Max Financial Profit PLUMMETS 96%, Yet Stock SKYROCKETS to Record High! Aavas Financiers Jumps 8%! What's the Secret?

Max Financial Services experienced a significant decline in its second-quarter financial year 2026 net profit, which fell by 96% year-on-year to Rs 4.12 crore, compared to Rs 112.56 crore in Q2 FY25. Its revenue from operations also decreased by nearly 27% to Rs 9,792 crore. However, the company's performance drivers show resilience: its Value of New Business (VNB) grew by 27% in the first half of FY26, and the VNB margin stood at a positive 25.5% for the quarter. Brokerages like JM Financial and Jefferies highlighted that this margin strength was driven by a favourable shift in product mix, with increased contributions from annuity, protection, and non-par businesses, despite the decline in ULIP volumes. Jefferies has named Max Financial as its top insurance pick.

Concurrently, Aavas Financiers reported a more stable Q2 FY26 performance, with net profit rising 10.8% year-on-year to Rs 163.93 crore. Revenue from operations increased by over 15% to Rs 667 crore. The company's assets under management (AUM) grew by 16% year-on-year to Rs 21,356.6 crore, and its net interest margin improved by 26 basis points to 8.04%.

Impact: Despite a sharp fall in headline net profit, Max Financial's stock hit a fresh record high, underscoring investor focus on underlying growth drivers like VNB and margin expansion. Aavas Financiers' solid earnings growth and margin improvement also boosted its stock. This suggests that forward-looking metrics and brokerage sentiment can heavily influence market reactions, even when short-term profitability figures appear weak. This news indicates strong investor confidence in the insurance and housing finance sectors' future prospects, potentially driving sector-wide interest. Rating: 7/10

Difficult Terms: - FY26: Financial Year 2025-2026. - YoY (Year-on-Year): Comparison of a period with the same period in the previous year. - VNB (Value of New Business): A key metric for life insurers, representing the present value of future profits from new policies sold. - VNB Margin: The profit earned as a percentage of the VNB, indicating the profitability of new business. - ULIP (Unit Linked Insurance Plan): A financial product offering a combination of insurance coverage and investment. - AUM (Assets Under Management): The total market value of assets managed by a financial institution on behalf of its clients. - Net Interest Margin (NIM): The difference between the interest income generated by a financial institution and the interest paid out to its lenders, expressed as a percentage of its interest-earning assets. It is a key indicator of a bank or NBFC's profitability.