Max Financial Services hits 52-week high after Q4 earnings; CLSA raises target

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Max Financial Services share price gained over 3 percent in early trade on Wednesday to hit a fresh 52-week high of Rs 1,050.25 apiece after the company reported a multi-fold jump in consolidated net profit for the quarter ended March 2021.

Max Financial Services hits 52-week high after Q4 earnings; CLSA raises target
Max Financial Services share price gained over 3 percent in early trade on Wednesday to hit a fresh 52-week high of Rs 1,050.25 apiece after the company reported a multi-fold jump in consolidated net profit for the quarter ended March 2021.
The company posted a net profit of Rs 70 crore for the fourth quarter of fiscal 2021 as compared to a net profit of Rs 6.7 crore in the same period a year ago.
Consolidated revenue during the quarter was at Rs 9,760 crore in the quarter, up 129 percent from Rs 4,266 crore in Q4FY20.
“A steep surge in the profit after tax (net profit) was largely due to higher investment income, reversal of provision for impairment on financial assets, low tax expense and a partial offset by new business strain due to shift in product mix towards non-par business,” it said.
The company’s sole operating subsidiary Max Life Insurance recorded a 22 percent rise in its total new business premium (individual and group) to Rs 6,826 crore in FY21. In terms of individual APE (adjusted premium equivalent), it grew by 19 percent to Rs 4,907 crore.
The renewal premium income of the insurer rose by 15 percent to Rs 12,192 crore, taking the gross premium to Rs 19,018 crore, up by 18 percent from a year ago.
Global brokerage firm CLSA said that Max Financial Services has outperformed its peers in FY21 on annualised premium equivalent (APE) growth (19 percent YoY) and protection growth and VNB growth.
With a VNB surprise and a rollover to Jun-22, CLSA reiterates a buy rating and raised its target price to Rs 1,350 per share from Rs 1,225 earlier. Max Financial Services remains CLSA’s preferred insurance picks.
“We see five reasons to buy: Max is a consistent share gainer with the Axis Bank deal, gains may accelerate; Max has narrowed its cost gap versus peers, leading to lower dependence on PAR products and a diversified product mix; Max has the highest agency efficiencies and one of the fastest-growing banca partnerships; Max’s VNB margins at 27 percent and ROEVs of more than 20 percent are the industry’s highest and the valuation discount to HDFC Life could likely narrow, given a high VNB margin/ROEV profile,” CLSA said.
At 10:50 am, the shares of Max Financial Services were trading flat at Rs 1,014 apiece on the BSE.

Market Movers

CompanyPriceChange%Gain
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Axis Bank750.90 14.65 1.99
ICICI Bank645.30 10.15 1.60
HDFC Life692.55 10.85 1.59
HUL2,391.95 27.35 1.16
CompanyPriceChange%Gain
Asian Paints3,041.85 93.75 3.18
Axis Bank750.75 14.50 1.97
ICICI Bank645.05 9.95 1.57
HUL2,391.15 26.30 1.11
IndusInd Bank1,033.55 9.35 0.91
CompanyPriceChange%Gain
Asian Paints3,042.20 92.30
Axis Bank750.90 14.65
ICICI Bank645.30 10.15
HDFC Life692.55 10.85
HUL2,391.95 27.35
CompanyPriceChange%Gain
Asian Paints3,041.85 93.75
Axis Bank750.75 14.50
ICICI Bank645.05 9.95
HUL2,391.15 26.30
IndusInd Bank1,033.55 9.35

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