Capitaline

Results 20-Oct-22

Analysis

Max Financial Services

Steady performance with higher margins

Max Financial Services has recorded 0.10% decline in income from operations to Rs 9316.09 crore in Q2FY2023. The revenue of Life Insurance (99.78% of total revenues) segment has gone down 0.14% to Rs 9,301.98 crore. The revenue of Business Investments (0.22% of total revenues) segment has gone up 44.90% to Rs 20.72 crore. PBIT of Life Insurance segment rose 39.96% to Rs 69.17 crore (accounting for 90.07% of total PBIT). PBIT of Business Investments segment rose 65.51% to Rs 7.63 crore (accounting for 9.93% of total PBIT).

The Capital employed for Life Insurance (31.73% of total) segment has gone up 12.06% to Rs 3166.41 crore. The Capital employed for Business Investments (68.27% of total) segment has gone up 0.94% to Rs 6811.30 crore.

Overall OPM has increased to 0.84% in Q2FY2023 from 0.59% in Q2FY2022, leading to 41.17% rise in operating profit to Rs 77.97 crore. Other expenditure as a percentage of total income moved down to 99.04% from 99.36% in Q2FY2023. The staff cost as a percentage of total income increased to 0.13% from 0.06% in Q2FY2023.

Other income increased 229.95% to Rs 6.5 crore. Interest cost increased 55.25% to Rs 9.47 crore. Depreciation moved down 3.31% to Rs 1.17 crore. PBT moved up 47.99% to Rs 73.83 crore.

The effective tax rate increased to 16.55% in Q2FY2023 compared to 4.49% in Q2FY2022. Provision for tax was expense of Rs 12.22 crore, compared to Rs 2.24 crore. Profit after tax rose 29.30% to Rs 61.61 crore.

There was profit attributable to non-controlling interest of Rs 10.32 crore as compared to Rs 8.02 crore. The share of profit of associate were nil in both the periods. Finally, Net profit attributable to owners moved up 29.42% to Rs 51.29 crore.

Max Life reported an Embedded Value of Rs 14704 crore, while the Operating Return on EV (RoEV) over H1FY23 stood at 15.7%. Embedded value per share stood at Rs 426.1 end September 2022.

Business highlights

During H1FY23, New Business Premium grew 9% to Rs 3378 crore and Annualised Premium Equivalent (APE) was up by 2% to Rs 2200 crore driven by strong growth in proprietary channels. Proprietary channels new business premiums grew by 23% year-on-year to Rs 773 Crore as result contribution of Proprietary channels to total new sales increased from 29% to 33% in H1FY23.

The renewal premium income (including group) rose 14% to Rs 6526 crore, taking the gross written premium to Rs 9904 crore, an increase of 12% over the half year of the previous financial year.

New Business Margin (NBM) rose to 26.7% in H1FY23, an increase of 140 bps. NBM expanded to 31.4% in Q2FY23, rising 230 bps over corresponding previous quarter mainly driven by increase in product profitability. Value of New Business (VNB) grew by 7% to Rs 586 crore in H1FY23.

Max Life operating expenses (policyholders) to gross premium ratio improved from 15.5% in H1FY22 to 15.1% in H1FY23 due to effective cost management efforts and higher business growth.

Max Life delivered a strong performance, and focus on retirement led to growth of 86% in Annuity business in H1 FY23. Max Life Pension Fund Management commenced business operations in Q2FY23.

Max Life's assets under management (AUM) were Rs 113352 crore end September 2022, up 13% over the previous year.

Max Life has secured a new banca partnership with Tamilnad Mercantile Bank (TMB) for term of 5 years. Also entered into partnership agreements with leading brokers such as Turtlemint, Bluechip, NJ Brokers, Muthoot Insurance Brokers and Vkover.

Mohit Talwar, Managing Director, Max Financial Services Limited, said, “By introducing new innovative products, secular growth across proprietary channels and balance product mix, we have registered a strong growth in H1FY23. Our focus lies in continuous growth through strategic partnerships, accelerate partnership channels growth and improve market share.”

