Concall AI

Max Financial Services Limited — Q4 FY25 earnings call

Call held 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

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

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

3 periods

Headline

MFSL Consolidated Revenue (excl. investment income)
₹32,620 Cr
YoY +12%
Consolidated PAT
₹403 Cr
Max Life Renewal Premiums
₹21,049 Cr
YoY +14%
Max Life Gross Premiums
₹33,223 Cr
YoY +13%
Value of New Business (VNB)
₹2,107 Cr
YoY +7%
New Business Margin (NBM)
24%
Embedded Value (EV)
₹25,192 Cr
Annualized Total Return on EV
29%
Annualized Operating RoEV
19.1%
Policyholder OPEX to GWP
13.6%
Total Cost to GWP
23.1%
Max Life 12-month FY'25 Profit Before Tax
₹448 Cr
YoY +20%
Assets Under Management (AUM)
₹1.75L Cr
YoY +16%
Individual Adjusted First Year Premium Growth
20%
Protection Business Growth
35%
Individual New Business Sum Assured Growth
31%
Rider APE Growth
300%
ULIP Proportion
44%
13th Month Persistency
87.6%
25th Month Persistency
74%
Grievance Handling (GIR)
38
Operating Variance (EV)
₹5 Cr
Non-Operating Variance (EV)
₹356 Cr
Banca Contribution to Total
55%
Axis Bank Contribution to Banca
48%

Q4

Margin
28.1%

FY25

Axis Bank Channel Growth
10%
New Partners Added
44

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	13,372	8,923	12,376	12,822	9,792 −27%	14,259 +60%	10,802 −13%	14,970 +17%
Expenses	13,199	8,834	12,356	12,703	9,771	14,181	10,808	14,803
EBITDA	173	89	20	119	21 −88%	78 −12%	-6 −130%	167 +40%
Margin	1%	1%	0%	1%	0%	1%	0%	1%
Other income	2	3	18	3	7	9	5	7
Interest	13	10	15	20	21	36	35	36
Depreciation	1	1	1	1	1	1	0	0
Profit before tax	162	81	22	101	6 −96%	50 −38%	-36 −264%	138 +37%
Tax rate	14%	14%	-73%	14%	6%	11%	-13%	14%
Net profit	139	70	38	86	6 −96%	45 −36%	-32 −184%	118 +37%
EPS	3.26	1.62	0.91	2.02	0.12	1.06	-0.76	2.77

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 subordinate debt with a credit rating of AA+ ₹500 Cr
Also during the quarter, we raised Rs. 500 crore of subordinate debt with a credit rating of AA+ and as a result, as we have ended the year, our solvency stands at 201%, up from 172% last March.
M&A Reverse Merger Merger · Pending regulatory · Consideration ₹[object Object] (undisclosed)

To streamline corporate structure and benefit from being a listed organization.

The timeline or reverse merger, I must highlight to you, and you would have seen our Board message to Stock Exchanges, we are very desirous to do the reverse merger. However, we are just waiting for clarity. 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 giving relief on section 35 and being listed organization, Max Financial Services, we want to keep all the stakeholders along as we do that, so 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.

Guidance & targets

Profitability

New Business Margin (NBM) Profitability · FY26 · Medium confidence 24%-25%

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.

— Prashant Tripathy

Revenue

Growth vs. Private Industry Revenue · FY26 · Medium confidence 300-400 basis points upside versus how the private industry grows

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 and just going by your data only. You talk about 13%-14% growth of private industry. So I think you should add 300 basis points more to that. That will be at least the aspiration with which we will operate.

— Prashant Tripathy

Volume

Axis Bank Channel Growth Volume · FY26 · Medium confidence 13%-14%

However, we will not really guide you to a 20% kind of growth number, but definitely more closer to the range of 13%-14% which is our expectation.

— Prashant Tripathy
Number of policies in non-PAR Savings Volume · FY26 · High confidence Increase

Yes, that will be a good assumption to make.

— Prashant Tripathy

What to watch in Q1 FY26

Reverse Merger Progress

August-September timeframe.

