Max Financial Services Ltd (MFSL) Q2 FY27 Earnings Call: VNB Margin Trends Toward 26%, 95% of Business Unaffected by IRDAI Proposals

Max Financial Services Ltd held its Q2 FY27 earnings call on October 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong H1 Profitability Despite GST Drag

• MFSL consolidated PAT of Rs.219 crore in H1 FY 2026-2027 — up 137% YoY, on revenue excluding investment income of Rs.17,484 crore, up 16% YoY.
• H1 FY 2026-2027 VNB grew 21% to Rs.1,180 crores — with VNB margin expanding 210 bps to 25.4% (from 23.3% in H1 FY 2025-2026); Q2 FY 2026-2027 VNB margin stood at 27% despite the GST impact.
• Gross written premium up 17% YoY to Rs.18,066 crores in H1 FY 2026-2027 — renewal business up 18% to Rs.11,247 crores; AUM at Rs.2.06 lakh crores, up 11% YoY.
• Policyholder OpEx ratio improved 174 bps YoY to 13.7% of GWP in H1 FY 2026-2027 — adjusting for GST embedded in the run rate, it improved 300 bps to 11.7% from 14.6% in H1 FY 2025-2026.
• Annualized operating ROEV improved 100 bps to 17.3% in H1 FY 2026-2027 — including ~Rs.5 crores positive operating variance; non-operating variance was negative at Rs.216 crores, largely due to interest rate movements, which management characterized as transitory.
• 13-month persistency slipped to 83% from 85% a year ago — though 37th/49th/61st-month persistency reached highest-ever levels.

Broad-Based Growth; Axis Bank Channel Subdued in Q2

• Individual adjusted first year premium grew 12% in H1 FY 2026-2027 and 9% in Q2 FY 2026-2027 — holding private market share at 10.1%; 3-year CAGR of 19% vs industry growth of ~11%.
• Axis Bank channel grew 4% in Q2 FY 2026-2027 — subdued by equity-market volatility dampening ULIP demand and a delayed STPP protection product launch; CEO Sumit Madan said growth "should not really be an issue" going forward and management is "quite confident" of healthy Axis Bank growth in H2 FY 2026-2027.
• Axis Bank counter share dipped to ~62-63% in Q2 FY 2026-2027 — from the normal ~65%, on deliberate product-led calls rather than competitive intensity; management expects it back at ~65% from Q3 FY 2026-2027.
• Emerging Axis Bank channels rose from 12% of Axis Bank sales in Q2 FY 2025-2026 to 30% in H1 FY 2026-2027 — the "Parivartan Plus" transformation program with Axis Bank targets the large bank opportunity, with more planned in H2 FY 2026-2027.
• Agency APE grew only 4% in H1 FY 2026-2027 — though August-September ran at 8% YoY; a reactivation program brought 12,000+ dormant agents back, with annuity up ~50% and protection up 27% in H1 FY 2026-2027.
• Group credit life grew 41% in Q2 FY 2026-2027 — partnerships onboarded over the last 3 years now contribute more than 35% of group credit life APE; broader retail partnership ecosystem grew 19% in Q2 FY 2026-2027 with five new partnerships added.

Annuity Surge, Protection Moderation Off High Base

• Q2 FY 2026-2027 retail APE mix: ULIP 37%, annuity 19%, par savings 15%, non-par savings 15%, protection & health 14% — annuity business grew 130% in Q2 FY 2026-2027.
• Annuity sales of Rs.526 crore in Q2 FY 2026-2027 — the variable annuity "Smart Rise" (Nifty 50-linked, launched in Q2 FY 2026-2027) contributed more than 50% and already ~8% of total APE; management denied it drove the Q2 margin delta, calling its margin profile "similar-ish" to the replaced product.
• Pure retail protection grew 31% in Q2 FY 2026-2027 — but moderated off a high base after the post-GST-change lift brought ~80-85% incremental customers; the FY 2026-2027 full-year plan had already assumed moderation, and a protection product refresh is underway.
• Protection TAM remains large — management estimates, assuming a target market of 8-9 crore Indians, penetration is possibly in the 15% range as of Q2 FY 2026-2027; India remains severely under-sum-assured.
• Rider growth: management stated 19% in H1 FY 2026-2027 — while the analyst flagged ~2% softness; management attributed softness to inherent ULIP demand weakness, with the rider component attached to ULIPs growing only low single digits.
• Non-par + annuity combined grew ~2.5% YoY in Q2 FY 2026-2027 and ~3.5% in H1 FY 2026-2027 — CFO Amrit Singh cited base effects, with long-term trend growth of 15-16%; steady momentum expected in H2 FY 2026-2027 with a product refresh targeted for Q4 FY 2026-2027.

