Jefferies names Max Financial as its top insurance pick, sees 41% upside despite target cut

Jefferies has moved Max Financial Services to the top of its life insurance pecking order, saying investor concerns over the impact of new distribution rules on the company’s growth are exaggerated.

The brokerage has retained its Buy rating on the stock, while cutting its target price to Rs 2,050 from Rs 2,250. The revised target still implies 41% upside from Max Financial’s previous close of Rs 1,451.

The brokerage’s optimism comes even as the stock has faced pressure following the IRDA distribution consultation paper. Investors have been concerned that the company may have to sacrifice growth to bring down its expenses of management (EOM) ratio, which needs to fall from 23% in FY26 to 12.5% by FY32.


Jefferies, however, believes Max Financial can bring down the EOM ratio without a major hit to growth.

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Regulatory concerns may be overstated

A key part of the brokerage’s argument is that Max Financial has already shown an ability to adapt to regulatory changes without the sharp deterioration in growth or margins that investors had feared.

The company delivered 19% annualised premium growth over the past three years despite several major changes to the life insurance industry, including changes to tax benefits, surrender regulations and the loss of input tax credit.

The impact of the revised surrender rules was initially expected to hurt margins by 100-200 basis points. However, Jefferies said the actual impact narrowed to around 50 basis points within two quarters.

Similarly, the loss of input tax credit had a gross impact of around 350 basis points, but the company largely offset this through changes in product mix, cost efficiencies and higher rider attachment.

Jefferies believes the latest distribution changes could follow a similar pattern, with the company having several levers to bring down its EOM ratio. Group funds expansion, the new commission structure and cost rationalisation could together provide significant savings by FY29.

Axis Bank could provide another growth trigger

The brokerage also sees room for Max Financial to improve its position in the banca channel, particularly through Axis Bank.

Banca growth has lagged the company’s overall business in recent years. However, Jefferies believes this could change as commission rates normalise under the new framework and Max Financial potentially gains more shelf space at Axis Bank.

Max Financial currently has a 65-70% counter share at Axis Bank, while Axis Bank owns a 20% stake in the company. Jefferies sees the relationship as an important opportunity for future premium growth.

The brokerage expects Max Financial to maintain strong growth over the medium term, helped by its expanding agency network, Axis Bank initiatives and opportunities in areas such as credit life. It also expects margins to improve as the business gains scale and persistency improves.

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Jefferies has therefore moved Max Financial to the top of its life insurance pecking order, despite the target price cut. It also sees potential benefits from the transition to Ind-AS from FY28, particularly as commission costs are deferred over the policy period.

Max Financial shares were trading at Rs 1,441, down 0.69% on Monday morning. The stock has declined 27.06% so far in 2026 and 23.50% over the past year.

Disclaimer: This article has been written by Sakshi Kumari, who is not a SEBI-registered Research Analyst or an Investment Adviser. Sakshi Kumari and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.