MAX Financial Services
Estimate change
TP change
Rating change
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9 June 2021
4QFY21 Results Update | Sector: Financials
CMP: INR996
TP: INR1,200 (+20%)
Buy
Steady performance; Non-PAR growth remains robust
Persistency improves; maintains healthy provisioning buffer towards
pandemic linked claims
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Financials & Valuations (INR b)
Y/E MARCH
Net Premiums
Sh.PAT
NBP gr - unwtd (%)
NBP gr - APE (%)
Premium gr (%)
VNB margin (%)
Op. RoEV (%)
Total AUMs (INRb)
VNB(INRb)
EV per Share
Valuations
P/EV (x)
P/EVOP (x)
MAXF IN
345
343.8 / 4.7
1050 / 463
3/44/61
1053
MAXLIFE continues to demonstrate resilient performance amid a
challenging macro environment, led by healthy (36%) APE growth, aided by
robust growth in Non-PAR savings and recovery in the ULIP segment. After
witnessing robust Protection growth over 1H, the same moderated during
2HFY21.
Healthy product mix towards high margin segments and strong APE growth
aided VNB growth of 44% YoY during 4QFY21. Strong push via the
bancassurance channel has aided premium growth, while the proprietary
channel is showing healthy traction.
We expect 22% CAGR in APE growth over FY21-23E, with VNB margin
improving to 26.8% by FY23E. This would enable 26% VNB CAGR over FY21-
23E, while operating RoEV sustains ~22%.
Maintain Buy.
Gross written premium grew ~21% YoY
led by a 36%/40% growth in the
first year/single premium, while renewal premium grew ~14%. Shareholder
PAT declined 54% YoY to ~INR1.1b in 4QFY21 on higher additional
provisions towards COVID-19 death claims.
Individual APE grew 35% YoY in 4QFY21. Total APE growth stood at 36%
YoY, aided by strong trends in Non-PAR savings (143%), with the launch of a
new product 'Smart Wealth plan', while ULIP showed recovery trends.
Protection growth moderated at 5% YoY as Group Protection fell 17%,
while Individual Protection grew 17%. The share of Non-PAR savings
increased to 30% in FY21 v/s 18% in FY20. The share of Protection stood at
14% v/s 13% in FY20.
Absolute VNB growth was healthy at 44% YoY due to strong margin
profile and healthy product mix.
Margin stood ~24% in 4QFY21 (v/s 22.8%
in 4QFY20). Absolute VNB grew 39% YoY in FY21. VNB margin improved
sharply to 25.2% in FY21 (v/s 21.6% in FY20).
On the distribution side, banca APE reported robust trends and grew 41%
YoY, while proprietary channel APE witnessed a strong (22%) recovery in
4QFY21. The share of banca improved to 71% in FY21 (v/s 68% in FY20),
while the share of proprietary stood at 28% (v/s 31% in FY20).
MAXLIFE witnessed total net claims of ~INR1.2b in FY21 on account of
COVID-19 deaths. It made total provisions of INR3.4b due to a likely
adverse COVID-19 experience in FY22, and now holds an excess provision
buffer of INR5b on its Balance Sheet. Operating RoEV stands at 18.5% (v/s
20.3% in FY20), impacted by higher COVID-19 provisions.
Persistency improved with 13th/61st month improving by 100bp/200bp to
84%/54%. In other cohorts, persistency trends remained stable (barring the
49th month). On the cost front, opex-to-GWP ratio declined to 20.7% (v/s
21.7%/20.8% over 9MFY21/FY20).
FY21 FY22E FY23E
190.2 224.9 272.0
5.2
7.1
8.0
22.3
21.0
24.0
19.5
20.7
24.3
17.5
18.2
21.0
25.2
26.4
26.8
18.5
21.0
22.3
904 1,066 1,246
12.5
15.8
19.9
274.5 325.5 390.8
0.0
0.0
4.5
3.8
3.2
29.0
21.6
17.2
VNB growth steady; persistency recovers further
Shareholding pattern (%)
As On
Mar-21 Dec-20
Promoter
17.0
17.3
DII
51.4
50.9
FII
23.1
19.7
Others
8.5
12.2
FII Includes depository receipts
Mar-20
28.3
29.0
30.6
12.1
Research Analyst: Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com) |
Himanshu Taluja
(Himanshu.Taluja@motilaloswal.com)
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);
Yash Agarwal
(Yash.Agarwal@motilaloswal.com)
Y
Investors
are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
MAX Financial Services
Highlights from the management commentary
In the medium term, the management expects persistency to reflect an upward
trajectory. The 13th month persistency can reach up to 86% (v/s 84% currently).
