Thank you very much sir. We will now begin the question -and-answer session. We'll take the first question from the line of Swarnabh Mukherjee from B &K Securities.

So, two-three questions on my side. First of all, thank you for confirming the marginal outlook. I just wanted to understand that you mentioned that the second quarter, the margin expansion will be due to scale up in non -PAR given product launches. So right now, the share of non -PAR in the mix has gone down significantly as ULIP and PAR has grown. Just wanted to understand would product launch and scale up be sufficient to take us to our ask rate for second half of margin so that we are able to lead that? And also, how to think about growth in second half given that the size of non -PAR as you have disclosed is slightly lower than where it is for ULIP. So , should we see kind of this 25% growth, which we have in the first half? Or should we expect a slightly lower number than that? So that's the first one. Secondly, sir, in terms of Banca, if you could highlight where our counter share for Axis Bank lies and if I could break down the growth between Axis and other banks, how to look at it. And thirdly, if you have given that because of the business mix and investment, there has been a negative impact in VNB. So , if you could just give us some color on that, what will be cost aspect which has resulted from that? How should we think about cost in the second half? Those are my 3 questions.

Okay. You asked many questions. Let me try and attempt answering a few of them. So , thank you for your question. I think these questions will be common across many people. Overall, the product mix is an element of 2 factors, the customer demand as well as tactical interventions that we make through launches of new products. I personally believe that the par segment got strengthened, but it came at the cost of non -PAR going down a little bit. And it was driven predominantly because of the tactical move of PAR launch. Again, within ULIP, while the ULIP mix is similar to how it was last year, we wanted to drive a number of policy as well as our presence in the online space, and hence, we had to launch an index -linked kind of design where inherently, the margins are lower. In the second half of the year, the tactical interventions in terms of product launches are going to be more biased towards non -PAR. That's a part of our calendar, it's a part of the design, and that's going to have an impact on driving the overall mix in a positive manner so that we are able to improve our margins. Again, as the business builds in the second half, you would notice that about 60% of the sale actually comes in the second half with respect to first half. So , the overall leverage also in the business drives the margin. And as a result of that -- and I went a few years looking at the data of last few years, generally, the second half margins are higher. So as a result of that, I mean, we are following a well -chosen predecided product calendar. And we remain absolutely optimistic about the margin guidance. As the year began, I had shared that the business will be making investment towards growth and market share. And hence, the 31% margins was not sustainable for us, which we achieved last year, and we had given a guidance of 27% to 28%. We remain committed to that, and we are very optimistic that we ’ll be able to go in that range. On your question on growth, I think, our guidance, as you may remember, March last year was an extraordinary month because of tax changes where the sales volumes were pretty high. So , we had given a guidance that on a full year basis, we will hit a double -digit number, and we are working towards a double -digit number. So , on sales, our commitment again is towards the guidance we have given. At this point in time, it is very hard for me to say whether the sales momentum or sales trajectory is going to remain exactly as per first half or not. The first half momentum, you will also notice the first quarter, our sales were quite tepid. So, all I can say is momentum is building by every passing month, and we are trying very hard to deliver a strong double -digit kind of growth rate as we finish the year. On your question on Axis and other banks, our counter share remains stable. We've been told by Axis Bank , overall we've seen our overall counter share to remain in the range of 65% to 70%. We remained stable at around 70% in the first half of the year. Equally on, Yes Bank, our counter share is very stable at around 58%. It's plus/minus 1%. So that's where we are. And we are happy that our execution still is helping us maintain our counter share. So , I remain optimistic that we will be able to drive growth through our bank partners. On your question, VNB colo ur into cost and business mix, I'm going to just hand it over to Amrit actually to talk through this. I think the cost is fairly stable, as you would have noticed. Of course, there are allocation-related adjustments which are made between other lines and commissions in view of the commission guidelines. But otherwise, the cost is pretty stable. Of course, we have made investments in opening new offices, which will start to get realized but otherwise, I'm not anticipating that cost is going to be completely out of sync with respect to the guidance that we've given. And hence, the VNB is going to be predominantly an outcome of the mix that they are going to drive in the business. I hope it answers all the questions.

Yes. I think I'll just add, Prashant. I think just stepping back at the start of the year, we had indicated that this is a year of investing and driving for overall buildup of distribution and hence garnering our market share. And a large part of our investments were predominantly in two areas, either it was in augmentation of distribution muscle , or it was towards investment in technology. And I think we are on that trajectory , and we will continue on th at trajectory. So, this elevation that you see of opex is something that will kind of remain in the period in this particular fiscal for sure.

