Earnings Review
Max Financial's Jul-Sept consol PAT shrinks on higher tax
This story was originally published at 22:30 IST on 22 October 2024
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--Max Fincl Jul-Sept consol net profit INR 1.13 bln vs INR 1.48 bln yr ago
--Max Fincl Jul-Sept consol revenue INR 133.73 bln vs INR 101.65 bln yr ago
--Max Fincl Apr-Sept consol net profit INR 2.40 bln vs INR 2.36 bln yr ago
--Max Fincl Apr-Sept consol revenue INR 251.71 bln vs INR 193.33 bln yr ago
By Aaryan Khanna
NEW DELHI – Max Financial Services Ltd. reported a consolidated net profit of INR 1.13 billion in the September quarter, down 23.9% on year. While the profit before tax was largely unchanged from last year, an increase in the tax burden led to the decline in the bottom line. The company had reported a net profit of INR 1.27 billion in Apr-Jun.
Profit before tax rose 2.4% on year to INR 1.62 billion. However, Max Financial's tax outgo in the reporting quarter rose to INR 227.6 million, against a tax writeback of INR 120.8 million a year ago. In absolute terms, this made the difference in the bottom line.
The company's income from, and expenses on its life insurance operations, the largest component of its business, grew slightly differently on nearly identical bases. Income from the category rose 30.9% on year, while expenses rose 31.6% on year. Even with the net loss on life insurance operations, interest income rose 43.9% on year to INR 1.28 billion and aided the bottom line.
The firm's consolidated revenue grew to INR 133.72 billion, up 31.6% on year. Net of investment income, revenue grew 14% on year to INR 128.20 billion in Jul-Sept, Max Financial said in a release. Meanwhile, the firm's top line grew 30.2% on year to INR 251.71 billion in Apr-Sept, while net income was marginally up at INR 2.40 billion during this period.
The company released its earnings after market hours. On Tuesday, its shares ended 1.9% lower at INR 1,170.45 on the National Stock Exchange.
LIFE INSURANCE
Max Life Insurance Co. Ltd., in which Max Financial Services has an 80% stake, saw its assets under management rise 27% on year to INR 1.70 trillion as of Sept. 30. The value of new business rose 23% on year to INR 5.13 billion in Jul-Sept.
"In Jul-Sept, in order to be compliant with IRDAI's (Insurance Regulatory and Development Authority of India) surrender regulations, Max Life successfully relaunched 98% of its products for sale without any impact on new business," Prashant Tripathy, chief executive officer and managing director of Max Life Insurance, said.
In December last year, IRDAI had issued a master circular asking insurance companies to increase the surrender value of life insurance policies, specifically for non-participating products. Surrender value is the total payout given by the insurance companies when the policyholder exits the policy before maturity. The norms kicked in from Oct. 1.
For Apr-Sept, Max Life Insurance's new business premiums, comprising both individual and group, rose 19% on year to INR 50.91 billion and the first year premiums grew 31% on year to INR 33.09 billion, according to a release by the company. This led to a gain in its market share among private life insurers by 51 basis points to 9.3%. The life insurer's gross written premium rose 14% on year to INR 131.37 billion in the six months to September, with 356,000 policies sold, up 23%.
In Jul-Sept, the life insurer's total annualised premium equivalent rose 31% to INR 21.70 billion. Max Life's 13-month persistency was 85.3% in the reporting quarter. Its new business margin was at 23.6% in Jul-Sept, down 155 bps on year.
Axis Bank Ltd. had in April infused INR 16.12 billion into Max Life Insurance, after which the Axis Group held 19.02% in Max Life. It further bought 0.97% more stake in Max Life in June, taking the stake of its entities to 19.99%, after being onboarded as a co-promoter in April 2021. On Tuesday, the boards of Axis Bank, Max Financial Services and Max Life agreed that the word "Axis" will be added to the life insurance company's business name. The new branding will come at a later date and is subject to shareholders' and regulatory approval, Max Financial said in a release. End
Reported by Aaryan Khanna
Edited by Tanima Banerjee
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