It expects business growth between 15% and 20% over FY22.
The Non-PAR segment will continue to remain between 25% and 30% in the
total APE mix. It expects a 200-300bp VNB margin improvement over the next 2-
3 years.
Valuation and view
MAXLIFE reported strong operating trends, with premium growth in the Non-PAR
business remaining steady, while the ULIP business showed a recovery. VNB margin
has improved sharply to ~25.2% in FY21 (360bp YoY improvement), while
persistency trends have also improved. Strong push via the bancassurance channel
has supported premium growth, while growth is improving gradually in the
proprietary channel. We estimate APE growth at 22% CAGR over FY20-23E and VNB
margin to improve to 26.8% in FY23E. This would enable 26% VNB CAGR over FY21-
23E, while operating RoEV will sustain ~22%. We maintain our Buy rating with a TP
of INR1,200/share (3.1x FY23E EV/3.8x FY23E EV after a 20% holding company
discount).
Quarterly performance
Policyholder's A/c
(INR m)
Gross premium income
Growth (%)
Renewal premium
Growth (%)
PAT
Growth (%)
Key metrics (INR m)
New Business APE
VNB
AUM (INR b)
Key Ratios (%)
VNB Margin (%)
Solvency ratio (%)
E: MOFSL estimates
FY20
FY21
4QE
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
26,510 37,810 38,800 58,710 27,510 45,330 46,280 71,060 1,61,836 1,90,180 68,123
14.3% 14.6% 12.8%
6.4%
3.8% 19.9% 19.3% 21.0%
11.0%
17.5% 16.0%
17,400 24,010 24,770 39,820 18,520 29,370 28,800 45,230 1,06,000 1,21,920 45,226
12.0% 11.3% 10.3% 15.1%
6.4% 22.3% 16.3% 13.6%
12.6%
15.0% 13.6%
680
860 1,540 2,314
1,710
260 2,200 1,060
5,394
5,230 2,700
NA
NA
NA
NA 151.5% -69.8% 42.9% -54.2%
-3.1%
-3.0% 16.7%
6,850 10,450 10,100 14,090
1,340 2,300 2,120 3,210
640
650
686
685
19.6
225.0
22.0
224.0
21.0
220.0
22.8
207.0
6,610 11,540 12,250 19,170
1,130 3,250 3,500 4,610
730
780
850
904
17.1
212.0
28.2
207.0
28.6
208.0
24.0
196.0
42,380
8,970
685
21.6
207.0
49,570 17,876
12,490 4,667
904
905
25.2
196.0
FY20
FY21E
FY21E
(INR m)
Var.
4%
0%
-61%
7%
-1%
0%
26.1
206bp
208.7 1, 270bp
9 June 2021
2
 Motilal Oswal Financial Services
MAX Financial Services
Exhibit 1: Quarterly snapshot
Policyholder A/c (INR b)
1Q
26.5
6.5
17.4
2.7
0.7
Gross premium
First year premium
Renewal premium
Single premium
Shareholder’s PAT
APE data (INR b)
PAR
2.3
3.1
2.9
4.2
1.5
Individual Protection
0.5
0.7
1.0
1.1
0.9
Group Protection
0.5
0.7
0.4
0.4
0.7
Non-PAR Savings
1.0
2.4
2.0
2.0
1.2
ULIP
2.5
3.5
4.1
5.6
2.3
APE (% of total)
PAR
33
30
28
30
22
Individual Protection
7
7
10
8
14
Group Protection
8
6
4
3
11
Non-PAR Savings
15
23
20
14
18
ULIP
37
34
40
40
35
Distribution mix (%)
Proprietary
33
33
30
29
37
Banca
66
66
69
70
62
Others
1
1
1
1
1
Key Ratios (%)
Operating ratios
Opex-to-GWP ratio (%)
24.7
23.0
22.7
20.8
21.9
Solvency Ratio
225.0
224.0
220.0
207.0
212.0
Profitability ratios
VNB margin
19.6
22.0
21.0
22.8
17.1
Persistency ratios
13th month
85.0
85.0
85.0
83.0
82.0
25th month
72.0
72.0
72.0
71.0
68.0
37th month
64.0
65.0
63.0
63.0
61.0
49th month
60.0
60.0
60.0
59.0
57.0
61st month
53.0
53.0
51.0
52.0
52.0
Key Metrics (INR b)
VNB
1.3
2.3
2.1
3.2
1.1
EV
93
97
101
100
107
AUM
640
650
686
685
730
Equity Mix (%)
21.0
21.0
22.0
17.0
20.8
Please note: Persistency ratios, opex ratio, and EV for 1H, nine months, and 12 months
FY20
2Q
37.8
