INVESTMENT THESIS ON MAX fINANCIALS (PLAY ON MAX LIFE INSURANCE)
Life Insurance is a decadal and more growth opportunity. India’s Insurance penetration is very low and as awareness increases, more people will buy Life Insurance (penetration) and people will enhance their cover as Incomes increase (consume more). In an industry that offers long term growth prospects, there can be many winners as there is space for many players.
Max is a well-run franchise reflected in high persistency (renewal) ratios and amongst the most productive Agency channels (own sales force) in the country. Max Life is distributed by Axis Bank with ~57% of its business originated by Axis Bank. However, its partnership with Axis Bank expires in Sep 2021 and uncertainty of whether the partnership will be renewed hangs heavily over the stock price. Bank led distribution is a key success factor in an Insurance company’s growth.
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