Just a couple of follow -ups. One is on the Banca mix ; I just wanted some color on how the growth has been between Axis and others? I mean, the 31% growth, if you could give some sense by what percentage Axis channel had grown and by what percentage other channels have grown because my sense is that other channels growth must be much more higher than Axis. So, some colour on that. And on the cost, I just wanted to understand, you have mentioned that in the presentation that first half policyholders expense to GWP ratio is around 15.4%. So broadly flattish now given that GWP has gone up by 16%. So , you could assume costs have been going up by 16%, 17%. In the second half, the operating leverage we were discussing about , if the growth in expenses remain at a similar rate would that play out or not that is what we want to focus?

I think , if I understood your second question correctly, the operating leverage plays out largely because of volume and the absolute volume of sales and absolute volume of opex. Even though there is a growth in opex, but the absolute volume is where the leverage kind of kicks in generally for us and this is historical. I mean if you go back in years and see how our second half margins look like. They do benefit because of the way we allocate and the way cost is actually attributed. So that is where the leverage comes from. And that is what we expect in this particular year itself, even though March might be a muted month, but still an absolute rupees crore of sale for the second half is much larger than how the opex actually stacks up. On your specific questions around the color of growth between Axis and our other partnerships. Axis actually for the quarter 2 and equally for other partnerships as well, has grown upwards of 28% is Axis growth in quarter 2 for us. And other partnerships have grown at around 60%. So , for the quarter, our Banca partners have grown at the range of around 30%.

Thank you. We'll take the next question from the line of Avinash Singh from Emkay Global Financial Services. Please go ahead.

A couple of questions. If you can just help us understand sort of what is working for you in the annuity? Because typically, annuity has been something that you used to sell more in the second half, but this year, even in the first half, you are selling a good amount of annuity and particularly the trend in the industry on annuity has been a bit of a mix. So I mean, what is helping you there? Is it some sort of the return of , I mean for this particular with channels, those are helping? And if at all, I mean, on a Y -o-Y basis, your annuity margins , if your margin profile is similar in the case of annuity. So that's first question. And second, if I were to look at, I mean, your accounting profit, of course, it had come better. And particularly, if I see the growth in new business strain has been on the lower side. Is it more to do with a PAR and maybe single premium annuity this year being higher than last year? Or is there something more to it?

Thanks, Avinash. I'll take this question. I think on annuity, what is working for us. I think I'll say 2 things. You'll recall, we had established our full retirement team as a construct over the last now 18 months, actually a full-fledged team has come in, which holistically looks at the entire retirement as an ecosystem, trying to tap into whether the NPS ecosystem, whether the corporate superannuation systems or whether driving the individual annuity through channels. So this investment in actually this team overall has helped actually support the annuity growth that we are experiencing for ourselves. In addition to the team, obviously a channel dedicated to this particular aspect. There were also some product interventions and actions which were taken, wherein we created a plethora of products across regular pay products, single -pay products, deferred entity designs and the entire construct. So this has helped us keep the momentum strong with respect to annuities. And a large part of benefit is definitely coming out of our group annuity design that we are selling to superannuation customers and clients, which is actually helping us. I think on the margin, overall annuity margin as you compare to last year does look a little weak and is not to do with a specific design actually, it is to do largely because of the mix between our business. We have seen, in line with pressure in the industry on single premium annuity, which has shifted towards regular premium annuity. But given the whole investment that we have undertaken, our overall annuity momentum actually continues to remain quite robust, as Prashant highlighted in his opening remarks I think on the question around profit that you see strain to be lower. I think it's to do with obviously the mix of participating being higher, which actually has more allowables and that has actually helped and also has lesser strains as a business line, which has helped in the profit profile.

The next question is from the line of Nischint Chawathe from Kotak Institutional Equities. Please go ahead.

Going back to the growth argument, looking at your performance for the last 2 quarters, doesn't it look like your guidance for sort of 10% APE growth for the year is a little conservative? I mean your ask rate for second half is not very high, even if I sort of exclude the one-offs that you did in the month of March.

Yes. I mean you good question that it's always good to remain conservative on giving guidances. Of course, we are trying very hard for a strong double -digit kind of a number. We will try to beat the guidance. So let's take it as that. We are trying very hard month -on-month to outpace whatever guidance is given, Nischint.

Sure. And on the Banca side, what would be your growth in Axis Bank on a year - on-year basis?