10.5
24.0
3.3
0.9
3Q
38.8
10.0
24.8
4.0
1.5
4Q
58.7
13.9
39.8
5.0
2.3
1Q
27.5
6.2
18.5
2.8
1.7
FY21
2Q
45.3
11.3
29.4
4.7
0.3
1.6
1.3
0.7
4.4
3.3
14
11
6
38
29
28
71
1
21.6
207.0
28.2
83.0
69.0
61.0
58.0
53.0
3.3
110
780
21.0
3Q
46.3
12.0
28.8
5.5
2.2
2.1
0.9
0.4
4.4
4.4
17
7
3
36
36
27
72
1
21.7
208.0
28.6
83.0
69.0
61.0
57.0
54.0
3.5
117
850
23.1
4Q
71.1
18.9
45.2
7.0
1.1
4.3
1.4
0.7
4.8
8.3
22
7
3
25
43
25
74
1
20.7
196.0
24.0
84.0
71.0
63.0
58.0
54.0
Change (%)
YoY
QoQ
21
54
36
57
14
57
40
27
-54
-52
1
104
26
65
52
76
143
10
48
89
Change (bp)
-783
517
-59
38
36
38
1,113
-1,072
340
738
-423
423
0
-10
-1,100
127
100
0
0
-100
200
-221
221
0
-100
-1,200
-452
100
200
200
100
0
4.6
44
32
118
19
1
904
32
6
21.6
459
-148
Source: MOFSL, Company
Highlights from the management commentary
Business mix
As per sum assured, it has a 15.6% market share and is ranked third in the
industry.
A solvency surplus of ~INR13b has been maintained on the Balance Sheet.
In the medium term, the management expects persistency to reflect an
upward trajectory.
The 13th month persistency can reach up to 86%.
MAXLIFE believes in maintaining a balanced product mix.
It expects NBP (New
Business Premium) growth between 15% and 20% over FY22.
The Non-PAR segment will continue to remain between 25% and 30%
in the
product mix as it offers better ability to hedge through the FRA market.
Protection is a long term growth opportunity for the entire sector. The
management’s focus is on maintaining prudent pricing in this segment.
9 June 2021
3
 Motilal Oswal Financial Services
MAX Financial Services
Operating metrics
There might be a price increase in Individual Protection policies. It is also
reviewing the price of GTL (Group term plans).
VNB doubled in the last three years, aided by strong trends in the Non-PAR
and Protection segment.
Tightening of operating expenses helped in VNB
margin improvement.
MAXLIFE is already carrying provisions of INR5b on its Balance Sheet towards
COVID-19 death claims. This is nearly 4x the net claims witnessed in FY21.
Tightening of mortality assumption is based on the rise in COVID-19 cases.
There was an INR880m hit to VNB in FY21.
Operating variance of INR800m is due to a tax refund of INR630m.
VNB margin outlook:
Over the next 2-3 years, it sees a 200-300bp upside to VNB
margin.
The new Non-PAR product launched in FY21 aided VNB margin improvement.
It has better pricing and new offerings v/s the last product.
Dividend policy:
The management sees no need to declare a heavy dividend. It
will retain most of the capital for the business to expand.
It will maintain solvency ratio in the 180-200% range.
In the new protection product, there was a 5-10% increase in pricing v/s the last
product.
Total gross death claims over FY21 stood ~INR13.49b. The same net of
reinsurance is INR10.09b.
Distribution channel
The management’s focus is on promoting the Axis Bank brand and is targeting
higher cross-sell to AXSB’s customer base.
It expects Yes Bank’s banca share to increase, in line with the growth of
MAXLIFE.
On the distribution front, the management focus remains on pushing Non-PAR
and ULIP through partner channels, and traditional policy (PAR) and Protection
through its own channels.
It will continue to invest in growing its proprietary channel.
