Earnings call transcript: Mahan Ind Q2 2025 shows robust growth in key areas

Max Financial Services Limited (MFSL) reported its Q2 2025 earnings, showcasing significant growth in several key metrics despite a challenging economic environment. The company highlighted an 18% increase in revenue, driven by strong performances across its product lines. The earnings call also provided insights into the company's strategic focus on digital transformation and partner expansion.

Key Takeaways

• Revenue grew by 18% in the first half of the fiscal year.
• Gross written premium increased to INR 15,490 crore.
• The company expanded its agent network significantly, more than doubling in size.
• Digital initiatives saw rapid adoption, with 400,000 app installations in 100 days.
• Market share improved by 83 basis points.

Company Performance

Max Financial Services Limited demonstrated solid performance in Q2 2025, with revenue excluding investment reaching INR 15,090 crore, marking an 18% growth compared to the previous year. The company's focus on expanding its product mix and enhancing its digital capabilities has contributed to a robust market position. Despite the lower consolidated profit after tax of INR 92 crore, the company remains optimistic about its growth trajectory.

Financial Highlights

• Revenue: INR 15,090 crore, 18% growth year-over-year
• Gross Written Premium: INR 15,490 crore, 18% growth
• Individual New Business Sum Assured: INR 2.16 lakh crore, 25% growth
• Embedded Value: INR 26,895 crore, 15% year-on-year growth
• Assets Under Management: INR 1.85 lakh crore, 9% growth

Outlook & Guidance

Max Financial Services maintains its full-year growth guidance of 15-17% Annual Premium Equivalent (APE) and targets Value of New Business (VNB) margins of 24-25%. The company is focused on becoming a leading player in the insurance market by leveraging digital and data-driven strategies. Future projections include EPS forecasts of 0.03 USD for Q3 FY2026 and 0.07 USD for Q4 FY2026, with revenue expected to reach 5,819.1 USD in FY2026.

Executive Commentary

Amrit Singh, CFO, stated, "We are hopeful that in the second half, we will be better," indicating optimism for future performance. Sumit Madan, MD & CEO, emphasized the vast potential in the insurance market, saying, "When I look at insurance as a market, I just look at a huge landscape." He also noted, "We feel 25% is a good steady number," reflecting confidence in maintaining VNB margins.

Risks and Challenges

• Potential margin reduction due to GST impact, estimated at 300-350 basis points.
• Competitive pressures in the insurance sector.
• Economic uncertainties that could affect consumer spending and insurance uptake.
• Regulatory changes impacting the insurance industry.
• Challenges in maintaining rapid digital adoption and integration.

Q&A

During the earnings call, analysts inquired about the impact of GST on margins and the company's strategies to mitigate this effect. The management highlighted growth potential in the protection and annuity segments and discussed their channel strategy, particularly the partnership with Axis Bank. These discussions underscored the company's proactive approach to navigating potential challenges and capitalizing on growth opportunities.

Full transcript - Mahan Industries BO (MFSL) Q2 2026:

Conference Moderator: Ladies and gentlemen, good morning and welcome to the Max Financial Services Limited Q2 and H1FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishant Kumar, Chief Financial Officer of Max Financial Services Limited. Thank you, and over to you, sir.

Nishant Kumar, Chief Financial Officer, Max Financial Services Limited: Good morning, everyone. Thank you for joining Max Financial's earnings call for the quarter ended September 30, 2025. We are pleased to present our quarter two financial year 2026 results, which are now available on our website as well as on the stock exchanges. Joining me today are Mr. Sumit Madan, Managing Director and CEO, and Mr. Amrit Singh, Chief Financial Officer of Axis Max Life Insurance. With that, I would like to invite Sumit to share the key developments and performance highlights from the second quarter of financial year 2026. Over to you, Sumit.

Sumit Madan, Managing Director and CEO, Axis Max Life Insurance: Thank you, Nishant, and good morning, everyone. At the onset, I really want to thank all of you for taking the time out for this call. In my new capacity as the MD and CEO, I'm genuinely honored to take on this role and very excited about the opportunities ahead. Axis Max Life, as you all know, has always been built on strong fundamentals and a clear sense of purpose, and that gives me utmost confidence as we look to the future. My focus will be on amplifying our core priorities, namely strengthening our customer-first approach, accelerating digital and data-led growth, deepening our partnerships, and driving sustainable long-term value for all the stakeholders. We've, in fact, made some very strong progress on these fronts, and my goal is to build on that momentum, including execution with discipline while nurturing the culture and purpose that always defines us.

Before I get into the progress achieved on strategic areas, I would like to mention that on the regulatory front, the recent GST changes have further improved the affordability of insurance products, and we have passed on the full benefit to all our customers. We believe this will support stronger demand over the medium to long term. In fact, early signs of increased traction, particularly in the protection segment, are already visible. While the non-availability of the input tax credit may have a short-term impact on annualized margin, we remain very confident in our ability to offset this through focused initiatives. These include distributor renegotiations, cost optimization, and operational efficiencies. As a result, we are maintaining our earlier sales and margin guidance. Let me now take you through the key developments across our strategic focus areas for the first half of FY 2026.

The first one, friends, is sustainable and predictable growth. Continuing our strong performance, our individual adjusted first-year premium grew by 18% in H1 FY 2026, which, in fact, is more than twice that of the private sector growth at 8%, while the overall industry expanded by just 2%. Consequently, our private market share improved by 83 basis points, reaching 10.1%. Even on a two-year CAGR, we delivered 24% growth, well ahead of the private sector's 16% and, in fact, more than double the industry's growth rate of 11%, a clear reflection of the strength and resilience of our franchise. In quarter two of FY 2026, individual adjusted FIP grew by 14%, again outperforming both the private sector, which stood at 8%, and the overall industry at 1%. On an APE basis, we recorded 15% growth driven from both our proprietary and the bancassurance channels.

