Capitaline

Results 10-Aug-23

Analysis

Max Financial Services

Healthy business growth and improving VNB margins

The income from operation of Max Financial Services increased 180.23% to Rs 9168.12 crore in Q1FY2024. The revenue of Life Insurance (99.92% of total revenues) segment has gone up 180.85% to Rs 9,165.61 crore. The revenue of Business Investments (0.08% of total revenues) segment has gone down 45.28% to Rs 7.31 crore.

PBIT of Life Insurance segment rose 54.00% to Rs 127.45 crore (accounting for 102.81% of total PBIT). PBIT of Business Investments reported loss of Rs 3.48 crore (accounting for (-)2.81% of total PBIT) compared to profit of Rs 2.78 crore.

The Capital employed for Life Insurance (34.55% of total) segment has gone up 13.75% to Rs 3,597.83 crore. The Capital employed for Business Investments (65.45% of total) segment has gone up 0.96% to Rs 6,815.85 crore.

Overall OPM eased to 1.36% in Q1FY2024 from 2.65% in Q1FY2023, leading to 44.06% rise in operating profit to Rs 124.97 crore. Other expenditure as a percentage of total income moved up to 98.52% from 97.14% in Q1FY2024. The staff cost as a percentage of total income declined to 0.12% from 0.23% in Q1FY2024.

Other income declined 20.48% to Rs 3.34 crore. Interest cost declined 0.32% to Rs 9.32 crore. Depreciation moved down 18.18% to Rs 0.99 crore. PBT moved up 46.78% to Rs 118.00 crore.

The effective tax rate declined to 14.30% in Q1FY2024 compared to 14.82% in Q1FY2023. .Provision for tax was expense of Rs 16.87 crore, compared to Rs 11.91 crore. Profit after tax rose 47.68% to Rs 101.13 crore.

There was profit attributable to non-controlling interest of Rs 13.45 crore as compared to Rs 12.12 crore. The share of profit of associate were nil in both the periods. Finally, Net profit attributable to owners moved up 55.57% to Rs 87.68 crore.

Business performance

Pursuant to the approval of the Max Financial and Max Life Boards, Axis Bank will be infusing Rs 1612 crore. Axis Bank has received requisite approval from RBI for infusion of further capital in Max Life. Post subscription to the preferential issue of shares, Axis Entities shall collectively hold 19.02% equity share capital of Max Life. Axis Bank will have the right to acquire additional 0.98% stake from MFSL. On the allotment of the said share capital to Axis Bank Limited, the shareholding held by Max Financial in Max Life will stand reduced to 80.98% from the current level of 87%.

During Q1FY24, Max Life New Business Premium grew 25% to Rs 1857 crore and Annualised Premium Equivalent (APE) Up by 10% to Rs 1113 crore driven by strong growth in proprietary channels. Proprietary channels new business premiums grew by 23% year-on-year to Rs 421 crore as result contribution of proprietary channels to total new sales increased from 34% in Q1FY23 to 39% in Q1FY24.

Further, the renewal premium income (including group) rose 15% to Rs 3014 crore, taking the gross written premium to Rs 4871 crore, an increase of 19% over the corresponding previous quarter. Further New Business Margin (NBM) expanded to 22.2% in Q1FY24, improved 110 bps over corresponding previous quarter mainly driven by change in product mix. Value of New Business (VNB) grew by 16% to Rs 247 crore in Q1FY24.

Max Life reported an Embedded Value of Rs 16938 crore, while the Operating Return on EV (RoEV) over Q1FY24 stood at 14.0%, improved by 50 bps.

Max Lifes assets under management (AUM) were Rs 129127 crore end June 2023, Up 21% over the corresponding previous quarter

During Q1FY24, Max Life delivered a strong performance, and focus on retirement led to growth of 260% in the Annuity business in Q1 FY24. Max Life Pension Fund Management Limited added highest AUM among new PFMs in Q1 FY24, AUM increased to Rs 293 crore end June 2023.

Analjit Singh, Chairman Max Life Insurance and Max Financial Services said, “The increase stake in Max Life by Axis Bank, has been long awaited and will lead to a more natural balanced ownership level considering the importance of the power of distribution through the Banca channel of Axis Bank.”

Prashant Tripathy, MD and CEO, Max Life Insurance, said, “The additional investment by Axis Bank will hugely strengthen our insurance franchise. On the back of our innovative and balanced product mix, and strong growth in proprietary business, we have delivered a strong quarter. We are focused to drive new and strategic partnerships to unlock growth for the company along with building momentum in the existing ones.”

Financial performance FY2023

The income from operation of Max Financial Services increased 0.74% to Rs 31412.67 crore as on 31 March 2023. Overall OPM has increased to 1.75% as on 31 March 2023 from 1.32% as on 31 March 2022, leading to 33.71% rise in operating profit to Rs 550.90 crore. Other expenditure as a percentage of total income moved down to 98.16% from 98.57% as on 31 March 2023. The staff cost as a percentage of total income declined to 0.09% from 0.12% as on 31 March 2023.

Other income increased 188.70% to Rs 18.39 crore. There is 51.41% rise in interest cost at Rs 37.46 crore and 7.40% decline in depreciation to Rs 4.63 crore, Profit before tax increased 35.65% to Rs 527.20 crore. There is no extraordinary item. After which, PBT increased 35.65% to Rs 527.20 crore.

The effective tax rate declined to 14.28% as on 31 March 2023 compared to 18.08% as on 31 March 2022. Provision for tax was expense of Rs 75.31 crore, compared to Rs 70.25 crore. Profit after tax rose 41.93% to Rs 451.89 crore.

There was profit attributable to non-controlling interest of Rs 73.41 crore as on 31 March 2023 as compared to Rs 65.03 crore as on 31 March 2022. The share of profit of associate were nil in both the periods. Finally, Net profit attributable to owners rose 49.38% yoy to Rs 378.48 crore as on 31 March 2023.

Max Financial Services : Consolidated Results
Particulars	2306 (3)	2206 (3)	Var %	2303 (12)	2203 (12)	Var %
Income from Operations	9168.12	3271.69	180	31412.67	31181.21	1
OPM (%)	1.36	2.65		1.75	1.32
OP	124.97	86.75	44	550.90	412.02	34
Other Inc.	3.34	4.20	-20	18.39	6.37	189
PBDIT	128.31	90.95	41	569.29	418.39	36
Interest	9.32	9.35	0	37.46	24.74	51
PBDT	118.99	81.60	46	531.83	393.65	35
Depreciation	0.99	1.21	-18	4.63	5.00	-7
PBT before EO	118.00	80.39	47	527.20	388.65	36
Tax Expenses	16.87	11.91	42	75.31	70.25	7
PAT	101.13	68.48	48	451.89	318.40	42
Non-controlling interest	13.45	12.12	11	73.41	65.03	13
Share of P&L from Asso.	0.00	0.00	-	0.00	0.00	-
Net profit	87.68	56.36	56	378.48	253.37	49
EPS (Rs)*	10.2	6.6		11.0	7.4
EV (Rs)/share	493.0	410.1		473.3	410.7
* Annualised on current equity of Rs 68.72 crore, Face value of Rs 2, Excluding extraordinary items.
Figures in Rs crore
Source: Capitaline Corporate Database

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