Max Financial Services: Jefferies says EOM compliance may not come at cost of growth; stock reacts
Jefferies expects MaxF to deliver 16% APE CAGR through FY29, supported by productivity gains from 67,000 net agents recruited over the past two years, initiatives to improve growth at Axis Bank and opportunities in categories such as credit life.
- Sep 28, 2026,
- Updated Sep 28, 2026 12:57 PM IST
Max Financial Services Ltd is in focus after Jefferies said concerns over the insurer's ability to meet new expense-of-management (EOM) requirements without hurting growth appear overstated. The brokerage said MaxF can bring down its EOM ratio through a combination of group funds expansion, a new commission structure and cost rationalisation.
Following the Insurance Regulatory and Development Authority of India's (IRDAI) distribution consultation paper, investors have raised concerns over whether MaxF's EOM compliance could come at the expense of annualised premium equivalent (APE) growth. The company's EOM ratio stood at 23% in FY26 and needs to decline to 15% by FY29 and 12.5% by FY32.
Max Financial Services shares fell 1.31% on Monday, touching a low of Rs 1,432, compared with the previous close of Rs 1,451.
Jefferies' base-case target price is Rs 2,050, versus the report's reference price of Rs 1,451. That implies 41% upside. The report says this target values Max Financial Services at 12x September 2028 estimated P/VNB (excluding EV).
Jefferies estimates that MaxF could achieve its FY29 EOM target through around 300 basis points of benefit from group funds expansion, 400 basis points from the new commission structure and 100 basis points from cost savings. The brokerage said this should help address concerns around a material slowdown in growth.
The brokerage also pointed to MaxF's track record through previous regulatory changes. Despite multiple changes, including the cap on tax benefits for savings products, revised surrender regulations and the loss of input tax credit, MaxF delivered 19% APE CAGR over the past three years.
Jefferies sees a potential opportunity in the company's bancassurance channel, particularly through Axis Bank. MaxF commands a 65-70% counter share at Axis Bank, which also holds a 20% stake in the insurer. The brokerage expects scope for greater shelf space once commission rates normalise under the new regulatory framework.
Jefferies expects MaxF to deliver 16% APE CAGR through FY29, supported by productivity gains from 67,000 net agents recruited over the past two years, initiatives to improve growth at Axis Bank and opportunities in categories such as credit life. It also expects margins to expand by 140 basis points by FY29, supporting 18% VNB growth over the next three years.
Max Financial Services Ltd is in focus after Jefferies said concerns over the insurer's ability to meet new expense-of-management (EOM) requirements without hurting growth appear overstated. The brokerage said MaxF can bring down its EOM ratio through a combination of group funds expansion, a new commission structure and cost rationalisation.
Following the Insurance Regulatory and Development Authority of India's (IRDAI) distribution consultation paper, investors have raised concerns over whether MaxF's EOM compliance could come at the expense of annualised premium equivalent (APE) growth. The company's EOM ratio stood at 23% in FY26 and needs to decline to 15% by FY29 and 12.5% by FY32.
Max Financial Services shares fell 1.31% on Monday, touching a low of Rs 1,432, compared with the previous close of Rs 1,451.
Jefferies' base-case target price is Rs 2,050, versus the report's reference price of Rs 1,451. That implies 41% upside. The report says this target values Max Financial Services at 12x September 2028 estimated P/VNB (excluding EV).
Jefferies estimates that MaxF could achieve its FY29 EOM target through around 300 basis points of benefit from group funds expansion, 400 basis points from the new commission structure and 100 basis points from cost savings. The brokerage said this should help address concerns around a material slowdown in growth.
The brokerage also pointed to MaxF's track record through previous regulatory changes. Despite multiple changes, including the cap on tax benefits for savings products, revised surrender regulations and the loss of input tax credit, MaxF delivered 19% APE CAGR over the past three years.
Jefferies sees a potential opportunity in the company's bancassurance channel, particularly through Axis Bank. MaxF commands a 65-70% counter share at Axis Bank, which also holds a 20% stake in the insurer. The brokerage expects scope for greater shelf space once commission rates normalise under the new regulatory framework.
Jefferies expects MaxF to deliver 16% APE CAGR through FY29, supported by productivity gains from 67,000 net agents recruited over the past two years, initiatives to improve growth at Axis Bank and opportunities in categories such as credit life. It also expects margins to expand by 140 basis points by FY29, supporting 18% VNB growth over the next three years.