Our proprietary channels continue to be a cornerstone of growth for Axis Max Life Insurance. Last three-year CAGR from these channels stand at a very impressive 39%. In fact, our online business delivered a remarkable 68% CAGR and is supported by the sustained strength of our offline distribution network. Within offline proprietary, our agency channel has seen significant expansion, with the agent post growing from around 61,000 in FY 2022 to now almost 142,000, alongside the addition of, of course, 150 new branch units over the past three years. Additionally, our service-to-sales approach, supported by continued investments in digitizing the sales management process, has been instrumental in driving growth across our cross-sale vertical.

On this strong foundation, our offline proprietary channels recorded 26% APE growth in Q2 FY 2026, while the online business grew 14%, resulting in an overall 22% growth from the proprietary channels during this quarter. Our partnership business also continues to gain traction, growing at 10% in Q2 in APE terms, supported by the scaling up of the partnerships we've built over the past two years. These new partnerships in banking and the broking space now collectively contribute around 5% of the individual APE. Driven by strong execution, product suite, and technological prowess, we have been able to ensure that our counter share in all new banker partnerships is now well over 25%. Another one of our key strategic growth areas has been the NRI segment, which continues to deliver strong, consistent performance, with about 13% of total sales coming from this segment.

To further strengthen our presence in this space, we have received the SEZ approval and NOC from IRDAI and provisional approval from IFSCA to establish an office in Gift City. This office will serve as a strategic hub, enabling us to expand access, improve service delivery, and capture the increasing opportunities within this growing market. To further enhance our reach and diversify our distribution footprint, we added 31 new partners across the retail and group segments during the first half of FY 2026, further strengthening our multi-channel presence and setting a solid foundation for future growth. Point two that I really want to bring out is around product innovation to drive margins. At Axis Max Life, we remain deeply focused on driving product innovation to deliver sustainable value for all our customers, employees, partners, investors, and the broader community.

Our non-participating savings products continue to perform strongly following the Q1 launch of Smart Vibe, helping us maintain a well-balanced product mix. Protection remains a preferred segment for us. Our award-winning retail protection products have led us to attain the highest market share during H1FY 2026, with a 34% growth rate in pure protection category. Consequently, the total retail protection and health segment contributed to 13% of overall sales, with 36% growth supported by 37% wider attachment rate. In addition, group credit protection business is also growing steadily, with a 24% growth in Q2, well ahead of the industry average. Our annuity business grew by 85% in H1FY 2026 and 122% in quarter two FY 2026, driven by overall a very strong execution on retail and the corporate annuity pool.

We recently launched our annual retirement study, well known as IRIS, India Retirement Index Survey, with the fifth edition, covering more than 2,200 households across 28 cities. IRIS measures how prepared Indians feel for retirement on a scale of 0 to 100. We are happy to note that the index has improved from 44 to 48, led by higher health preparedness, while financial and emotional readiness remains stable. These findings do highlight the growing need for retirement planning, reaffirming the strategic importance of our annuity offerings in securing long-term financial well-being for our customers. As we move ahead, the third important piece to highlight is our approach towards being a very customer-centric organization. At Axis Max Life, our customers always remain at the heart of everything we do. We are deeply committed to building relationships founded on trust, transparency, and service excellence.

Our focus on delivering superior customer experiences continues to set us apart and is reflected in our market-leading retention and satisfaction metrics. We continue to lead the industry in 13-month persistency by number of policies as per Q1 FY 2026 rankings and hold the second position for both 25 and 37-month persistency on the same metrics. In quarter two of FY 2026, our 13-month persistency stood at 83%, while the 25-month persistency reached an all-time high of 76%, up nearly 500 basis points year on year. Our net promoter score improved to 57, up from a baseline of 52 at FY 2025 exit. Touchpoint NPS improved to 59 from 55 earlier, and relationship NPS improved from 50 to 54, demonstrating strong, robust customer engagement and satisfaction.

We've also made strong progress in grievance resolution, with the grievance incidence rate improving to 38 in quarter two FY 2026 from 45 in quarter two FY 2025. Together, all these outcomes reaffirm our unwavering commitment to customer centricity, which remains at the foundation of our sustainable long-term growth and the trust that defines Axis Max Life brand. Another important area where the organization has really focused is around digitization for our operational efficiency. Our digital transformation journey continues to deliver tangible and measurable gains across customer experience, sales enablement, and operational efficiency, strengthening Axis Max Life's position as a digitally-led insurer of the future. Our mobile app continues to scale rapidly, with over 400,000 installations within 100 days and 21% new-to-digital users, supported by some very strong user feedback reflected in our ratings, which is 4.7 on iOS and 4.8 on Android.

We continue to create a seamless journey for our customers, leveraging the digital ecosystem, data and analytics, and a very superior user experience. This has led to industry-leading NPS scores for our digital platforms. Our customer service website NPS is now at 71, and e-commerce buying stands at 77. Also important to note, we ensured the full GST compliance across all digital journeys and core insurance platform within just two days, enabling the timely issuance of over 15,000 policies while maintaining a seamless customer experience. Our digital distribution platform, MSpace, as we call it, is now scaled to all proprietary channels and to Axis Bank partnership with a very high adoption rate of almost 90%, leading to higher productivity in our cross-sale channel.

