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    Max Financial

    MFSL
    Financial Services·14 May 2025
    Management Summary

    Max Financial Services delivered a strong Q4 and FY25, outperforming the industry in premium growth and maintaining robust margins despite regulatory changes and market volatility. Key highlights include significant growth in protection and individual new business sum assured, improved persistency, and a healthy solvency ratio. The company is focused on product innovation, digital transformation, and is optimistic about future growth in bancassurance and e-commerce, while actively pursuing a reverse merger.

    Highlights

    6

    • Individual adjusted first year premium grew by 20% in FY'25, surpassing private sector growth of 15% and overall industry growth of 10%.

    • Protection business grew by 35% in FY'25, and Individual New business sum assured by 31%, maintaining rank #3.

    • Overall FY'25 New Business Margin (NBM) stood at 24%, at the outer range of expectations (23-24%).

    • 13th month persistency increased by 100 basis points to 87.6%, and 25th month persistency increased by 380 basis points to 74%.

    • Embedded Value (EV) as of March 31, 2025, is ₹25,192 crore, with an annualized total return on EV of 29%.

    • Solvency stands at 201%, up from 172% last March, after raising ₹500 crore of subordinate debt.

    Concerns

    3

    • Overall FY'25 margins were lower by 250 basis points compared to last year, primarily due to a lower proportion of non-PAR and higher proposition of ULIPs (44% vs 36% last year).

    • Bancassurance channel growth slowed in Q4 (7%) and for the full year (around 10%) compared to earlier periods, attributed to banks' focus on deposits.

    • The company is awaiting legislative clarity for the reverse merger, with an expected timeline of August-September, which could impact strategic flexibility.

    Key financials

    Metrics

    28

    Periods

    3

    Headline

    25
    • MFSL Consolidated Revenue (excl. investment income)
      ₹32,620 Cr
      YoY+12%
    • Consolidated PAT
      ₹403 Cr
    • Max Life Renewal Premiums
      ₹21,049 Cr
      YoY+14.0%
    • Max Life Gross Premiums
      ₹33,223 Cr
      YoY+13%
    • Value of New Business (VNB)
      ₹2,107 Cr
      YoY+7.0%

    Q4

    1
    • Margin
      28.1%

    FY25

    2
    • Axis Bank Channel Growth
      10%
    • New Partners Added
      44 count

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Debt

    Debt disclosed

    M&A

    Reverse Merger

    merger · pending regulatory · Consideration ₹NaN (undisclosed)

    Guidance & targets

    4
    CategoryTargetPriority
    Profitability
    New Business Margin (NBM)
    24%-25%
    		Medium
    Revenue
    Growth vs. Private Industry
    300-400 basis points upside versus how the private industry grows
    		Medium
    Volume
    Axis Bank Channel Growth
    13%-14%
    		Medium
    Volume
    Number of policies in non-PAR Savings
    Increase
    		High

    Reverse Merger Progress

    August-September timeframe.
    CurrentWaiting for legislative clarity, internal decision to wait for act change.
    TargetAct change, initiation of reverse merger process.

    Why it matters

    Completion of the reverse merger is a significant strategic event for the company, impacting its listing structure and regulatory compliance.

    I think we are hoping that the clarity would have come from the change in the act which is expected or which was expected or is expected during monsoon session, which will pave the path for reverse merger in our case... hopefully, when it comes and I am quite hopeful that it will come in the month of August-September timeframe. We will immediately begin the exercise.

    How to verify

    capital_allocation.m_and_a[target='Reverse Merger'].status

    Risks & concerns

    4
    RiskSeverity

    Regulatory changes and market volatility

    FY'25 was marked by substantial product regulatory changes and market volatility, but Axis Max Life remained resilient and adapted. — Management acknowledged

    medium

    Impact of surrender guidelines on margins

    Overall impact reduced to less than 50 basis points for Q4, with FY'25 margin at 24% due to actions taken (riders, protection, health). — Management acknowledged

    low

    Bancassurance channel growth slowdown

    Growth in Axis Bank channel was 10% in FY25, slower than expected, attributed to banks' focus on deposits and industry-wide slowdown, but management is optimistic for FY26. — Analyst acknowledged