Key exhibits
Exhibit 1: Share of Non-PAR savings improves to 30%, while
Protection at 14% in FY21
PAR
30%
9%
7%
54%
Protection
Non-PAR
ULIP
Exhibit 2: VNB margin improves to ~25.2%, similar to
IPRULIFE levels
FY19
FY20
FY21
41%
8%
8%
43%
FY18
42%
9%
10%
40%
FY19
38%
18%
13%
30%
FY20
37%
30%
14%
19%
FY21
SBI LIFE
HDFC LIFE
IPRU LIFE
MAX LIFE
FY17
Source: MOFSL, Company
Source: MOFSL, Company
9 June 2021
4
 Motilal Oswal Financial Services
MAX Financial Services
Exhibit 3: Opex-to-GWP ratio at 21.7%
Policyholder cost to GWP Ratio (%)
23.5%
Exhibit 4: Persistency improves in the 13
th
/61
st
month
FY19
83% 83% 84%
71% 71% 71%
20.8%
20.7%
53% 52% 54%
FY20
FY21
20.0%
20.0%
FY17
FY18
FY19
FY20
FY21
13th Month
25th Month
61th Month
Source: MOFSL, Company
Source: MOFSL, Company
Valuation and view
MAXLIFE has increased its focus on Non-PAR and Protection segments, the share
of which has increased to ~44% in FY21 v/s ~16% in FY17 as Protection/Non-PAR
savings grew by 40%/58% CAGR over FY17-21.
The company has one of the most productive agency channels, with an
improvement in agent productivity to INR250k in FY20 (v/s INR150k in FY17).
The proprietary channel accounted for 28% of total APE. The management will
continue to make significant investments in growing its proprietary channel.
VNB has doubled in the last three years, aided by improvement in high margin
products in the total APE mix. VNB margin currently stands at 25% (360bp YoY
investment).
Buy with a TP of INR1,200/share:
MAXLIFE reported strong operating trends,
with premium growth in the Non-PAR business remaining steady, while the ULIP
business showed a recovery. VNB margin has improved sharply to ~25.2% in
FY21 (360bp YoY improvement), while persistency trends have also improved.
Strong push via the bancassurance channel has supported premium growth,
while growth is improving gradually in the proprietary channel. We estimate
APE growth at 22% CAGR over FY20-23E and VNB margin to improve to 26.8% in
FY23E. This would enable 26% VNB CAGR over FY21-23E, while operating RoEV
will sustain ~22%. We maintain our Buy rating with a TP of INR1,200/share (3.1x
FY23E EV/3.8x FY23E EV after a 20% holding company discount).
Exhibit 5: Value MAXLIFE at INR1,200 per share
Appraisal value method (INR b)
Embedded value
New business profit
Appraisal value
MFS’ stake post deal
MFS’ value
MFS’ valuation per share (INR)
Appraisal value-to-embedded value (x)
Holding company discount
Target price (INR)
Implied multiples
- VNB multiple (x)
- EVOP multiple (x)
Upside
FY23E
169
19.9
647
80%
518
1,500
3.8
20%
1,200
24.0
20.7
20%
Source: MOFSL
9 June 2021
5
 Motilal Oswal Financial Services
MAX Financial Services
Story in charts
Exhibit 6: First-year premium grew 36% YoY in 4QFY21,
while total gross income premium grew 21%
Regular Premium YoY (%)
31%
18%
15%
22% 21% 24%
Tot. Premium Income YoY (%)
36%
15%
20% 19%
6% 4%
-4%
20%
7%
21%
Exhibit 7: Renewal premium up 14% YoY in 4QFY21
Renewal Premium YoY (%)
16% 18% 13% 19% 14% 15% 13%
-15%
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 8: Proprietary channel APE grew 9% YoY in FY21
Proprietary Channels New Business (APE) (INRb)
11.6
6.5
7.5
8.9
12.8
14.0
Exhibit 9: Banca APE rose 24% YoY
Banca APE (INRb)
35.3
18.8
23.4
27.6
28.4
14.3
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 10: VNB margin stands at 24% as on 4QFY21
VNB Margin (%)
Exhibit 11: Solvency ratio stands at 196%
Solvency Ratio (%)
Source: MOFSL, Company
Source: MOFSL, Company
9 June 2021
6
 Motilal Oswal Financial Services
MAX Financial Services
Financials and valuations
Technical account (INR m)
Gross Premiums
Reinsurance Ceded
Net Premiums
Income from Investments
Other Income
Total income (A)
Commission
Operating expenses
Total commission and opex
Benefits Paid (Net)
Chg. in reserves
Total expenses (B)
(A) - (B)
Prov. for Tax
Surplus/Deficit
Shareholder's a/c (INR m)
Transfer from technical a/c
Income From Investments
Total Income
Total Expenses
PBT
Prov. for Tax
PAT
Growth
Premium (INR m) and growth (%)
New business prem. – unwtd.