On year-on-year basis, if I look at the growth rate around Axis Bank on MFYP or paid premium basis, it is 12%.

For first half.

For first half. Of course, the business momentum picked up quite considerably in the second quarter, where we grew about 28%.

Okay, 28% in the second half. And on the proprietary side, if you could just highlight because your proprietary growth is very strong. So is it something that it kind of sustains in the second half, it may be moderate to the first quarter level in the second half because you can see a big divergence between proprietary or agency sales across various players. So what is it that you are doing? And is it something that can continue? Or is it just that you're getting some counter share out here from peers or anything of that sort?

So under proprietary , and let me elaborate a little bit. There are 3 channels that we predominantly look at. The first one is agency and all agency -like models. The second one is direct sales force where our employed workforce works on different customer segments. And then the third one is all the sales that we generate either on our own website or on aggregators website under digital domain. So those are 3 areas. As I highlighted, proprietary growth is of strategic advantage to us, and that's a very core area of focus for us for Max Life Insurance over last few quarters. Last year, we began a project with BCG to look at our agency differently to grow agency faster than how it was growing in the previous 5 years. And I'm very happy to share that in that project, we've been fairly successful. If I were to look at agency overall growth, it is clocking better than industry. I'm sure it will be amongst the top 3 fastest -growing agencies in India. And the effect of buildup of new offices is still to kick off. So once that starts to come board, I'm reasonably certain that the momentum within agency will definitely be in the range of 20% to 30%. I'm reasonably sure of that. So that momentum will continue for a while. Within DSF again, earlier, we used to only look at predominantly at the orphan customer base, but we expanded that. We're looking at digital leads. We're looking at bank leads. We are experimenting with surrender leads. And that entire scope has been enhanced plus the improvement in productivity. So those 2 put together has become a good driving force. And over the last many quarters, I have seen that particular team deliver anywhere between 30% to 40% kind of growth numbers. The third one was in online space. Again, in online space, our protection growth consistent with the industry has started to pick up, and we have grown about ~37% on a paid premium basis. But the good part is we wanted to strengthen our position in savings space and through a variety of product levers, we could really substantiate our position and there has been an upside in growth coming strongly in the savings space of almost 4x. So across all vectors of proprietary channel, we are working very hard to drive momentum and that yielding outcomes. And I'm very confident, that this momentum will continue.

And specific to this quarter, was there a sort of slightly high push on the digital side because Q2 numbers have seen a lot.

That's correct.

I mean either way the inherent agency growth is stronger, no doubt about it, but probably that it is to push its.

Yes, digital growth was higher though on a smaller base, I must say. But yes, there was digital push, and we want to leverage the index -linked small-cap fund that we launched and that was a small cap that we launched. That was fairly successful.

Sure. And just one last point is, going beyond this year, I think you've already given margin guidance for this year, how should we really think about margins going in FY '25, '26? Is it something that you sort of revert back to '23 levels? Or does it remain flat? Or do you think that maybe 25% is the more sustainable long - term level? How should we think of it?

I think like I gave you the guidance to finish closer to 27%, 28%. As we grow and there is operating leverage that comes the margin will improve, but you are in a competitive situation, you are fighting it out with competition. So that eats into margins. So honestly, over the next 2 to 3 years, we should think about the margin profile from 27%, 28% going up by maybe a couple of hundred basis points.

Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.

Firstly, was there some pressure on product line VNB margins, as you highlighted with regards to ULIP, wherein you saw some pressure because of the mix changing and the launch of the new product. Similarly, on non -PAR or Protection, any specific trends that would have impacted the product level margins?

Yes. I think on ULIP, as has been mentioned, the launch of is a very unique offering for the online channel, which actually was also taken up by our banks channel as well, especially in the affluent segment of selling and was successfully executed. There is a margin pressure at a ULIP line, for sure, because this particular product profile has a lower margin which actually has impacted the ULIP profile. Our participating non -PAR guaranteed savings design and the margins are stable. There is nothing to worth mention there. On Annuity, I did specifically mention in responding to Avinash's question that the shift which has happened between the variants actually is the reason why the annuity margins looked lower and it is not to do with specifically with the margin profile of that particular variant compared to last year. It's just the mix of variants that have been sold in it.

Okay. Non-PAR, how many resets would have done in the quarter and because of where any resets, delay in resets, was there any pressure on margins?

