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MAXF delivered a strong Q1FY26 performance, with VNB margin at 20.1% (+2.6ppt YoY), above our estimated 18.2%. However, APE at Rs16.7bn (+14.8% YoY) was slightly lower than our estimated Rs16.8bn. Led by the higher margin, VNB at Rs3.4bn (+31.9% YoY) beat our estimate by ~9%. The strong VNB margin delivery was largely driven by a shift in the product mix to high-margin Non-Par and Protection products, from low-margin ULIP products. The management reiterated its VNB margin guidance of ~24-25%; the excess will be invested in strengthening distribution channels. To bake in the Q1 developments, we have cut FY26-28 APE estimates by ~1% each, while increasing VNB margin estimates by ~50bps, resulting in ~1% increase in VNB over FY26-28E. We maintain ADD, with an unchanged Jun-26E TP of Rs1,800.

Strong margin delivery drives robust VNB growth

In Q1FY26, APE at Rs16.7bn, up 14.8% YoY, came slightly below our estimated Rs16.8bn. Driven by a shift in the product mix to high-margin Non-Par and Protection products, the VNB margin at 20.1% (+2.6ppt YoY) exceeded our estimated 18.2%. Resultantly, led by the higher margin, VNB at Rs3.4bn, up ~32% YoY, was ~9% higher than our estimated Rs3.1bn. Embedded value at Rs264.8bn grew 20.1% YoY and was marginally higher than our estimated Rs262.9bn. AUM at Rs1,832bn, up ~14% YoY, lagged our estimate of Rs1,847bn.

The management reiterates VNB margin guidance of ~24-25%

During Q1FY26, the ecommerce channel witnessed a slowdown, largely owing to the high base (strong ULIP sales in the previous year). However, the management expects growth in the ecommerce channel to rebound ahead. The management reiterated its commitment to a balanced product mix. If the market environment drives ULIP growth, then the company will be open to grabbing the opportunity, given that ULIPs are customer-friendly products; also, with improving rider attachment, margins have improved. The management expects continued traction in Non-Par products, led by product innovation and product launches. The management reiterated its VNB margin guidance of ~24-25%, and the excess will be invested in strengthening distribution.

We reiterate ADD, with an unchanged Jun-26E TP of Rs1,800

To bake in the Q1 developments, we have tweaked our FY26-28 estimates which resulted in ~1% cut in APE. We, however, increase our VNB margin estimates by ~50bps each over FY26-28, leading to ~1% increase in VNB. Given MAXF’s expanding distribution, rising brand strength, and focus on protection, we reiterate ADD with an unchanged Jun26E TP of Rs1,800, implying FY27E P/EV of 2.2x.

Earnings Conference Call Highlights

• The management mentioned that e-commerce channels are heavy on monthly premium payment mode. Further, there has been a slowdown in the channel, given the impact from slowdown in ULIP demand.
• The overall productivity of agents, based on the number of active agents, has increased by ~4% YoY.
• The Insurance Bill is ready to be presented in Parliament, and there have been no changes to the Section 35 provision, compared to the draft bill. The management expects the Bill to be introduced in the upcoming session. Once it is approved, the management will begin working on the merger process.
• A shift in the product mix aided margin expansion in Q1. Further, actions related to pricing and rider contribution also contributed to margin expansion.
• The management reiterated VNB margin guidance of 24-25% and mentioned that any margin expansion beyond 25% will be reinvested in building distribution channels.
• In Q1, ULIPs witnessed a slowdown, given the volatility in equity markets. However, if the market presents opportunities for growth in ULIPs, the management plans to pursue these in a measured way. Still, it is committed to maintaining a balanced overall product mix.
• The management mentioned that given the growth of the company, there might be some capital requirements, which could be addressed through debt issuance.
• During Q1, the company launched its Flagship Smart VIBE Non-Par product, which includes Enhanced Protection through riders.
• The management mentioned that product launches contribute to ~50% of the premium in a product segment.
• The Axis Bank channel has seen strong growth in the number of policies in the ~20% range.
• Certain categories have recorded margin improvements, while others have experienced slight reductions, primarily due to changes in design structure following the new surrender regulations. Overall, the company has successfully strengthened its margin profile.
• The company has seen some softness in 13-month persistency, driven by overall consumer behavior and a decline in higher-ticket policies. However, performance in other cohorts has improved, and the management has undertaken measures to improve persistency levels.
• The Health product segment experienced a decline, largely due to regulatory changes altering the overall product structure, resulting in a slight contraction. ? The management remains confident of growth rebounding in the e-commerce channel ahead.

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