New business prem. - WRP
Renewal premium
Total premium – unwtd.
New bus. growth – unwtd.
New business growth - WRP
Renewal premium growth
Total prem. growth – unwtd.
Premium mix (%)
New business – unwtd.
- Individual mix
- Group mix
New business mix - WRP
- Participating
- Non-participating
- ULIPs
Total premium mix – unwtd.
- Participating
- Non-participating
- ULIPs
FY18
1,25,009
1,213
1,23,795
37,574
346
1,61,715
8,929
16,098
25,027
49,466
79,043
1,53,555
8,160
1,077
7,083
FY18
3,992
2,178
6,175
24
6,152
875
5,276
-20%
FY18
43,486
33,072
81,523
1,25,009
18.6%
20.3%
14.6%
16.0%
FY18
91.6%
8.4%
44.7%
13.9%
41.4%
57.3%
14.2%
28.5%
FY19
1,45,752
1,569
1,44,184
48,643
440
1,93,267
9,896
19,274
29,170
57,178
97,365
1,83,730
9,536
1,299
8,237
FY19
4,402
2,177
6,604
377
6,226
662
5,564
5%
FY19
51,604
40,019
94,148
1,45,752
18.7%
21.0%
15.5%
16.6%
FY19
92.0%
8.0%
41.4%
16.4%
42.2%
53.4%
15.0%
31.5%
FY20
1,61,836
2,049
1,59,788
21,589
612
1,81,989
10,244
23,441
33,685
66,222
66,394
1,66,321
15,668
2,752
12,916
FY20
4,690
2,074
6,781
802
5,978
585
5,394
-3%
FY20
55,835
42,380
1,06,002
1,61,836
8.2%
5.9%
12.6%
11.0%
FY20
91.9%
8.1%
32.2%
29.6%
38.2%
49.0%
19.8%
31.2%
FY21E
1,90,180
3,263
1,86,916
42,061
714
2,29,691
12,644
26,975
39,619
72,531
1,06,262
2,18,427
11,264
1,801
9,463
FY21E
4,141
2,106
6,246
330
5,917
651
5,266
-2%
FY21E
68,264
49,525
1,21,916
1,90,180
22.3%
16.9%
15.0%
17.5%
FY21E
91.5%
8.5%
31.3%
33.1%
35.6%
43.1%
25.3%
31.6%
FY22E
2,24,861
3,684
2,21,176
53,324
832
2,75,332
14,893
31,674
46,567
90,228
1,25,281
2,62,094
13,239
2,152
11,087
FY22E
5,574
2,739
8,313
372
7,941
874
7,067
34%
FY22E
82,599
59,777
1,42,262
2,24,861
21.0%
20.7%
16.7%
18.2%
FY22E
90.5%
9.5%
33.7%
29.8%
36.5%
44.1%
24.0%
31.9%
FY23E
2,72,000
4,520
2,67,480
58,609
971
3,27,060
17,958
38,239
56,197
1,10,880
1,44,329
3,11,427
15,633
2,662
12,971
FY23E
5,944
3,489
9,432
421
9,011
991
8,020
13%
FY23E
1,02,423
74,308
1,69,577
2,72,000
24.0%
24.3%
19.2%
21.0%
FY23E
90.0%
10.0%
33.7%
29.6%
36.7%
43.0%
24.4%
32.6%
Note: EPS and EV per share adjusted for MFS stake in MAXLIFE
9 June 2021
7
 Motilal Oswal Financial Services
MAX Financial Services
Financials and valuations
Balance Sheet (INR m)
Sources of Fund
Share Capital
Reserves And Surplus
Shareholders' Fund
Policy Liabilities
Prov. for Linked Liab.
Funds For Future App.
Current liabilities and prov.
Total
Application of Funds
Shareholders’ inv.
Policyholders’ inv.
Assets to cover linked liab.