Non-PAR savings, I think there is a very keen eye on to how the interest rates are moving and consequently, what happens to margin. So as a practice, we look at it on a monthly basis and make decisions keeping all parameters in pla y. Over the last 6 months, we would have done 2 resets, which has actually and it's in line with how the markets have moved. And those resets have helped maintain the momentum of non-PAR savings guaranteed businesses.

Okay. Secondly, on the agency channel, how is the ticket size, say, compared to last year's first half and this year's first half? And do you expect the agency channel ticket size to move higher going ahead? Some understanding was given that in the first half, there was some apprehension with regards to the understanding of the tax change. And that's the reason the 5 lakh plus ticket size was not moving well in the agency channel. Is there something of that sort is happening here as well for you guys as well?

So the objection is right. Actually, for last year, the channels which benefited out of the taxation change in the month of March, were largely agency and in broking channels. These actually benefited the most because of that disintermediation. And that's the reason of that expectation that as the full year progresses and especially when the month of March comes, there could be some moderation in that particular activity. But specifically looking at a company level and looking at greater than 5 lakhs kind of a thing, we have seen actually even our less than 5 lakhs cases are definitely growing at 21% robust momentum, but greater than 5 lakhs are g rowing. They're definitely not degrowing. They have grown at some 5%, 6%. But the contribution, obviously, has come off a little bit as compared to last year. So there is that pressure with respect to the contribution of greater than 5 lakh in our traditional book as compared to last year. But both of these segments stay in growth trajectory for us. And there are some interventions which are already in play or have been in play to offset some of this impact. But we had indicated that maybe half of the impact we will be able to hold on to a half is something that we get impacted with. And that's why the full year guidance is what Prashant was indicating.

Got that. And with regards to VNB margins, you mentioned that the growth, the expansion margin, and that will be primarily given the product mix or it will be more operating leverage driven?

So it will be both actually. It will be , operating leverage will have an important role, in fact, a major role. And with respect to certain product actions, pricing actions, and some of it, for example, we have already taken. I mean, in the month of October, we have corrected prices around our nonparticipating design chassis. We have corrected prices. We are launching a new non -PAR variant in another few days from now. So some of this actually will help us shift a little bit away from participating towards nonparticipating and away from ULIP t owards non - participating. So it should help us in that momentum. But it's a play of both operating leverage and the product variant that we'll introduce and the action that we'll keep taking on.

So I think I'll just answer, I mean, there is a cost of acquisition frame that you should keep in mind. And I'll say the cost of acquisition has been maintained across our channels and our partners. There is some classification that is happening. You can see in our financials, obviously, the commission rates have increased quite sharply. But at a cost of acquisition level, you should assume that it has remained stable of how it was previously.

Thank you. The next question is from the line of Shreya Shivani from CLSA. Please go ahead.

I have one question on the agency channel. So if I look at the agent count, it was at about 70,000 flat in FY '22, '23. And you mentioned about BCG activity that you had carried out. In the first half, your agent count is up 7,000. It is at 77,000 right now. So while your agent productivity is amongst the better ones in the industry, are you looking at any specific agent base, like maybe, in the next 1 to 2 years, we want to achieve this much agent base or something like that? That's my question.

Yes. I mean, honestly, one way of looking at it is how many people do we have in the agency workforce. But there are other ways of looking at agency also. How many of them are active, which means doing one policy every month. We look at another measure of how many agents are delivering 1 0 lakhs and above of new sales. So there are several measures that we deploy. I don't have those numbers handy, maybe we could come up separately, but we are trying to drive the number of active agents and number of people contributing more than 10 lakhs. So those are 2 parameters that we internally track and that's how we drive the business.

I think I'll also point you to the recruitment momentum. Actually, recruitment is up, if you see from the same data that you're looking at as compared to last year in the ranges of 60% to 65%. So what we're doing recruiting in large numbers, which is not just driven by higher manpower being deployed for recruitment in the demand region, but also the throughput for manpower has been quite significantly up because of more structured governance and focus around how to go about some of these things. In addition to that, we're also working towards ensuring that these recruited agents are becoming more and more successful. So one of the big reasons for our agency doing quite robustly in the first half actually is driven by both higher recruitment quantity and also the quality effect of those people recruited which is in terms of activation.

Got it. And just a follow-up question over there. Is it, do you also track your agents in terms of what kind of quality of customers they bring in terms of probably the profitability pool of their customer base? Or is there any linkage between their performance and the commissions you pay out?