Even on the sales enablement front, the Sales Navigator platform, a real-time analytics and incentive management tool, is now adopted by over 75% of our salesforce across agency, DSF, and Axis channel, further enhancing the productivity and the performance visibility. We continue to leverage AI, AI cross-sale engine for our proprietary and partnership business to generate personalized offers. Each offer includes the best product, the next best product, pre-approved sum assured, and a conversational pitch for the sellers. This has resulted in approximately INR 500 crore of new sales. In fact, even in risk and underwriting, we are leveraging automation to enhance both precision and scale. Our comprehensive suite of risk models is fully integrated into our onboarding journey, ensuring meticulous due diligence based on the risk category. This integration has yielded potential savings of INR 550 crore by fraudulent claim avoidance.

Additionally, our AI-driven income estimation model, utilizing alternative data sources such as CIBIL, PayU, and Account Aggregator, has all revolutionized the financial underwriting. This innovation has, in fact, allowed 30% of our term portfolio to undergo financial underwriting without the need for any physical documentation, resulting in faster in-journey decisions. Our GenAI initiatives continue to scale across the enterprise. Eli, our virtual HR business partner, now engages approximately 17,000 frontline sales employees with a 51% engagement rate. Eli supports continuous listening, personalized communication, and assists managers and HR in resolving employee concerns, which contributes to lower attrition levels. Converse Pro, our AI-based email resolution engine, efficiently handles up to 30% of customer email volume. This automation leads to a faster resolution and has resulted in a 20% reduction in support headcount.

Additionally, our GenAI immersion program for senior leadership has identified 30-plus high-impact enterprise use cases to be deployed over the next two years, further embedding AI-driven innovation across all aspects of business. To summarize FY 2026, it has been an exciting year. FY 2026 continues to demonstrate strong momentum with robust growth across key markets driven by our focus on innovation, customer centricity, and operational excellence. Even as global developments continue to influence the market dynamics, we remain confident in our ability to meet our guidance and deliver sustained value creation for all stakeholders. With that, let me now hand over to Amrit, who will take you through the financial performance for the quarter. Thank you, Sumit. And good morning, everyone. We had made our presentations live last evening. I will just kind of speak about a few highlights, a few financial highlights.

At MFSL level, the revenue, excluding investment, now stands at INR 15,090 crore, a growth of 18% in the first half. MFSL's consolidated profit after tax is at INR 92 crore. It's lower than last year, primarily due to the fair value change account that India is accounting in which it has to be taken. Also, the GST expense underlying Axis Max Life franchise has kind of taken on its profit. Axis Max Life gross written premium and renewal premium both have grown healthy at 18%, touching INR 15,490 crore and INR 9,503 crore, respectively. Individual new business sum assured continues to grow at a healthy pace of 25% and has touched INR 2.16 lakh crore. We are a number three player with respect to total individual sum assured in the market. Embedded value, ending 30th September 2025, is now INR 26,895 crore, a year-on-year growth of 15%.

The embedded value carries a one-time GST impact, which is on the backbook of INR 268 crore. Analyzed operating ROEV is 16.3%. This includes a positive operating variance of INR 13 crore. There is a marginal negative non-operating variance of INR 9 crore, largely due to yield curve movements and which were offset with some gains in the equity. Policyholder OPEX to GWP is at 15.5%. Policyholder OPEX has grown by 11%. During the quarter, we raised additional INR 800 crore of subdebt with IFC as a strategic partner to this particular round. This has helped strengthen our solvency, which now stands at 208%. AUM are at INR 1.85 lakh crore, a growth of 9%. In H1FY 2026, the retail product mix is very well balanced. Participating products at 13%, annuities at 8%, non-par saving at 28%, protection and health at 13%, and ULIPs at 37%.

Each of these categories has delivered healthy growth with the exception of ULIPs. The overall balancing of product mix has helped us expand our margins from 23.6% in quarter two FY 2025 to 25.5% in quarter two FY 2026. For H1, the margins have expanded from 20.2% last year to 23.3% in this current year, which has led to a VNB growth of 27%. In the month of September, approximately 75% of sales were impacted due to GST credit disallowances, which contributes to around 0.6% of margin impact in the first half. Thereby, the GST impact is close to 300-350 basis points on a run rate basis.

However, despite this impact, through a series of actions on cost, product mix, and execution, we are confident that we will maintain the margin guidance that we had given earlier of improving the margins from the previous year and being in the range of 24%-25%. This will be along with the higher-than-market growth that we have been delivering so far. In conclusion, our agility in navigating regulatory shifts and market dynamics has enabled us to deliver a healthy operating performance. With that, we'll be happy to take over questions. I'll hand it over to the moderator for Q&A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two.

Participants are requested to use handshakes while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shreya Shivani from Nomura. Please go ahead. Yeah, thank you for the opportunity. Congratulations on a great set of numbers. I have three questions. First is, as you highlighted, the impact of GST, if you do nothing, would be a 300-350 basis points annual year-over-year impact that we are talking about. I just wanted to understand that when it comes to, apart from cost, product mix, when it comes to cost, what kind of negotiations are we done with our distributors, or what kind of timelines do we have? Will it take us one quarter, two quarters, etc.? That is my first question.

My second question is, again, on the GST cut, if you can help us understand in your product suite, which product gets impacted the most, which product gets impacted the least, and how would you manage the impact across the product categories? Some understanding of how each product responds to what has happened on the GST bit. My third question is on the channel, and I wanted to understand on the channel strategy. Your partnership channel, obviously, your proprietary channel has been running faster than the partnership channel. Within the partnership channel, what have been the trends with the banker partners and particularly with Axis Bank? That will be my third question. Thank you. Hi, Shreya. Thank you for those questions. I'll take the first two, and I'll request Sumit to speak about the third one. Firstly, you're right.