    medium

    Delay in Reverse Merger

    Company is desirous of reverse merger but waiting for legislative clarity, expecting resolution by August-September timeframe. — Management acknowledged

    medium

    Q&A highlights

    8

    “We grew close 24% as against private growth of around 2%. So that is a good upside... Coming to the guidance, it is really giving absolute guidance is not the best idea. However, I will peg ourselves to where the industry moves. One would desire to maintain at least 300-400 basis points upside versus how the private industry grows... On margins, we finished 24% and I have been repeatedly saying that we should be in a number which is slightly higher than that. But at the same time, we are not aspiring to have phenomenally higher margins at the cost of growth. So the way we are going to maneuver this year is to try NP in the range of 24%-25% and try to grow faster than the industry. That will be the desire.”

    Provides early insights into FY26 performance, specific growth figures for April, and detailed guidance on both growth relative to industry and NBM targets.

    asked by Avinash Singh (Emkay Global Financial Services Limited)

    2 min read7 chapters

    Detailed Narrative

    01

    Strong FY25 Performance Amidst Regulatory Headwinds

    Max Financial Services demonstrated resilience in FY25, with Individual adjusted first year premium growing by 20%, outperforming the private sector's 15% and overall industry's 10% growth. Despite substantial product regulatory changes and market volatility🌐, the company regained rank #4 for the full year and achieved rank #3 in Q4. This agility and strong distribution capabilities enabled consistent growth and value delivery.

    02

    Robust Profitability and Margin Management

    The company reported a New Business Margin (NBM) of 24% for FY25, aligning with its 23-24% expectation, despite a 250 basis point reduction from the previous year primarily due to a higher ULIP proportion (44% vs 36%). Q4 NBM stood at 28.1%. Strategic actions, including a 300% growth in rider APE and a 35% growth in the Protection business, significantly cushioned the impact of surrender regulations.

    03

    Enhanced Customer Satisfaction and Persistency

    Max Life maintained its rank #2 in customer satisfaction for the third consecutive year, as per Hansa Research's syndicated NPS study. The company also saw significant improvements in persistency, with the 13th month persistency increasing by 100 basis points to 87.6% and the 25th month persistency rising by 380 basis points to 74%. Grievance handling also improved, with GIR reducing to 38 in FY'25 from 44 in FY'24.

    04

    Strategic Digitalization and Operational Efficiency

    The company made substantial progress in digital capabilities, launching mSpace, a super app to streamline sales processes, with 90% adoption for supervisors and 100% for direct sales force. AI-powered initiatives like mPulse Medical Vital Face Scan and risk analytics engines (e.g., Shield, MediCheck) helped identify and mitigate potential claim risks exceeding ₹1,500 crores in FY'25, enhancing operational efficiency and customer experience.

    05

    Embedded Value Growth and Capital Strength

    The Embedded Value (EV) stood at ₹25,192 crore as of March 31, 2025, reflecting an annualized total return on EV of 29%. The annualized operating RoEV was 19.1%. The company strengthened its capital position by raising ₹500 crore of subordinate debt in Q4, resulting in a solvency ratio of 201%, up from 172% in March last year. Assets Under Management (AUM) grew by 16% to ₹1.75 lakh crore.

    06

    Bancassurance and E-commerce Channel Performance

    Bancassurance channels delivered 12% growth in FY'25, with Axis Bank contributing 48% of the total Banca business and maintaining a 66% counter share. While Q4 saw a slowdown to 7% growth in the Axis Bank channel, management is optimistic about achieving 13-14% growth in FY26. The e-commerce channel continued its strong performance, driven by data integration and product innovation, especially in ULIP and index-linked products.

    07

    Product Innovation and Future Outlook

    Max Life rolled out 80 product interventions in FY'25, including STAR ULIP and Smart-Term Plan Plus, contributing to 35% growth in Protection business. For FY26, the company aims for a New Business Margin of 24-25% and to grow 300-400 basis points faster than the private industry. The company is also actively pursuing a reverse merger, with clarity expected in the August-September timeframe.

    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.