Max Financial Services Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Max Financial Services Limited reported strong Q2 and H1 FY26 results, with individual adjusted first year premium growing 18% in H1 and market share improving to 10.1%. Margins expanded significantly, leading to 27% VNB growth. While consolidated PAT was lower due to accounting changes and GST impact, management expressed confidence in offsetting the GST impact through various initiatives and maintaining sales and margin guidance. Digital transformation and customer centricity remain key focus areas, with strong performance in proprietary and partnership channels.

Highlights

  • H1 FY26 Individual Adjusted First Year Premium grew 18%, more than double the private sector growth of 8%.

  • Private market share improved by 83 basis points, reaching 10.1%.

  • Q2 FY26 Margins expanded to 25.5% from 23.6% in Q2 FY25, and H1 FY26 margins expanded to 23.3% from 20.2% last year, leading to 27% VNB growth.

  • Embedded Value grew 15% year-on-year to INR 26,895 crore, with an Annualized Operating ROEV of 16.3%.

  • Annuity business grew 85% in H1 FY26 and 122% in Q2 FY26, driven by strong execution and product offerings.

Concerns

  • MFSL consolidated PAT is INR 92 crore, lower than last year, primarily due to fair value changes from Ind AS accounting and GST expense.

  • GST credit disallowances impacted 75% of September sales, contributing to a 0.6% margin impact in H1 and an estimated 300-350 basis points on a run rate basis.

  • Marginal negative non-operating variance of INR 9 crore due to yield curve movements.

Key financials

3 periods

Headline

  • MFSL Revenue (excl. investment)
    ₹15,090 Cr
    YoY +18%
  • MFSL Consolidated PAT
    ₹92 Cr
  • Individual New Business Sum Assured Growth
    25%
  • Embedded Value
    ₹26,895 Cr
    YoY +15%

Q2 FY26

  • Margins
    25.5%

H1 FY26

  • VNB Growth
    27%

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.

Capital allocation

high confidence
  • Debt Debt disclosed
    • New borrowing Raised additional sub-debt with IFC as a strategic partner, strengthening solvency to 208%. ₹800 Cr
    During the quarter, we raised additional INR800 crore of sub-debt with IFC as a strategic partner to this particular round. This has helped strengthen our solvency, which now stands at 208%.

Guidance & targets

Margins

  • Sales and Margin Guidance Margins · Full Year · High confidence Maintaining earlier guidance
    As a result, we are maintaining our earlier sales and margin guidance.

    — Sumit Madan

  • Margins Margins · Full Year · High confidence 24% to 25%
    we are confident that we will maintain the margin guidance that we had given earlier of improving the margins from the previous year and be in the range of 24% to 25%.

    — Amrit Singh

Growth

  • APE Growth Growth · Full Year · High confidence 15% to 17%
    On the growth guidance, look, I mean, on an APE basis, we are growing 15%. We had given for the full year good guidance between 15%, 17%. So I think we are holding on to that number.

    — Amrit Singh

  • Industry Outperformance Growth · Future · High confidence 300 to 500 bps
    We have always maintained that we will be able to deliver better than what the industry is doing by almost around 300 to 500 bps, and I feel very confident about this.

    — Sumit Madan

Profitability

  • Operating ROEV Profitability · Next 2-3 years · High confidence 18% to 19%
    Over the next 2, 3 years, we are comfortable remaining in the range of 18%, 19%, and that is what we will try to do and target.

    — Amrit Singh

What to watch in Q3 FY26

GST Impact Mitigation

Next quarter / H2 FY26
Current 300-350 bps impact on run rate basis
Target Offsetting impact through cost controls, product mix, and distributor renegotiations

Why it matters

Verifying management's ability to offset the significant GST impact is crucial for maintaining margin guidance.

However, despite this impact through a series of actions on costs, product mix, execution, we are confident that we will maintain the margin guidance that we had given earlier of improving the margins from the previous year and be in the range of 24% to 25%.

Risks & concerns

  • GST Credit Disallowance Impact

    medium

    Non-availability of input tax credit may have a short-term impact on annualized margin, estimated at 300-350 bps on a run rate basis, but management is confident in offsetting it.

    Management acknowledged

  • Yield Curve Movements

    low

    Caused a marginal negative non-operating variance of INR 9 crore.

    Management acknowledged

  • Perception of Insurance as High-Cost Industry

    low

    Analyst raised concerns about external commentary on the high cost of insurance; management stated they operate well below regulatory expense thresholds.

    Analyst downplayed

Q&A highlights

8 direct
GST Impact and Mitigation Strategy Direct
If you do nothing, that is the impact, 300 to 350 basis points. But there are series of things that we are trying to do at our end, which beyond distribution negotiation is also cost controls, product tweaks, product mix, renegotiations across our vendor partner, looking at our outsourcing and sourcing decisions as well.

Analyst sought clarity on the magnitude of GST impact and management's specific actions to mitigate it, which is a key concern for margins.

Asked by Shreya Shivani

Channel Strategy and Axis Bank Growth Direct
proprietary channel now constitutes almost 46% of the total business and the remaining 54%, of course, coming from the partnership channel. ... Axis Bank, since you specifically asked, we have seen a growth of almost around 7% as far as Axis Bank is concerned.

Analyst inquired about the performance and strategic direction of key distribution channels, particularly the Axis Bank partnership, which is a significant contributor.

Asked by Shreya Shivani

Accounting Divergence between MFSL PBT and Max Life PBT Direct
The residual drop is just because of the Ind AS accounting standard, which actually measures mark-to-market movements all through to the P&L. And there is nothing else beyond that particular element on this particular one.