If you do nothing, that is the impact, 300-350 basis points. There are a series of things that we are trying to do at our end, which beyond distribution negotiation is also cost controls, product tweaks, product mix, renegotiations across our vendor partner, looking at our outsourcing and sourcing decisions as well. With respect to specific negotiations with the distributor, we will not like to kind of comment because these are individual conversations that we will do with our distributors, and some of these conversations are underway and will require a couple of months before some closure kind of comes through. I think the way we are approaching this problem is, and I think this also is an answer to your second question, that which product gets impacted the most. There are products which are impacted structurally, and there are products which are more tactical impact.

I think the ones which are structurally impacted, which are more in the lines of ULEP and participating design, we are working with the distributors to see how the same can be tweaked. On other product categories, there are more tactical, and we will leverage tactical mechanics to solve for those. On channel strategy. Yeah, Shreya, on the channel strategy, you'll be happy to note, and you must have seen the progress over the last few quarters. There is a very good mix between the partnership and the proprietary channel now. Proprietary channel now constitutes almost 46% of the total business, and the remaining 54%, of course, coming from the partnership channel. Our new banks, and we've acquired almost across various financial players, 31, like we mentioned in H1, around almost 90 plus odd over the last financial year.

These new partnerships have now started adding quite a significant revenue to us. On the new bank side, if I look at the last six banks as an example, out of these in three banks, our counter share is actually already more than we are the number one player as far as the counter share in three out of those six banks are concerned. I think in terms of growth, it's a very healthy growth as far as various partnership channels also are concerned. Axis Bank, since you specifically asked, we have seen a growth of almost around 7% as far as Axis Bank is concerned. In the remaining partnership channels, our growth, in fact, has been much faster. Our growth, if you look at the overall story as far as the partnership channels are concerned, we've seen a growth of around 14% coming from Yes Bank.

In some of the other players, we've seen a growth of 100% plus coming between HYFI 25 and HYFI 26. There is a growth of 111% in the new acquisitions that we've done over the last two years. Got it. Just to follow up on, because the channel strategy, I wanted to understand it better, there has been some media—I mean, the chairman of IRDAI, in some media reports, has been talking about how insurance is a high-cost industry, and he would want to bring it to medium cost. I understand some of it he may be referring towards the health insurance product specifically. I just wanted to understand your perspective on how to deal with such—I mean, how are you thinking about the entire distribution strategy along with the cost structure in mind? Because the chairman of IRDAI is speaking in these terms currently.

Shreya, as things kind of stand today, there is an expenses of management which is defined by the regulator. Axis Max Life actually operates well below the threshold. All efforts on a progressive year are actually to optimize for that expenses of management at an overall level. Given the nature of the product, and I think the regulator understands that as well, it does require a strong distribution footprint to carry this product category. That enablement needs to be provided. As time goes by, I think efficiency always comes through. That is how we think about it. All right. All right. This is very useful. Thank you and all the best. Thank you, Shreya. Thank you. The next question is from the line of Avinash from MK Global. Please go ahead. Yeah, hi. Good morning. Thanks for the opportunity. A few questions.

The first one is more on accounting clarifications. If I see a material divergence this quarter between the accounting profit or PBT of Max Financial and Max Life, is it just—I mean, pardon my ignorance—is it just that Ind AS and IN GAAP divergence, or is there something more? If that divergence is broad, you can sort of explain what are the key factors here in the divergence. Related to accounting, another question. If I see your EV walk where you have explained this GST impact around INR 260 crore, that I see you take it out of NAV. I mean, a simple understanding would suggest that, okay, if it is the future years' GST ITC losses, it should be ideally part of the VIF adjustment. Is there something—I mean, here again, my understanding is incorrect. These are on accounting.

The second question, more from a strategic, if I mean, you have rightly highlighted that over the last five years, in the backdrop of industry growth at 10%, you have grown at 15% odd. Now, if I were to ask any Sumit now, because you have just taken over, over the next five years, now because you have kind of your strategy and particularly product and channel strategy in place, and also you know the industry dynamics, do you have that kind of a same kind of confidence or kind of aspirations to repeat that last five years in the backdrop? If the industry were to grow at 10%, can you grow at 15% even from this list? Thanks. I'll take the first one, and I guess I'll request Sumit to come in for the third one.

Avinashji, your observation is actually correct with respect to the accounting profit in MFSL, which is an in-days mechanics. The difference between Max Financial Services, Max Life, Axis Max Life profit, and in-days profit is that in addition to the profit dip which has happened in Axis Max Life due to GST impact, where from INR 231 crore of profit after tax that we had got last year, we are right now reporting INR 149 crore. That's an INR 82 crore drop. The residual drop is just because of the in-days accounting standard, which actually measures mark-to-market movements also through the P&L. There is nothing else beyond that particular element on this particular one. On the GST impact, it's just a representation to just show what the GST impact is. It should be from WIF only. It is not out of the net worth.

That is how you should kind of read it. Avinash, I think on your next question as far as the next few years are concerned, coming from a different industry now into insurance, I look at it as a huge opportunity as far as what the industry offers to us. I am not new to Axis Max any longer. I have been here for almost two years, so very much involved as part of the strategy. Like I said in the opening address also, there are some key parameters we are focusing on. We have looked at segments very closely. We spoke about NRI as a case in point. I think most importantly, what stands out is the continuity factor for us. I spoke about that in the initial speed also. There is a very sustainable and predictable growth which is there.