Financial performance H1FY2023

The income from operation of Max Financial Services declined 17.55% to Rs 12587.78 crore in H1FY2023. The revenue of Life Insurance (99.73% of total revenues) segment has gone down 17.60% to Rs 12,565.46 crore. The revenue of Business Investments (0.27% of total revenues) segment has gone down 80.16% to Rs 34.08 crore.

PBIT of Life Insurance segment rose 8.49% to Rs 151.93 crore (accounting for 93.59% of total PBIT). PBIT of Business Investments segment fell 92.66% to Rs 10.41 crore (accounting for 6.41% of total PBIT).

The Capital employed for Life Insurance (31.73% of total) segment has gone up 12.06% to Rs 3,166.41 crore. The Capital employed for Business Investments (68.27% of total) segment has gone up 0.94% to Rs 6,811.30 crore.

Overall OPM has increased to 1.31% in H1FY2023 from 0.92% in H1FY2022, leading to 17.66% rise in operating profit to Rs 164.72 crore. Other expenditure as a percentage of total income moved down to 98.54% from 98.83% in H1FY2023. The staff cost as a percentage of total income declined to 0.15% from 0.26% in H1FY2023.

Other income increased 249.67% to Rs 10.7 crore. Interest cost increased 203.06% to Rs 18.82 crore. Depreciation moved down 7.75% to Rs 2.38 crore. PBT moved up 14.86% to Rs 154.22 crore.

The effective tax rate declined to 15.65% in H1FY2023 compared to 37.83% in H1FY2022. Provision for tax was expense of Rs 24.13 crore, compared to Rs 50.8 crore. Profit after tax rose 55.85% to Rs 130.09 crore.

There was profit attributable to non-controlling interest of Rs 22.44 crore in H1FY2023 as compared to profit of Rs 22.64 crore in H1FY2022. The share of profit of associate were nil in both the periods. Finally, Net profit attributable to owners rose 76.97% yoy to Rs 107.65 crore in H1FY2023.

Max Financial Services : Consolidated Results
Particulars	2209 (3)	2109 (3)	Var (%)	2209 (6)	2109 (6)	Var (%)	2203 (12)	2103 (12)	Var (%)
Income from Operations	9316.09	9325.4	0	12587.78	15267.45	-18	31181.14	31273.91	0
OPM (%)	0.84	0.59		1.31	0.92		1.32	1.87
OP	77.97	55.23	41	164.72	140	18	411.95	584.38	-30
Other Inc.	6.5	1.97	230	10.7	3.06	250	6.44	14.11	-54
PBDIT	84.47	57.2	48	175.42	143.06	23	418.39	598.49	-30
Interest	9.47	6.1	55	18.82	6.21	203	24.74	0.27	9063
PBDT	75	51.1	47	156.6	136.85	14	393.65	598.22	-34
Depreciation	1.17	1.21	-3	2.38	2.58	-8	5	5.32	-6
PBT before EO	73.83	49.89	48	154.22	134.27	15	388.65	592.9	-34
EO	0	0	-	0	0	-	0	0	-
PBT after EO	73.83	49.89	48	154.22	134.27	15	388.65	592.9	-34
Tax Expenses	12.22	2.24	446	24.13	50.8	-53	70.25	33.15	112
PAT	61.61	47.65	29	130.09	83.47	56	318.4	559.75	-43
Profit attributable to non-controlling interest	10.32	8.02	29	22.44	22.64	-1	65.03	134.36	-52
Share of Profit/(Loss) from Associates	0	0	-	0	0	-	0	0	-
Net profit attributable to owners	51.29	39.63	29	107.65	60.83	77	253.37	425.39	-40
EPS (Rs)*	5.9	4.6		6.2	3.5		7.3	12.3
* Annualised on current equity of Rs 69.02 crore, Face value of Rs 2, Excluding extraordinary items.
EO : Extraordinary items, Figures in Rs crore, Source: Capitaline Corporate Database

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