Why Jefferies remains bullish on Max Financial after Q3 performance

Max Financial Services reported a strong December-quarter performance, driven by higher premium growth and improved margins, even as persistency in one bucket declined, according to Jefferies, which retained its “Buy” rating on the stock with a target price of ₹2,130.In Q3FY26, the company’s Annualised Premium Equivalent (APE) rose 30% year-on-year to ₹2,733 crore, beating consensus estimates of ₹2,608 crore. Value of New Business (VNB) increased 34% to ₹659 crore from ₹590 crore a year earlier, also surpassing poll expectations of ₹606 crore.

VNB margin improved to 24.1% from 23.2% in the year-ago period, aided by a shift in product mix toward higher-margin retail protection products and a lower contribution from ULIPs.
Jefferies noted that margins expanded by about 100 basis points year-on-year but moderated sequentially.The company’s Embedded Value (EV) grew 16% year-on-year, while operating Return on EV stood at 17%. However, the 13-month persistency ratio declined by around 200 basis points, even as other persistency buckets improved by 100–400 basis points.

Jefferies said earnings came in ahead of expectations.

Separately, the Reserve Bank of India (RBI) released a draft framework on the sale of financial products and services by banks, including insurance. The proposal seeks to curb aggressive cross-selling and prohibits bundling or implicit add-on insurance with loans or deposits.

Analysts expect the rules to moderate bank-led distribution of insurance products, which could have implications for insurers that rely heavily on bancassurance channels.