Analyst questioned a material divergence in reported profits, which could indicate underlying issues, but management clarified it's due to accounting standards.

Asked by Avinash Singh

Future Growth Aspirations and Industry Outperformance Direct
I am both optimistic and very excited about the future that works for us. We have always maintained that we will be able to deliver better than what the industry is doing by almost around 300 to 500 bps, and I feel very confident about this.

Analyst probed management's long-term growth outlook and confidence in outperforming the industry, providing insight into strategic ambition.

Asked by Avinash Singh

VNB Development and Margin Improvement Drivers Direct
A large part of this answer is product mix led, Swarnabh, some bit of support also coming in certain categories like protection and annuity, but large part of this is coming out of product mix.

Analyst sought to understand the specific drivers behind the significant VNB margin expansion, clarifying whether it was structural or tactical.

Asked by Swarnabh Mukherjee

ULIP Mix Reduction and Product Strategy Direct
That has been brought in line at around 50%. We do not see a need to go beyond it. It is important to understand that each category has a consumer and a consumer segment to it. Each of them is VNB additive and hence, kind of helps the organization at an overall level.

Analyst questioned the company's strategy regarding ULIP mix, which has implications for product profitability and overall VNB margins.

Asked by Swarnabh Mukherjee

Opex to GWP Ratio Trend Direct
So opex, the growth has been around 11%. And as I told you that the GWP has grown at around 18%. So mathematically, if you keep growing your GWP faster than the opex ratio, you will continue getting an improvement in opex-to-GWP ratios. We do expect this trend to stay for full year as well.

Analyst inquired about the sustainability of the improved opex to GWP ratio, which is a key indicator of operational efficiency and profitability.

Asked by Kushagra Goel

Product Mix and Channel Differences (Protection vs. Savings) Direct
Protection selling, by nature, is a bit of a long selling because it kind of entails medicals, collecting financial documents, and the time that it takes to close the protection sale is always longer. And we have seen the ability to navigate and leverage this in proprietary channels to be higher. Then partnership channels where savings and instant product, which actually can be issued quickly find more popularity.

Analyst sought to understand the strategic rationale behind different product mixes across proprietary and partnership channels, particularly the higher protection share in proprietary channels.

Asked by Nischint Chawathe

3 min read 7 chapters

Detailed narrative

Strategic Priorities and Performance

Max Financial Services is focused on amplifying core priorities: strengthening customer-first approach, accelerating digital and data-led growth, deepening partnerships, and driving sustainable long-term value. The company has made strong progress on these fronts, with execution discipline and nurturing culture. Recent GST changes have improved affordability of insurance products, with full benefits passed to customers, supporting stronger demand, especially in the protection segment.

Sustainable Growth Drivers

Individual adjusted first year premium grew 18% in H1 FY26, more than double the private sector growth of 8%, improving private market share by 83 basis points to 10.1%. Proprietary channels, including online business with a 68% 3-year CAGR and offline proprietary with 26% APE growth in Q2 FY26, remain a cornerstone. Partnership business grew 10% in Q2 APE terms, with new partnerships contributing around 5% of individual APE. The NRI segment consistently contributes 13% of total sales, and the company received SEZ approval to establish an office in GIFT City.

Product Innovation and Margins

Non-participating savings products continue strong performance. Retail protection and health segment grew 36% in H1 FY26, contributing 13% of overall sales, with a 37% rider attachment rate. Group credit protection business grew 24% in Q2. Annuity business saw significant growth of 85% in H1 FY26 and 122% in Q2 FY26. The overall balancing of product mix, particularly the shift in Axis Bank's ULIP mix to 50% from over 60%, expanded margins from 23.6% in Q2 FY25 to 25.5% in Q2 FY26, leading to a 27% VNB growth in H1 FY26.

Customer Centricity and Digital Transformation

The company maintains market-leading retention and satisfaction metrics, with 13-month persistency at 83% and 25-month persistency at an all-time high of 76% in Q2 FY26. Net Promoter Score improved to 57, and grievance incidence rate improved to 38. Digital transformation efforts, including a mobile app with over 4 lakh installations and high ratings, and the mSpace platform with 90% adoption, have enhanced customer experience and operational efficiency. AI-driven tools like cross-sell engines and income estimation models are improving sales and underwriting processes, while GenAI initiatives are scaling across the enterprise.

Financial Performance Overview

At the MFSL level, revenue excluding investment grew 18% in H1 to INR 15,090 crore, though consolidated PAT was INR 92 crore, lower than last year due to Ind AS fair value changes and GST expense. Axis Max Life's gross written premium and renewal premium both grew 18%. Individual new business sum assured grew 25% to INR 2.16 lakh crore. Embedded Value stood at INR 26,895 crore, a 15% YoY growth, with an Annualized Operating ROEV of 16.3%. Policyholder opex to GWP was 15.5%, growing 11%.

GST Impact and Mitigation Strategy

The non-availability of input tax credit due to recent GST changes is expected to have a short-term impact on annualized margin, estimated at 300-350 basis points on a run rate basis. Management noted that 75% of September sales were impacted, contributing 0.6% to H1 margin impact. To offset this, the company is implementing focused initiatives including distributor renegotiations, cost optimization, and operational efficiencies, and remains confident in maintaining its earlier sales and margin guidance of 24-25%.

Channel Strategy and Growth

The proprietary channel now accounts for 46% of the total business, with the remaining 54% from partnership channels. While Axis Bank channel growth was around 7%, other new acquisitions and partnerships showed over 100% growth. Management is optimistic about Axis Bank's performance in H2, expecting better numbers due to strategic changes and focus on specific verticals within the bank. The company continues to expand its distribution footprint by adding 31 new partners across retail and group segments in H1 FY26.

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