Max Financial Services Stock Surge Expected: Motilal Oswal Issues STRONG BUY with INR 2,100 Target!

Author

Akshat Lakshkar | Whalesbook News Team

Detailed Coverage:

Motilal Oswal has released a research report on Max Financial Services, maintaining a positive outlook. The company's insurance subsidiary, MAXLIFE, demonstrated robust financial performance in the second quarter of Fiscal Year 2026 (2QFY26). Annual Premium Equivalent (APE) grew by 16% year-on-year to INR25.1 billion, and Value of New Business (VNB) surged by 25% year-on-year to INR6.4 billion. Notably, the VNB margin improved to 25.5%, a significant beat against expectations. For the first half of FY26 (1HFY26), APE increased by 15% year-on-year to INR41.8 billion, with VNB growing by 27% year-on-year to INR9.7 billion. The company's Embedded Value (EV) stood at approximately INR269 billion by the end of 1HFY26.

Motilal Oswal retains its APE estimates and slightly raises its VNB margin estimates for FY26, FY27, and FY28 by 50 basis points each. The brokerage reiterates its BUY rating on Max Financial Services, setting a target price (TP) of INR2,100. This TP is based on a valuation of 2.3 times the estimated Embedded Value for September 2027.

Impact: This research report is expected to generate positive sentiment among investors, potentially leading to an increase in Max Financial Services' stock price. The reiteration of a 'BUY' rating and a substantial price target signal strong conviction from the analyst firm. Rating: 7/10

Difficult Terms Explained: * **APE (Annual Premium Equivalent)**: This metric represents the annualized premium income from new insurance policies sold. It's a key indicator of the sales performance of an insurance company's new business. * **VNB (Value of New Business)**: This is the estimated profit that an insurance company expects to earn from new policies issued during a specific period, taking into account future costs, risks, and investment returns. * **VNB Margin**: Calculated as VNB divided by APE, this ratio indicates the profitability of the new business. A higher VNB margin suggests that the company is generating more profit from each new policy sold. * **EV (Embedded Value)**: This represents the present value of future profits expected from an insurance company's existing business, plus its net worth of assets. It's a measure of the company's intrinsic financial value. * **RoEV (Return on Embedded Value)**: This ratio measures how effectively a company generates profit relative to its Embedded Value. It's an indicator of the company's profitability and operational efficiency.