Multibagger stock: FIIs, MFs, insurers hold 90% stake in this midcap; should you buy?

PL Capital retained its ‘Buy’ rating on multibagger stock Max Financial Services, valuing Axis Max Life under the appraisal value framework and raising the target price to Rs 1,925. The brokerage said the upward revision was supported by a strong medium-term outlook on both growth and margin trajectory. The multibagger stock, where mutual funds, foreign investors and domestic insurers held about 90 per cent stake as of September 30, is up 143 per cent in the past three years, and 55 per cent year-to-date. PL Capital said it met the management of Axis Max Life to assess the key drivers shaping the company’s performance over FY26–30. Axis Max Life expected tailwinds from stronger protection growth in the second half and had launched new products across PAR, NPAR and annuity to sustain momentum. While FY26E VNB margin is likely to face a drag from the GST exemption due to the non-availability of input tax credit, the management expects a shift towards NPAR and protection products, along with cost-optimisation initiatives, to absorb most of the impact. The brokerage built in margins of 24.2 per cent and 24.6 per cent for FY26 and FY27, respectively. PL Capital said the company expects the Insurance Bill to be passed in the Winter or Budget Session, which would set the timeline for Axis Max Life’s reverse merger with Max Financial Services. It was also exploring composite-licence opportunities through discussions with health insurers for retail health distribution. IFRS-17 was expected to become applicable over the next two years, with pro-forma submissions already made to IRDAI. The company's growth momentum is supported by multiple levers, it said noting that Axis Max Life’s APE rose 15 per cent year-on-year in 2QFY26, led by protection and NPAR, and the momentum was expected to continue into the second half. The company anticipated tailwinds in retail protection volumes post-GST exemption and a recovery in credit-life disbursals. New launches—Smart VIBE (NPAR), SWAG 2.0 (PAR) and SWAG Pension (annuity)—were gaining strong traction and were expected to offset the nine per cent year-on-year decline in ULIPs. Over the medium term, Axis Max Life aimed to maintain a diversified mix of about 35 per cent ULIP, 15–25 per cent PAR/NPAR, 10–15 per cent protection and 5–7 per cent annuity. PL Capital built in a 16 per cent APE CAGR over FY25–28. Proprietary and new banca partnerships remained key growth engines. The proprietary channel grew 22 per cent year-on-year and contributed 46 per cent of APE in Q2. Axis Max Life had added 64,000 agents since FY22 and was now focused on improving productivity. In e-commerce, the insurer held the top ranking in online protection and had recently launched digital savings products. On the banca side, new partnerships with South Indian Bank, Ujjivan SFB, Tamil Nadu Mercantile Bank, CSB and DCB strengthened distribution, with Axis Max Life securing the highest counter-share in three of the six new partners. Within Axis Bank, the insurer maintained a 65–70 per cent counter-share and had deployed around 7,000 dedicated employees across branches. Growth from new banca partners and the proprietary channel was expected to outpace Axis Bank’s 12 per cent CAGR over FY20–25. Broker-led distribution, started in FY23, was also expanding. VNB margin expected at 24–25 per cent. Management highlighted a gross adverse impact of 300–350 basis points on FY26E VNB margin due to the loss of ITC but expected distributor renegotiation, efficiency measures and cuts in discretionary spending to offset much of the hit. Strong protection and NPAR growth in the second half was also likely to mitigate the impact. H1FY26 VNB margin stood at 23.3 per cent, and Axis Max Life reiterated full-year guidance of 24–25 per cent.