Max Financial Services reports strong Q4 earnings

Max Financial Services reports strong Q4 earnings

Shares of Max Financial Services 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% from Rs 4,266 crore in Q4FY20.
The surge in 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’s sole operating subsidiary Max Life Insurance recorded a 22% 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% to Rs 4,907 crore.
The renewal premium income of the insurer rose by 15% to Rs 12,192 crore, taking the gross premium to Rs 19,018 crore, up by 18% from a year ago.
Max Financial Services has outperformed its peers in FY21 on annualised premium equivalent (APE) growth (19% YoY) and protection growth and VNB growth.
Max is a consistent share gainer with the Axis Bank deal, gains are expected to 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% and ROEVs of more than 20% are the industry’s highest and the valuation discount to HDFC Life could likely narrow, given a high VNB margin/ROEV profile.

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