In terms of some of the other focus areas, like I alluded, the entire digitization for operational efficiency is something that we've taken up with a lot of zeal in the organization. Customers always have remained at the center of Axis Max Life, and the same trend again continues. Even in terms of the product innovation, the idea is to give the best product to the customer but at the same time driving margins as well. Over the next five years, to answer it specifically, I'm very optimistic as far as the industry is concerned. I'm both optimistic and very excited about the future that holds for us. We've always maintained that we'll be able to deliver better than what the industry is doing by almost around 300-500 basis points. I feel very confident about this. Perfect. Perfect. Thanks. All the best. Thank you, Avinash.

Thank you. Thank you. The next question is from the line of Swarnath Mukherjee from BNK Securities. Please go ahead. Hi, sir. Thank you for the opportunity and congrats on a good set of numbers. First question, sir, just wanted to understand the VNB development for the quarter. I mean, year on year, it is 190 basis points now. You said 60 basis points coming due to the GST impact. Adjusting for that, that 250 odd basis points, if you can break it down between how the product mix has held, how much has come from the product mix, how much maybe product-level improvements, and if there has been any operating leverage that has played out during this quarter. If you could give that color, it would be very helpful. Second is, in terms of growth, as you had mentioned that you are maintaining the growth guidance.

If I look at your base in the second half, it is slightly more benign than what we had in the first half. Are we being conservative in kind of maintaining and not upgrading our growth guidance? I just wanted to understand, particularly given the fact that we have a leadership position on the online channel and given that the outlook for protection-oriented products improved meaningfully because of the GST changes, can we not see a better growth and better margin outcome also coming out from that? Third, again, on the product mix, I just wanted to understand that are we comfortable with the current product mix, or can the ULEP mix be reduced further? I can see that in the banker channel, it has come down meaningfully. Is there any further headroom to reduce ULEP?

Lastly, on operating ROEV, sir, if I were to think about over the next couple of years, and given that there might be some impact coming from the interest rate side on the unwind factor, how should we think about our operating ROEV going forwards? These will be my questions. Thanks, Swarnath. I think I'll take most of these questions. Firstly, on the VNB, I think your question is, where is the improvement in margins coming through? A large part of this answer is product mix-led, Swarnath. Some bit of support also coming in certain categories like protection and annuity, but a large part of this is coming out of product mix. On the growth guidance, look, I mean, on an APE basis, we are growing 15%. We had given for the full year a growth guidance between 15% and 17%.

I think we are holding on to that number. Your observation is right that on a very tough base, and that's what we said, that a two-year CAGR is right now touching 24% kind of levels. On a very strong base, we have done well. We are hopeful that in the second half, we will be better. Right now, just holding on to the guidance. If we have a positive surprise to deliver, I am sure that will delight you as well. Product mix, I think we are balanced. One of the things around the Axis, and largely this has come because certain discrete steps and actions have been taken in our partnership channels, especially Axis Bank, which you will recall last year was running at a higher ULEP mix of 60% plus. That has been brought in line at around 50%.

We don't see a need to go beyond it. It is important to understand that each category has a consumer and a consumer segment to it. Each of them is VNB additive, and hence kind of helps the organization at an overall level. We feel that the mix is fairly balanced. We do have certain designs being launched on the participating side, which could see some variances happening through the quarter. Generally, unit links in the last quarter does see a little bit of increase as the momentum of the sales also picks up. I won't kind of indicate that there is more headroom to reduce ULEP. That's not how we think about it. Operating ROEV, look, it's a mathematical number.

Swarnath, you understand that as EV kind of builds up, there will always be VNB as a portion of opening EV will start becoming smaller and smaller. Over the next two, three years, we are comfortable remaining in the range of 18%-19%. That is what we will try to do and target. Right. Very helpful. Amrit, just a quick clarification on the first response. You were saying it is largely coming out of the product mix. I just wanted to understand, is there any operating leverage also component playing out to this? Because our growth has been fairly strong. I am just wondering if maybe our cost base would be kind of geared towards this growth. Is there, are we getting something over and above that cost base?

In a scenario, hypothetical scenario where in future, if there is some at least transient impact on growth, can there be a delivery? That is the reason why I asked the question. I think on operating leverage, Swarnath, you are aware, and Sumit spoke about in his opening remarks that we have added offices and we are trying to augment a proprietary channel. There is an investment strategy which has also been in play for the last couple of years. The sales and OPEX growth or total expense growth have been in line with each other. I will not say that there is a big operating leverage which has kind of come through. As time progresses, especially in proprietary channels, we do see a significant bit of operating leverage helping us as times unfold going forward. Okay. Got it. Very helpful, sir. Thank you.

All the very best for the second half. Thank you. The next question is from the line of Kushagra Goyal from CLSA. Please go ahead. Hi. Thank you for taking my question. Most of my questions are answered. Just one first question on the protection side. You are delivering quite strong growth on the total retail and health protection, and you shared that 34% is the pure protection growth. I just wanted to know what was the pure protection growth this quarter last year? Similarly, for the rider attachment rate, that is around 37% right now. What was that, let's say, for the full year FY25 and this quarter last year? Yeah. Thank you, Kushagra. Very relevant one, Kushagra. In fact, we've been seeing protection growth across channels for the last year or so.

To answer specifically, we've seen a 34% growth as far as pure protection is concerned. This growth has come across Axis Bank. This growth has come across banker channel. This growth has come across all our proprietary verticals as well. We see a very strong momentum now. In fact, post-GST, the momentum has only improved as far as protection is concerned. We've been looking at the numbers post-22nd September week by week. Across industry and all the more so with Axis Max Life Insurance, we've seen strong traction being built up on protection week on week post-22nd September as well. On riders, it's 37% versus a 45% attachment last year. Those are the kind of numbers that we are looking at. Protection was around 30% growth the year prior, on which we are right now doing 34%-36% kind of growth rate till end of September.

