Earnings call transcript: Axis Max Life sees 18% revenue growth in Q1 2025

Axis Max Life Insurance reported robust Q1 FY2025 financial performance, with an 18% revenue increase, INR 86 crores in consolidated profit after tax, and a 32% rise in Value of New Business (VNB) to INR 335 crores. The company also saw a 20% growth in Embedded Value and expanded net margins to 20.1%, outperforming private sector peers. Management maintained its FY2026 margin guidance of 24-25% and confirmed a leadership transition with CEO Prashanth stepping down, replaced by Sumit Madhan, signaling continued strategic focus on growth and digital initiatives.

Analysis

Max Financial Services (MFSL) reported a robust start to fiscal year 2026, with its subsidiary Axis Max Life delivering significant outperformance against the private insurance sector. Individual adjusted first-year premium grew by 23%, nearly three times the sector's 8% growth, driven by strong execution across both proprietary and bancassurance channels. Profitability metrics were particularly strong, with the Value of New Business (VNB) increasing 32% to INR 335 crores, supported by a significant New Business Margin (NBM) expansion to 20.1% from 17.5% a year prior. This margin improvement was a direct result of a strategic shift in the product mix, reducing the share of ULIPs from 43% to 36% and increasing higher-margin non-participating products and rider attachments. While 13th-month persistency saw a marginal dip to 86%, this was offset by a record-high 25th-month persistency of 75%, and management remains confident in its full-year margin guidance of 24-25%. The planned CEO transition to an internal leader suggests strategic continuity, and with a healthy solvency ratio of 190%, the company is well-capitalized to pursue its growth initiatives.

Key Decisions for Investors

• The demonstrated ability to expand margins to 20.1% and grow VNB by 32% through a strategic product mix shift, while significantly outperforming the industry on premium growth, supports a bullish outlook on the company's operational strength.
• Investors should monitor the 13th-month persistency rate for stabilization and track the narrowing of the APE-FYP growth gap in subsequent quarters as key proofs of execution quality.
• The pending approval for Axis Bank to increase its stake and the successful execution of the new CEO's strategy are key potential catalysts for the stock.
• Given the company's strong performance metrics, including a 20% growth in Embedded Value, investors should assess whether the current valuation, which some third-party analysis suggests is slightly overvalued, adequately prices in the superior growth trajectory and margin profile relative to peers.