes capital due to the products that we are selling and the growth momentum that we are demonstrating... we are quite confident that our shareholders also will be more than happy to kind of contribute if required to provide and need the growth capital in the business.

Confirms a healthy solvency ratio but acknowledges capital consumption due to growth, hinting at potential future capital raises from shareholders if needed.

Asked by Avinash Singh

Other banca channel growth headroom Direct
We are actually very excited about the other banks because some of the recent growth we've seen in recent acquisitions, also, very fast, we've been able to get the counter share that we really desire... we are very bullish about some of the other banks.

Highlights strong performance and optimism regarding growth from non-Axis Bank bancassurance partnerships, indicating a key growth driver.

Asked by Supratim Datta

13-month persistency weakness Partial
Though we have continued to do well with respect to our improvements in the later cohorts where you can see other cohorts, there has been an improvement coming through. But we are also closely observing this trend and making all efforts to ensure that the persistency outcome remains strong. Some bit of it could be an overall economic effect on the Indian consumer. Some bit of it is also the proportion of high-ticket sizes has reduced as time has kind of gone by.

Acknowledges a slight dip in 13-month persistency, attributing it to broader economic factors and a shift in product mix (reduced high-ticket sizes), indicating a watch item.

Asked by Prayesh Jain

Axis Bank's additional 1% stake acquisition Direct
On the 1%, yes, there are discussions. I mean, that's something Axis Bank is pursuing with the RBI. And as soon as that approval comes through, Axis Bank will be doing either a primary or secondary investment. We are awaiting an approval.

Confirms ongoing discussions with RBI for Axis Bank to increase its stake, which could be a significant capital event.

Asked by Madhukar Ladha

2 min read 6 chapters

Detailed narrative

Strong Q1 FY26 Performance and Growth Drivers

Max Financial Services Limited reported a robust start to FY26, with individual adjusted first-year premium growing by 23%, significantly outperforming the private sector (8%) and overall industry (5%). Annualized Premium Equivalent (APE) grew 15%, driven by both proprietary and bancassurance channels. Proprietary channels demonstrated 18% APE growth, while bancassurance grew 16%, with other banca partners showing a massive 54% growth. The company added 15 new partners during the quarter, strengthening its distribution network.

Product Mix Rebalancing and Margin Expansion

The company successfully rebalanced its product mix, reducing the share of ULIPs from 43% in Q1 FY25 to 36% in Q1 FY26, partly due to the launch of the innovative Smart VIBE product. This shift, combined with a surge of over 300% in rider APE and strong growth in protection (36%) and annuities (40%), led to a significant margin expansion. The Net Business Margin (NBM) improved from 17.5% in Q1 FY25 to 20.1% in Q1 FY26, resulting in an impressive 32% growth in Value of New Business (VNB) to INR 335 crore.

Customer-Centricity and Digital Transformation

Max Life achieved its highest-ever individual death claim paid ratio of 99.7% in FY25, demonstrating strong customer trust. The company maintained leadership in 13th-month persistency and secured the second position for 25th and 37th-month persistency. Digital initiatives are a key focus, with eKYC adoption increasing from 35% to 70% and the launch of the Axis Max Life app. A Gen AI-powered email bot is expected to automate 30% of customer service volumes and optimize headcount by 20%.

Financial Overview and Solvency

MFSL's revenue, excluding investment income, stood at INR 6,194 crore, an 18% growth, though consolidated profit after tax was INR 86 crore, impacted by new business strains. Gross written premium for Axis Max Life grew 18%, and renewal premium grew 17% to INR 3,873 crore. The embedded value at the end of June was INR 26,478 crore, a 20% growth, with an annualized operating ROEV of 14.3%. The company's solvency ratio stood at a healthy 199% at the end of the quarter.

Leadership Transition and Regulatory Outlook

Prashant Tripathy announced his departure as MD & CEO on September 30, 2025, with Sumit Madan set to take over on October 1, 2025. Management expressed confidence in a smooth transition and continued momentum. Regarding the pending insurance bill, it is expected to be presented in parliament, with no changes anticipated to Section 35 that would impact the company's holding structure. Discussions are ongoing with the RBI for Axis Bank to potentially increase its stake by 1%.

Persistency Trends and Economic Factors

While 25th-month persistency reached an all-time high of 75%, 13th-month persistency saw a slight dip to 86% from 87% in Q1 FY25. Management attributed this to a combination of overall economic effects on the Indian consumer and a reduction in high-ticket size policies. Efforts are underway to strengthen persistency, with collection trends showing improvement as the quarter progresses.

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