Post that, there is some acceleration that we are seeing in the protection business. Got it. That's very helpful. Secondly, I think you answered on the OPEX side, but this time our OPEX to GWP was quite low. Just wanted to understand how should we see this going forward? Was this just a timing thing, or for the full year, we can see some improvement in our OPEX versus last year? Just wanted to get some more color on that. OPEX growth has been around 11%. As I told you, the GWP has grown at around 18%. Mathematically, if you keep growing your GWP faster than the OPEX ratio, you will continue getting an improvement in OPEX to GWP ratios. We do expect this trend to stay for the full year as well. Okay. Got it. That's all. Thank you.

Best of luck. Thank you. Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead. Yeah. Hi, team. Congrats on a great set of numbers. First question is on the GST hit. I think, Amrit, you mentioned 200-250 or 300-350? 300-350 on a run rate basis. On a run rate basis, if nothing is done. In that light, you had earlier guided for a VNB margin expansion of about 100 basis points for FY2026. Now, how would you kind of guide for the margins for FY2026? Would you change that 100 basis points expansion, or you would want to increase or cut it? How should we look at it for the full year? Yeah. Prayesh, I did speak in the opening remarks. I think we are holding on to the guidances.

We had indicated that we will improve margin profiles, and it will be between 24% to 25%. We are holding on to that guidance. Okay. Got that. Secondly, the second question is on the Axis Bank channel, right? Do you think that we have a lot of headroom here to kind of take the advantage of the brand that has been built now, and especially in lower-tier cities? The growth that we have been reporting on the Axis Bank channel is quite muted right now. Do you think that this can be another driver for you going ahead, or do you think that a 7%-10% kind of growth is something which is more doable at Axis Bank channel? I think Axis is a very strong brand, Prayesh.

Addition of Axis, like you rightfully said, specifically in tier two, tier three locations, that further up the momentum of sales for us. It is a very well-recognized, very respected brand, and obviously, we are getting a lot of benefit out of it. What we have done specifically, while you see the growth number at 7%, what we have done is also a lot of changes as far as the product mix is concerned. That is something we were very conscious about as far as change in the last quarter is concerned. Along with Axis, we are also focusing on some verticals within the bank where probably we can do more. Some of the cross-sell around assets, emerging channel, cards. Those are the ones where we need to make use of the entire opportunity.

As we get into H2, I am actually very optimistic as far as the numbers coming from Axis from a growth rate perspective are concerned. They've done very well in terms of the laid-down strategy for quarter two. Growth numbers at 7% have been pretty strong. I'm looking forward to a far better number in H2. Great. Just about this 300-350 basis points, how much of this can you offset by the product mix in the second half where production is improving? I would assume non-par can have some more legs given the interest rate trajectory. How much of it can be offset by product mix, and how much would you kind of need commission support to completely offset the impact?

I think, Prayesh, rather than getting into the specifics, let us just hold to the guidance that we have indicated that when we started the year, we guided for 24%-25%. Obviously, we were not aware that GST will come our way. We will navigate some of these things to ensure that we hold on to the guidance number. I'll leave it at that rather than kind of give specific details around percentages here. Got that. We sure will. Thank you so much. Thank you, Prayesh. Thank you. The next question is from the line of Madhu Kaur Ladha from Nuvama Wealth Management. Please go ahead. Hi. Congratulations on a great set of numbers. It's a very strong performance. Two questions, sir. See, Axis channel at 6%-7% sort of a growth number is still a little bit probably lower in my expectation.

I was wondering what is happening over there in the sense that I know that, okay, you've done some work on the product mix side, etc. but still, the premium uptake, I would believe, should have been higher. We also know some also comment on the counter shares and strategy, and what should be the number that one should look at in terms of Axis growing year over year in the medium term? Some commentary around that will be helpful. Second, I'm seeing that group credit life now has started picking up a little bit for us. It's doing about, we've got about a 14% growth year over year in the first half. I wanted to get a better sense of what channels are driving this business, how much of it from Axis, and how much of it is from outside Axis, if it could help with that.

Thanks. Sure. I'll take the first one, first, Madhu Kaur, as far as Axis Bank is concerned. See, I think we need to understand there are a lot of things that we are focusing on as far as Axis is concerned. Like I said earlier, emerging and you really have to look at the picture going function by function. For example, emerging channel is an area, like I mentioned earlier, which is growing steadily for us. Similarly, for example, we have looked at cards database. We've looked at assets database in terms of further penetrate from an insurance perspective. While the growth is at 7% for H1, we have also taken up an Axis transformation project to further up as far as productivity and efficiency at Axis is concerned.

Most importantly for us, like we mentioned, the brand is so strong, and all of us expect better numbers across all our channels, including Axis. Given the momentum right now, we are actually on the right track. There was a very conscious intent around correcting some of the product mix at Axis. Even with the changed product mix, a growth of 7%, Madhu Kaur, is actually a very healthy growth. H2 last year, for example, was around 8% for us. I'm actually very confident of doing much more in H2 coming from Axis Bank compared to what we did last year because all the ingredients are right now in place. With the momentum across all channels behind us, I think Axis should not be an exception. We should do exceptionally well.

There's been a lot of groundwork that we've done, Madhu Kaur, even in terms of some of the digital initiatives that we've taken at Axis just to further strengthen both the teams at Axis Bank and, of course, at Axis Max Life Insurance. In terms of digital efforts also that we've done, you will see the growth coming at a much faster pace in H2 from Axis Bank. On the second question, as far as GCL is concerned, you want to comment first or GCL? Madhu Kaur, on GCL, actually, our dependence on Axis is around 40%, and the rest comes from other channels. As we have been updating, we have been augmenting many partners in the last 18 to 24 months. Even in the first half, also, we added partners. Some of those additional partners are actually driving some bit of the growth.

