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    Max Financial

    MFSL
    Financial Services·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

    5
    • 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

    3
    • 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.

    What Changed2

    vs Q3 FY26

    Guidance items2 → 5 (+3)Risks discussed4 → 3 (-1)
    Key financials

    Metrics

    6

    Periods

    3

    Headline

    4
    • 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

    1
    • Margins
      25.5%

    H1 FY26

    1
    • VNB Growth
      27%

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Debt

    Debt disclosed

    Guidance & targets

    5
    CategoryTargetPriority
    Margins
    Sales and Margin Guidance
    Maintaining earlier guidance
    High
    Margins
    Margins
    24% to 25%
    High
    Growth
    APE Growth
    15% to 17%
    High
    Growth
    Industry Outperformance
    300 to 500 bps
    High
    Profitability
    Operating ROEV
    18% to 19%
    High

    GST Impact Mitigation

    Next quarter / H2 FY26
    Current300-350 bps impact on run rate basis
    TargetOffsetting 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%.

    How to verify

    guidance_and_targets[category='Margins']

    Risks & concerns

    3
    RiskSeverity

    GST Credit Disallowance Impact

    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

    medium

    Yield Curve Movements

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

    low

    Perception of Insurance as High-Cost Industry

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

    low

    Q&A highlights

    8

    “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

    3 min read7 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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%.

    06

    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%.

    07

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.