Max Financial Services Ltd (BOM:500271) Q4 2025 Earnings Call Highlights: Strong Revenue Growth ...

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15-05-2025

Consolidated Revenue (excluding investment income): INR32,620 crores, a growth of 12% in FY25.
Consolidated PAT: INR403 crores.
Renewal Premiums: Grew by 14% to INR21,049 crores.
Gross Premiums: Grew by 13% to INR33,223 crores.
Value of New Business (VNB): INR2,107 crores for FY25, with a growth of 7%.
New Business Margin (NBM): 24%.
Embedded Value (EV): INR25,192 crores as of March 31, 2025.
Annualized Total Return on EV: 29%.
Annualized Operating Return on EV (ROEV): 19.1%.
Policyholder OpEx to GWP: 13.6%.
Total Cost to GWP: 23.1%.
Profit Before Tax (PBT): INR448 crores, a growth of 20% for FY25.
Solvency Ratio: 201%, up from 172% last March.
Assets Under Management (AUM): Approximately INR1.7 lakh crores, a growth of 16%.
Warning! GuruFocus has detected 5 Warning Sign with BOM:500271.
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Max Financial Services Ltd (BOM:500271) reported a consolidated revenue growth of 12% in FY25, reaching INR32,620 crores.
The company added 44 new partners across retail and group channels in FY25, enhancing its distribution network.
Max Financial Services Ltd (BOM:500271) achieved a 35% growth in its protection business and a 31% increase in individual new business sum assured.
The company launched innovative products like Star ULIP and Smart Term Plan Plus, contributing to product diversification and growth.
Max Financial Services Ltd (BOM:500271) maintained a high customer satisfaction ranking, with a six-point increase in Net Promoter Scores, indicating strong customer engagement.
Margins for the full year were 24%, a decrease of 250 basis points compared to the previous year, primarily due to a higher proportion of ULIPs.
The growth in the bank assurance channel slowed in the fourth quarter, with Axis Bank's growth at 7%, reflecting broader industry trends.
The company faces challenges from regulatory changes, particularly concerning surrender value guidelines, which impacted margins.
Despite strong growth in e-commerce, the company acknowledges that the base effect may limit similar growth rates in the future.
The reverse merger process is delayed, pending regulatory clarity, which could impact strategic initiatives.
Q: What is driving Max Financial's impressive growth in April, and how do you see growth and margins in FY26? A: Prashant Tripathy, CEO, noted that April's growth of 24% was across all lines of business and channels. The company aims to maintain a growth rate 300-400 basis points above the private industry average, which is expected to be 13-14%. For margins, they aim for a range of 24-25%, balancing growth and profitability.
Q: What is the company's stance on regulatory changes, particularly regarding bank assurance? A: Prashant Tripathy stated that there has been no formal communication about changes in bank assurance regulations. The company has not heard any official indications of upcoming changes and suggests not giving much heed to unverified sound bites.
Q: Why has there been a recent success in attaching Riders, and what are the timelines for the reverse merger? A: Prashant Tripathy explained that the success in attaching Riders is due to industry evolution and execution capabilities. Regarding the reverse merger, the company is waiting for legislative clarity expected in the monsoon session, hoping to proceed by August or September.
Q: Can you explain the growth expectations for the protection business and the performance of the bank assurance channel? A: Prashant Tripathy highlighted the under-penetration of protection products, with only 34% ownership in top cities, driving a 25% CAGR expectation. For bank assurance, Amrit Singh, CFO, noted a 7% growth in Q4, with Axis Bank contributing 48% to total sales. The company is optimistic about future growth in this channel.
Q: How is the e-commerce channel performing, and what is its sustainability? A: Sumit Madan, Chief Distribution Officer, emphasized the channel's strong performance, driven by data integration and segment focus. The company leads in protection and is expanding in savings, though growth rates may moderate due to a larger base.
Q: What is the impact of surrender value changes on margins, and how will it affect FY26? A: Amrit Singh stated that the impact of surrender value changes has been neutralized through product adjustments and is expected to have minimal effect on FY26 margins.
Q: How is the company diversifying its bank assurance partnerships beyond Yes Bank? A: Sumit Madan noted successful diversification with new partnerships, achieving top counter shares in several banks, supported by strong distribution and training capabilities.
Q: What is the dividend strategy, and how often does the persistency formula change? A: Prashant Tripathy confirmed that dividends are not planned until Axis Max Life is listed, as capital is needed for growth. Amrit Singh added that persistency formula changes are infrequent, with the last change in FY24.
Q: Why has the ULIP case size declined, and what is the outlook for non-par savings policies? A: Amrit Singh attributed the ULIP decline to customer segment choices and channel focus. Prashant Tripathy expects an increase in non-par savings policies as the product mix evolves.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.