IRDAI Consultation Paper: ~95% of Business Estimated Unaffected

• Management flagged proposed commission and expense-of-management changes as "a meaningful reset of industry business models" — Axis Max Life supports the reforms' objectives and is confident it will "emerge much stronger," as with previous industry transitions.
• ~89-90% of business stands to gain rather than lose if the proposed regulations come in the current shape and form — management optimistically estimates 95% of the business does not get impacted (period unspecified).
• Insulated channels per CEO Sumit Madan: Axis Bank (42-43% of sales), agency (21%), D2C (6-7%), direct sales force (12%) — together ~83% of business largely unimpacted; exposed pockets include smaller bank partnerships (~3%, realistic impact ~1-1.5%), small brokers (~2-3%) and GCL (~1%).
• Yes Bank contributes 5-6% of business — Axis Max Life holds #1 counter share; management does not expect a negative outcome even hypothetically under consolidation, while noting it cannot answer on Yes Bank's behalf.
• Management described "very constructive" meetings with the regulator — plus collective industry representations to DFS; suggestions to IRDAI include group credit life treatment, transition-period relief, and exclusion of GST from AUM computation; management is "hopeful and optimistic" suggestions will be reflected in the final draft paper.
• On bank insurance relationships, management said it is still only a consultation paper — internal scenario analysis is done and management is confident banks will ideally consolidate insurance partners at some point, but no formal discussions have yet been held with Axis Bank or any other bank.

Margin Guidance Trending Toward 26%; EOM Glide Path to 12.5%

• Management retained its 25-26% VNB margin guidance range — but said confidence is now trending toward ~26% for H2 FY 2026-2027 and full-year FY 2026-2027; on the FY 2026-2027 margin, management is currently seeing it closer to 26 than 25 — ~25.5% within the 25-26% spectrum.
• H1 FY 2026-2027 margin expansion attributed primarily to product-mix change and improved inherent product margins — with operating leverage a "far lower" contributor; margins structurally improve in Q3-Q4 FY 2026-2027 as volumes build.
• EOM-to-GWP ratio currently ~25%; management is confident of reaching 15% over the next 2.5 years — then to 12.5% of AUM (analyst-cited horizon: next 5 years); estimated OpEx optimization required is ~7%, split 3.5% + 3.5% across two 2-year periods.
• MD & CEO Sumit Madan's bridge: commission and GST adjustments ~5-7%, business/efficiency measures ~2-3% — on the journey from 25 to 15 and then to 12.5; his confidence is conditional on the final shape and form of the guideline.
• Core OpEx growth guided at 8-10% for FY 2026-2027 — Q2 FY 2026-2027 headline OpEx growth was ~3-4% (employee costs down 10% YoY, advertising down ~34-35%, other opex up 23% with some reclassification) versus core growth of ~9-10%.
• FY 2026-2027 total expense-to-AUM ratio may remain at ~25% levels — steady with FY 2025-2026, despite ~2-2.5% extra GST in FY 2026-2027; excluding GST from the base, management indicated an underlying reduction.

Comfortable Solvency; Persistency Inflection Expected in H2

• Solvency ratio at 197% in Q2 FY 2026-2027 with no immediate capital raise planned — the company raised ~Rs.686 crore of debt in September (Q2 FY 2026-2027); the analyst noted solvency is helped until new money comes in from either Axis or a QIP (period unspecified).
• New commission limits would take the ~22% FY 2026-2027 AUM base (analyst expectation, slightly below ~22%) down to ~16.5-17.5% — per CFO Amrit Singh; management confirmed a glide path from ~17.5% to ~15% over 2 years (period unspecified), calling it "not like a significant number" and navigable.
• Ind AS transition date confirmed as 1 April 2026 — management said it is premature to comment on the approach for the in-force book; FY 2026-2027 will be restated as the comparative period when FY 2027-2028 numbers are provided. With IFRS reporting set to begin FY 2027-2028, IGAP will be reported in parallel for two years.
• Persistency stress is concentrated in non-par designs — products launched in FY 2025-2026 created the challenges; the problem product was discontinued in March 2026 (FY 2025-2026), a move management called a "bold decision."
• Management expects persistency to stop deteriorating and improve — with improvement kicking in Q3 FY 2026-2027 and Q4 FY 2026-2027 as the problem product's base reduces.
• AI/digital momentum: 47+ AI solution tracks across recruitment, sales, underwriting and servicing — AI-based recruitment generated 60,000+ leads, the sales co-pilot supported 82,000+ sales interactions in FY 2026-2027, and AI-enabled underwriting models have delivered nearly Rs.1,000 crores of risk avoidance.
• Management expressed confidence in maintaining overall profitability momentum — and expects APE growth to accelerate in H2 FY 2026-2027 versus H1 FY 2026-2027, citing a "kinder base" and an opportunity from the ongoing transition; protection sales face a high base in H2 FY 2026-2027 (analyst framing).