Also, as the disbursement cycles are kicking off, we are quite confident that this will build up as the year kind of progresses further. Just, Amrit, just to follow up, in GCL, what is our counter share at Axis? And with a 7% sort of a growth, my guess is that on individual APE basis, our counter share would have sort of come off a little bit. Is that correct? Yeah. On Axis, on individual side, counter share hovers between 65%-70% kind of ranges. I think we are holding on to 65%, 66% for the first half. No material deterioration in that space as we see it. We are quite confident that it will remain in that range. Credit-like, the counter share is slightly lower, more in the likes of 60% kind of levels.

But again, there also, we are hopeful that we will be able to enter into new spaces and augment that as well to more like a 65%-70% over the years. Got it. Got it. Thanks and all the best. Thank you. The next question is from the line of Sankeet Gowda from Evander's Park. Please go ahead. Yeah. Thanks for the opportunity. Amrit, this 60 basis point in the current half margin impact, how do you break it? Whether it is only related to new business or the renewal from 1 April to 21 September is also there in 60? If that is the case, can you break it down, that 60 into renewal part and the new part from September 22 onwards? No. Hi, Sankeet.

Sixty bits, as I said, is only for the sale that has been post the GST period, which is 22nd September onwards, which I mentioned in the opening remark, is 75% of the sale of the September month. The rest of the impact is something that has got carried in the other number that you saw, the INR 268 crore that we showed on the EV board. Understood. Understood. Sorry, maybe I missed that point. And on that INR 268 crore, also, Amrit, I mean, obviously, as a percentage of opening EV, if I do that number, it comes closer to 110 basis points, while most of the other names are reported somewhere between 40% to 50%. Just wondering why we are almost at a 2X compared to what others are reporting. Anything to read there just to have an understanding better why there is a divergence?

Actually, Sankeet, I'm aware that some of our competitor people have reported a lower number. It predominantly is to do with the product mix that is sold and what is as part of the WIF in the book. If we have more traditional, which actually intrinsically has more renewal commissions, then the impact on us would always be higher. It's not much of an OpEx play on the renewal side, on the maintenance side. It is more the renewal commission play, which actually creates this difference between us and anyone else. Is it fair to say that you being largely very retail-heavy compared to others being group, and maybe your conservation ratio being a little superior compared to others is getting reflected in that divergence? It is quite possible.

Also, we have not made any assumptions when we have kind of computed this amount with respect to any improvement in persistency or attachments of riders going forward, etc. It is a more conservative estimate of as-is whereas basis. Because the premium rates have come up, maybe there could be positive elements around persistency, which could flow through, etc. This is as-is whereas kind of an estimate of INR 268 crore, largely coming out of renewal commissions the way they are structured in our books. Understood. Understood. Second question, Amrit, is that you are still maintaining your VNB guidance of 24%-25%. If I gross add back your GST impact, maybe you will be around 28%. See, that is a meaningful improvement. Assuming GST would have not happened, then your margins were going from 24% to 28%.

I mean, that bump up is predominantly to say that happened because at product level, especially non-par or NUT, product-level margins have meaningfully improved because of the shape of the curve. Therefore, it's more tactical or more cyclical benefit what you are getting today to navigate the problem of GST? You are partly correct. There are two, three elements. I think if you see in our numbers, strong growth in protection, strong growth in annuities, and now from quarter two onwards, even the credit-like business is picking up. Intrinsically, mix is supporting us. This is a tailwind that we had not necessarily baked in at the time of margin guidance at the start of the year. That is something that we're seeing as a strong trend. Additionally, your observations around yield curve enabling some of the categories that you mentioned is also true.

It's a mix of both the things which are helping us navigate this particular financial year. Amrit, the reason why I'm asking this question is that 24%, as you're going to 28%, if GST would have not happened, then product mix would have contributed how much? Maybe this product-related tailwind, which is more cyclical in nature compared to the macro environment, how much it has contributed to the margin? If you can give a bit of color, that will be useful to understand how much is structural and how much is cycle-favor. I think product mix, the contribution would be in the ranges of 60%-70%, and the rest, around 30% or percent, is coming out of some of those intrinsic category margins improving. Okay. Perfect. Thanks for the answers. That's it, Sankeet. Thank you. The next question is from the line of Sukrit D.

Patil from Eyesight Fen Trade Private Limited. Please go ahead. Good morning, team. And best wishes to Mr. Sumit on joining and taking on the reins of the company. I just want to understand a personal outlook from your side. I want to understand the bigger picture. What is the long-term plan for Max Financial Services beyond quarterly numbers or distribution expansion? Is there a deeper tactic that you are building that gives the company a lasting edge over the time? For example, are you thinking about new ways of working or introduction of any digital platforms or customer engagement modules? Something that makes the company stronger and hard for your competitors to copy the model. Thank you. That's my first question. I'll ask the second question later. Sorry, Fredrik, are you there? He said he'll ask the second question. Okay. Sorry. You want me to answer the first one first?

Yes. I think personal outlook, Fredrik, I have said it time and again in various forums. I come from banking. When I look at insurance as a market, I just look at a huge landscape. Whichever number you want to believe, 3.8, 4, 4.2, as far as penetration is concerned, there is just so much opportunity as far as India is concerned. At least in the last two years, with my experience at Axis Max Life, we've just furthered up the momentum as far as our numbers, penetration, and growth is concerned. I think from a perspective, Fredrik, first and foremost, we need to just focus on some of the right areas. Whether it's sum assured, whether it's protection, the growth in some of these key areas along with number of policies as a case in point is something which is very close to us.