Current Waiting for legislative clarity, internal decision to wait for act change.

Target Act 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.

Risks & concerns

Regulatory changes and market volatility
medium

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

Management acknowledged
Bancassurance channel growth slowdown
medium

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
Delay in Reverse Merger
medium

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

Management acknowledged
Impact of surrender guidelines on margins
low

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

Q&A highlights

8 direct

April FY26 Growth & FY26 Guidance (Growth & Margins) Direct

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)

Bancassurance Regulatory Noise Direct

I confirm that basis all the meetings that we have had and have been a part of some, I have not heard any formal communication about any changes in Bancassurance... On the contrary, some of the sound bites that I have heard actually confirm that the expected regulatory posture should be consistent should not be changing a lot so that it gives more and more confidence to industry players, customers as well as investors.

Addresses a key sector-wide concern about potential regulatory changes in bancassurance, providing reassurance from management's direct interactions.

Asked by Avinash Singh (Emkay Global Financial Services Limited)

Reverse Merger Timeline & Regulatory Discussions Direct

On the reverse merger, your observation is right. Of course, there is some decision, however, I must highlight at this point of time that we reviewed the performance or our company with respect to the company which actually went through that process. We are a listed organization. There are multiple regulators involved, and we do want to make sure that we keep all the stakeholders along and hence our decision is to wait for the act to change... we are just talking for about 2 or 3 months, it is our decision internally to wait for the act change to happen before we begin this exercise.

Clarifies the company's approach to the reverse merger, indicating a preference to wait for legislative changes rather than pursuing the NCLAT route, and provides a timeline expectation (August-September).

Asked by Shreya Shivani (CLSA)

EV Operating Variance Breakdown Direct

On operating variants, there is Rs. 5 crore positive... there are some positives on the mortality and expense side and some marginal negative on the persistency and lapse side.

Provides granular detail on the drivers of the positive operating variance in Embedded Value, which is a key metric for insurance companies.

Asked by Shreya Shivani (CLSA)

Bancassurance Channel Growth & Strategy Direct

The Axis Bank growth for Quarter 4 was around 7% and the full year number as we shared is around 10%... our counter share remains stable at around 66% when on Yes Bank the counter was about 54%... our Banca contributes now about 55%-56%, of that absolute 48% is from Axis Bank... we are very optimistic about the outcomes, not just on sales growth, but also on margin growth.

Addresses concerns about slowing growth in the critical bancassurance channel, provides specific growth rates and market share data, and outlines management's optimism and strategic focus for improvement.

Asked by Supratim Datta (Ambit)

Protection Business Growth Drivers & Targets Direct

Our firm belief is that Protection in form of either pure Protection or Health or rider is an area which is under-penetrated, and it will continue to grow... our sum assured growth, 31% last year and while our market share may be lower on the total sales basis, but on sum assured basis, our market share is substantially high. We, in fact are number 3 player for last many quarters.

Explains the rationale behind the ambitious 25% CAGR target for Protection, highlighting market under-penetration and the company's strong position in sum assured.

Asked by Supratim Datta (Ambit)

E-commerce Channel Growth & Sustainability Direct

I think specifically on the e-com channel, 1) we are very it is a crowning glory for us; we have been very proud of the channel. The way we work on both, data and the integration, I think those have been the key differentiators for us. The way data drives numbers for us in the e-com channel, I think we are slightly superior from that perspective.

Discusses the strong performance of the e-commerce channel, attributing it to data-driven strategies and product innovation, and addresses its sustainability.

Asked by Nidhesh Jain (Investec)

Non-operating Variants (EV) Breakdown Direct

So in the non-operating variants, there is a negative of around Rs. 41 crore because of the brand, onetime brand change that we did. There is a positive of Rs. 219 crore around equities and debt around Rs. 170 crores.

Provides a detailed breakdown of the non-operating variance in EV, clarifying the impact of brand-related costs versus gains from equities and debt.

Asked by Nidhesh Jain (Investec)

2 min read 7 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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.

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