Loans
Total
Operating ratios (%)
Investment yield
Commissions / GWP
- first year premiums
- renewal premiums
- single premiums
Operating expenses/GWP
Total expense ratio
Claims/NWP
Solvency ratio
Persistency ratios (%)
13th Month
25th Month
37th Month
49th Month
61st Month
Profitability ratios (%)
New business margin (%)
RoE (%)
Operating RoEV
RoEV (%)
Valuation ratios
Total AUMs (INR b)
EPS (INR)
Value of new business (INR b)
Embedded Value (INR b)
EV Per share (INR)
P/EV (x)
P/EPS (x)
P/EVOP (x)
P/VNB (x)
FY18
19,188
7,702
26,989
3,10,137
1,63,050
18,655
17,841
5,49,628
32,146
3,19,238
1,70,981
2,233
5,49,628
FY18
8.3%
7.1%
20.2%
3.0%
0.1%
12.9%
20.0%
39.9%
275%
FY18
80.0%
72.0%
62.0%
57.0%
53.0%
FY18
20.2%
20.3%
20.6%
13.9%
FY18
522
14.3
6.6
75.1
157.8
8.0
88.5
40.2
FY19
19,188
8,478
27,609
3,81,436
1,86,738
22,498
23,398
6,59,270
35,187
3,94,173
1,98,619
3,265
6,59,270
FY19
9.0%
6.8%
18.1%
2.7%
1.2%
13.2%
20.0%
39.6%
242%
FY19
83.0%
71.0%
64.0%
58.0%
53.0%
FY19
21.7%
20.4%
21.9%
19.0%
FY19
628
15.0
8.6
89.4
187.9
6.8
84.7
33.2
FY20
19,188
6,806
25,739
4,54,807
1,74,210
30,962
20,276
7,17,724
32,581
4,60,484
1,91,642
4,264
7,17,724
FY20
3.4%
6.3%
17.2%
2.6%
1.1%
14.5%
20.8%
41.4%
207%
FY20
83.0%
71.0%
63.0%
59.0%
52.0%
FY20
21.6%
20.2%
20.3%
11.6%
FY20
685
14.5
9.0
99.8
209.7
6.0
87.4
30.2
FY21E
19,943
8,446
28,106
5,79,978
1,95,666
4,926
23,318
8,47,452
43,985
5,64,469
2,01,224
6,525
8,47,452
FY21E
5.8%
6.6%
19.5%
2.6%
1.0%
14.2%
20.8%
38.8%
209%
FY21E
84.0%
71.0%
63.0%
58.0%
54.0%
FY21E
25.2%
19.6%
18.5%
18.6%
FY21E
904
12.2
12.5
118.3
274.5
4.6
103.9
29.5
43.8
FY22E
19,943
6,920
26,548
6,34,771
2,48,564
5,076
25,649
9,60,819
59,379
6,44,180
2,13,297
9,983
9,60,819
FY22E
6.6%
6.6%
19.1%
2.6%
1.0%
14.1%
20.7%
40.8%
197%
FY22E
85.0%
73.0%
63.5%
59.0%
54.5%
FY22E
26.4%
25.9%
21.0%
18.6%
FY22E
1,066
16.4
15.8
140.4
325.5
3.9
77.4
22.0
34.7
FY23E
19,943
5,785
25,379
6,94,233
3,14,376
6,198
28,214
10,94,646
80,162
7,36,148
2,26,095
15,274
10,94,646
FY23E
6.4%
6.6%
18.5%
2.6%
1.0%
14.1%
20.7%
41.5%
192%
FY23E
86.0%
74.0%
64.0%
59.5%
55.0%
FY23E
26.8%
30.9%
22.3%
20.1%
FY23E
1,246
18.6
19.9
168.5
390.8
3.2
68.2
17.5
27.5
Note: Valuation ratios adjusted for MFS stake (80%) and holding company discount of 20%
9 June 2021
8
 Motilal Oswal Financial Services
MAX Financial Services
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products.
MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on
www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading
Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity
& Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository
Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory &
Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are available on the
website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should
be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant
banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from
MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong
Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act"
and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and
investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for
distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document
relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule
15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order
to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities
International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in
respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of
which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
9 June 2021
9
 Motilal Oswal Financial Services
MAX Financial Services
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)
discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of
MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature.
The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed,
in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose
and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report
constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities
discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives,
financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document
should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including
the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be
suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial
risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions
contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as
endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and
alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect
or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment
banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and
independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already
available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the
views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other
person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of
or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject
MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category
of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors,
employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may
arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any
and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold
MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person accessing this information due to any
errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management
Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of
Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a
group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory
services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee
of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj
Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
9 June 2021
10