Capitaline

Results 01-Feb-23

Analysis

Max Financial Services

Continues to strongly improve margins and VNB

The income from operation of Max Financial Services increased 27.92% to Rs 8895.52 crore in Q3FY2023. Overall OPM has increased to 3.62% in Q3FY2023 from 1.60% in Q3FY2022, leading to 190.03% rise in operating profit to Rs 322.25 crore. Other expenditure as a percentage of total income moved down to 96.31% from 98.32% in Q3FY2023. The staff cost as a percentage of total income declined to 0.07% from 0.09% in Q3FY2023. The provisions as percentage of total income declined to 0% from 0% in Q3FY2023. Other income increased 293.06% to Rs 2.83 crore. Interest cost increased 2.17% to Rs 9.4 crore. Depreciation moved down 6.56% to Rs 1.14 crore. PBT moved up 210.17% to Rs 314.54 crore.

The effective tax rate increased to 14.37% in Q3FY2023 compared to 10.33% in Q3FY2022. Provision for tax was expense of Rs 45.19 crore, compared to Rs 10.48 crore. Profit after tax rose 196.22% to Rs 269.35 crore.

There was profit attributable to non-controlling interest of Rs 44.41 crore as compared to Rs 16.07 crore. The share of profit of associate were nil in both the periods. Finally, Net profit attributable to owners moved up 200.48% to Rs 224.94 crore.

Business performance

In the 9MFY23, the consolidated revenues eased 3% to Rs 21497 crore due to lower investment income. Excluding investment income, the consolidated revenues at Rs 15,890 crore, grew 12%.

Consolidated PAT at Rs 399 Crore in 9MFY23, up 129%, due to lower new business strain than corresponding previous period.

In Q3FY23, Consolidated Revenue at Rs 8898 crore were up 28% and Consolidated PAT at Rs 269 crore, up 196%.

During 9MFY23, New Business Premium grew 7% to Rs 5640 crore driven by strong growth in proprietary channels. Proprietary channels new business premiums grew by 19% yoy to Rs 1,262 crore as result contribution of Proprietary channels to total new sales increased from 28% in 9MFY22 to 34% in 9MFY23. Further, the renewal premium income rose 16% to Rs 10,548 Crore, taking the gross written premium Rs 16188 crore, up 12% yoy.

Max Life achieved highest New Business Margin (NBM) of 31.8% in 9MFY23, improved by 670 bps over corresponding previous period. Further NBM expanded to 39.2% in Q3FY23, an increase of 1430 bps quarter mainly driven by higher non-participating product mix. Value of New Business (VNB) grew by 25% to Rs 1179 crore in 9MFY23 and by 50% to Rs 593 crore in Q3FY23.

Max Life policyholders cost to gross premium ratio improved from 21.4% in 9MFY22 to 20.4% in 9MFY23 due to effective cost management efforts and higher business growth. Max Life reported an Embedded Value of Rs 15,547 crore, while the Operating Return on EV (RoEV) in 9MFY23 improved by 140 bps to 19.5%.

During 9MFY23, Max focused on retirement segment led to growth of 300% in Annuity business in 9MFY23. Max Life`s assets under management (AUM) were Rs 118400 crore end December 2022 - a rise of 16% over the previous period.

Max Life Pension Fund Management commenced business operations in Q2FY23, and also received PoP license which will support further growth. Max Life has secured a new banca partnership with Ujjivan Small Finance Bank and 2 new renowned Broker partnerships in Q3FY23.

Max Financial completed acquisition of 5.17% stake of Max Life from MSI in December 2022, post-acquisition Max Financial shareholding in Max Life increased to 87%

Agreements amended with Axis Bank for the right to acquire balance 7% stake sale of Max Life at Fair Market Value

Prashant Tripathy, Managing Director, Max Life Insurance Company Limited, said, "Through the introduction of new innovative products, secular growth across proprietary channels, and a balanced product mix, we achieved a strong growth in Q3FY23. In addition to accelerate bancassurance channel growth, we are focused on continuous growth through strategic partnerships and improved market share."

Financial performance 9MFY2023

The income from operation of Max Financial Services declined 3.32% to Rs 21483.3 crore in 9MFY2023. Overall OPM has increased to 2.27% in 9MFY2023 from 1.13% in 9MFY2022, leading to 93.87% rise in operating profit to Rs 486.97 crore. Other expenditure as a percentage of total income moved down to 97.62% from 98.67% in 9MFY2023. The staff cost as a percentage of total income declined to 0.12% from 0.21% in 9MFY2023.

Other income increased 257.94% to Rs 13.53 crore. Interest cost increased 82.18% to Rs 28.22 crore. Depreciation moved down 2.22% to Rs 3.52 crore. PBT moved up 98.73% to Rs 468.76 crore.

The effective tax rate declined to 14.79% in 9MFY2023 compared to 25.98% in 9MFY2022. Provision for tax was expense of Rs 69.32 crore, compared to Rs 61.28 crore. Profit after tax rose 128.77% to Rs 399.44 crore.

There was profit attributable to non-controlling interest of Rs 66.85 crore in 9MFY2023 as compared to Rs 38.71 crore in 9MFY2022. The share of profit of associate were nil in both the periods. Finally, Net profit attributable to owners rose 144.75% yoy to Rs 332.59 crore in 9MFY2023.

Max Financial Services : Consolidated Results
Particulars	2212 (3)	2112 (3)	Var %	2212 (9)	2112 (9)	Var %	2203 (12)	2103 (12)	Var %
Income from Operations	8895.52	6953.99	28	21483.30	22221.49	-3	31181.14	31273.91	0
OPM (%)	3.62	1.60	202 bps	2.27	1.13	114 bps	1.32	1.87	-55 bps
OP	322.25	111.11	190	486.97	251.19	94	411.95	584.38	-30
Other Inc.	2.83	0.72	293	13.53	3.78	258	6.44	14.11	-54
PBDIT	325.08	111.83	191	500.50	254.97	96	418.39	598.49	-30
Interest	9.40	9.20	2	28.22	15.49	82	24.74	0.27	9063
PBDT	315.68	102.63	208	472.28	239.48	97	393.65	598.22	-34
Depreciation	1.14	1.22	-7	3.52	3.60	-2	5.00	5.32	-6
PBT before EO	314.54	101.41	210	468.76	235.88	99	388.65	592.90	-34
EO	0.00	0.00	-	0.00	0.00	-	0.00	0.00	-
PBT after EO	314.54	101.41	210	468.76	235.88	99	388.65	592.90	-34
Tax Expenses	45.19	10.48	331	69.32	61.28	13	70.25	33.15	112
PAT	269.35	90.93	196	399.44	174.60	129	318.40	559.75	-43
Non-controlling interest	44.41	16.07	176	66.85	38.71	73	65.03	134.36	-52
Share of P&L from Asso.	0.00	0.00	-	0.00	0.00	-	0.00	0.00	-
Net profit	224.94	74.86	200	332.59	135.89	145	253.37	425.39	-40
EPS (Rs)*	26.1	8.7		12.9	5.3		7.3	12.3
EV (Rs)/share	450.5	388.6		450.5	388.6		410.7	342.9
* Annualised on current equity of Rs 69.02 crore, Face value of Rs 2, Excluding extraordinary items.
bps : Basis points
EO : Extraordinary items
Figures in Rs crore
Source: Capitaline Corporate Database

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