If you look at the industry numbers also, Fredrik, over H1, our growth as far as number of policies is also concerned is actually pretty high compared to the rest of the players in the market. Similarly, when you look at the protection or the sum assured numbers, we, again, have a very strong script there. I think those are some of the focus areas. In terms of the vision, the way I see it, and internally, we've divided into two parts. From a short-term perspective, Fredrik, we are looking at ourselves being a breakout number three player as far as the market is concerned from a short-term perspective. I personally want to take a significant lead as far as number three in the market is concerned over some other players. That's the immediate vision.

In terms of data and digital, and I think we have, as a company, done a lot of work both on data and digital over the last two years. In my opening advice also, we spoke about Sales Navigator. We spoke about MSpace. We spoke about MPro. Some of those initiatives that we have taken are far better and far faster than what we've done in the past. There have been some very specific strategies, Fredrik. I'll give you a small example. Just the content of the training video, whether for our sales team on the ground or even for our very respected advisors on the ground, we've made them much more digitally savvy, made it much more sharper. It is a combination of small and big steps that we are doing in terms of looking at the way the future is.

In terms of way of working, Fredrik, I think Max has always been a very strong entity. I think only just a little bit weak around execution has helped us reach these kind of numbers. The best part is the consistency is the key. I feel very strongly that these numbers, this momentum is not only sustainable but also further scalable for us. Thank you. My second question is on margin. Again, a forward-looking one. When costs rise, whether it's distribution, compliance, or tech, how do you make sure the margins stay steady without the growth slowing? Is there any system you have built or you will be putting into place like smarter sourcing, pricing discipline, or any digital efficiencies that will help you quietly keep the profits in line even when things are getting, even when you can't foresee any unpredictable things or something down the line?

Thank you. I think on margins, the way we think about margins is we feel 25% is a good steady number. If the number kind of increases beyond that particular range, we will be very keen in throwing that back as investment so as to augment and build distribution. At the same time, we like to keep it range-bound. We do not want it to kind of fall also sharply. Hence, pricing discipline, execution, identifying those pockets of opportunities at all points in time is a very, very active element of play in our distribution machinery. Our distribution machinery almost kind of runs through a daily VNB rhythm as well. There is that kind of a granularity in the system which we have built over time.

Just zooming out and stepping back, I think if you really see, there are three categories which, as a license, we are permitted to play in. There is a discipline savings category. There is the mortality/morbidity category. And then there is a longevity category. The latter two categories are fairly under-penetrated, and India continues to provide significant opportunities in that space. Those also, with respect to competitive dynamics, are less competed from other product forms and hence continue to remain a good source of margin profile for the company. Building and augmenting some of those mixes will help us stay steadfast on it. The remaining category of savings, I think scale solves and creates an operating leverage play.

Especially in our own channels, where we see this pan out quite significantly, it is something that we closely watch and ensure that the productivity outcomes of our sales force year on year actually improve. That is largely around margins, especially how we think about it. Thank you for the guidance. I wish the entire team and you personally best of luck for Q3. Thank you, Fredrik. Thank you. The next question is from the line of Sneha Ganatru from SUD Life. Please go ahead. Sneha Ganatru, please proceed with your question. Due to no response, we will take the next participant. The next question is from the line of Ms. Chinthe Chowda from Kotak. Please go ahead. Hi. Ms. Chinthe, just one question. This is actually on product mix.

If I look at, if I kind of try to break this between proprietary and partnerships, I mean, one common thing that we see is that on a year-on-year basis, ULIP has gone down. Within the proprietary channel, what we can see is that there has been some meaningful improvement in protection and health and par book. When I look at partnerships, there is a bigger increase in the non-par savings book. Is this something by design? I think if I look at structurally as well, the share of protection and health in proprietary is much higher than that of partnerships. Is this something which is there by design, by strategy, or is it something that you would want to kind of equalize at some point of time? How should one think about it? Your observation is correct, actually.

Some bit of it is by design. Protection selling by nature is a bit of a long selling because it kind of entails medicals, collecting financial documents. The time that it takes to close a protection sale is always longer. We have seen the ability to navigate and leverage this in proprietary channels to be higher than partnership channels where savings and instant products, which actually can be issued quickly, find more popularity. At least in the near future, I think our focus of driving protection health in the proprietary channels will continue to remain. We have a special emphasis and special focus on driving that. Whereas in partnership channels, we do try. You need to understand that there are multiple SKUs that they are selling, and time is a bit of an essence for them.

There is always a prioritization that will keep happening at that period. Partnership, if I try to break between online and offline, the breakup would be different or would it be similar? In our proprietary, we actually have three channels as part of the proprietary. We have our own agency network, our cross-selling engine, and our e-commerce channel, which also includes partners in the e-commerce channel. Largely because it is a marketplace and the brand is what gets sold versus partnership, which are pure play more banks and brokers, actually. Got it. The question is that the offline proprietary looks similar to partnership or does it? No, no. Even offline proprietary also has a higher proportion of protection. Got it. Got it. Thank you very much. I think your question is agency and direct selling teams, do they sell more protection? Answer is yes. Got it.

Got it. Thank you. Thank you very much. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Nishant Kumar for closing comments. Thank you, everyone, for being part of Max Financial Services' earning call. We look forward to more such interactions in the future. Have a good day. Goodbye. Thank you. On behalf of Max Financial Services Limited, that concludes this conference. Thank you for joining us today, and you may now disconnect your lines.

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