For Max Financial Services, capital infusion to boost growth plans
₹1,612 crores. With this, Axis Group will collectively hold 19.02%. Analysts from Motilal Oswal Financial Services point out that with the stake increase, a key concern for the stock was addressed and will support Max Life’s solvency ratio which stood at 188% in the June quarter (Q1FY24).
Also, healthy Q1 performance and favourable comments from the management on the company’s prospects augur well. The capital infusion is expected to provide growth visibility for the next 18-24 months, and the management expects to grow its annualized premium equivalent (APE) by more than 20% in the medium-term. The key focus will be on retail protection and retirement, particularly annuity products.
Additionally, it also plans to continue expanding its distribution channel, including bancassurance partnerships (bank partnerships), number of agents, and onboarding brokers. In this regard, during Q1, the company partnered with South Indian Bank along with five brokers and corporate agents. The company is already partnered with 7-8 small banks in recent months.
Its key bank partner, Axis Bank, is also expected to drive growth. For Max Life, the Axis Bank channel accounts for about 52% of the overall bank channel. Also, the company has been making efforts to grow its own channel and e-commerce platform.
Further, the management also stated that it plans to focus more on growth. This means it intends to increase the number of policies being sold (volume) while the value of new business margin (VNB) could take a backseat. This, along with the expansion of its distribution channel, would mean that the operating costs are expected to be on the higher side.
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