It is obviously linked to the entire compensation philosophy of how you incentivize an agent has the linkages to many parameters. It has linkages to the product variants that they're bringing, the length of the product that they're actually selling, the persistency outcomes of those products, the way they kind of comes through, implications on the grievances, miss-sell, etcetera, all holistically kind of packaged in a compensation philosophy for a particular agent is designed. And that has always been the case, and there is always refinement and sharpness that keeps happen. Do we measure at an agent cohort level productivity? The answer is no. I think we do measure at a branch level, but not going down to an agent level yet. But intrinsically, the way products are constructed and where the products are remunerated, there is a very strong linkages to how the profitability of that product will turn out to be.

Thank you. The next question is from the line of Adarsh from Enam Holdings.

Congrats. Just wanted to check on Axis as you close this transaction and you negotiate as a long-term partner. Just is there any difference in payouts that could have happened? Or is it product centric? How , the question I'm asking is because eventually, they have ended up paying you a little bit more money for the stake that they have bought. So does economics stand now from a VNB margin perspective, we could see some extra payouts?

So basically, the long-term arrangement and long term strategy of Axis Bank is to invest in Max Life insurance. And we're just following the regulatory guidance. I don't expect that to have any material impact on our VNB margin.

Got it. And since our counter share is stabilized in the Axis network at now 65%, 70%. And given that there is one more channel , one more partner added from the Citi Channel. How is the progress happening on what access Tata is getting in Axis to Citi network? And how do you expect that to impact you in terms of counter share?

So Axis Bank believes in open architecture. And it believes in having multiple partners at the same time, they have clarified and so have we to investors at large that Max Life is an investment of Axis Bank. And hence, our counter share will be kept at 65% to 70%. Of course, we do participate on Citibank and then the new partner through acquisition of some participants. At this point in time, I have no additional news to share in terms of their participation on Axis Bank counters. But I must like to highlight that the philosophy is to remain open architecture.

The next question is from the line of Nidhesh from Investec.

Two questions, firstly what all is included in protection and health? When we're saying protection has been grown at 70% Y -o-Y, what all products are included in that? And secondly, how is the growth in credit life business? What is the quantum of credit life business that we have done in H1?

Yes, Nidhesh. So protection and health category actually help now also includes the SEWA product that we have launched. Because with respect to the objective that it is solving for, it is very similar to the ethos of Protection and Protection & Health includes some bit of SEWA as well. And they are also similar margin profile. So it is actually a very strong grouping that has been done.

But irrespective of that, even if I take out the SEWA contribution, which was around INR 18 crore, the growth is quite robust at 50% to 52% for Q2. Credit Life has been growing at a steady momentum of 30% to 31%, and we have signed up more partners as we speak and hopefully expecting this to pick up further as the year progress.

Sir, just to confirm the margin for SEWA product is similar to protection margins?

Yes. More or less. More or less.

We will take the next question from the line of Sanketh Godha from Avendus Spark. Please go ahead.

I just wanted to understand the digital drive strategy because of you indirectly alluded to the point that it's a lower VNB , it's a drag on the VNB margin business , on the overall company's VNB margin because at the cost the products typically sold are the index-linked, ULIP plan. So I just wanted to understand that this is like a onetime phenomenon you chase that growth with the digital ch annel in the current quarter? Or given the margins are lower, you might tone down that growth? And I just wanted to understand how much is digital as opportunity of total APE. In that prop channel, how much is exactly digital, how much exactly is agency and how much exactly is direct of 40% of total APE what you have disclosed?

So ULIP, the question, I think whenever there is a particular product offering, which is offered, there is always some bit of initial 1 to 2 months of overindexing of that particular proposition. And we don't expect the ULIP drag to be a structural permanent drag, which will remain and we expect it to settle down as the year kind of progresses. So , I think that answers the question that you were trying to ask there. With respect to how much does our online e -commerce channel now is contributing, it's contributing around 8%-9%.

And how much it was last year, if you remember?

It would have been around 5% -6%. So it is now around 9%-10% and has been corrected.

Perfect. Perfect. And the second question which I had was with respect to persistency. In the presentation some data looks off because the 49th persistency seems to be higher compared to 37th month persistency, which ideally should not be the case. So how do I read these numbers? Generally, the persistency fall as months progress. So I just wanted to understand that part little.

Yes, I think we have done an alignment to the persistency circulars, which are in play, which is now the 2021 and 2010 persistency circular. And basis that -- the guidance of the circular, the persistency has been recomputed. It doesn't mean anything economically. It is just a computation methodology, which has been brought more in line with market and also the circular which are in place.

Got it. Got it. And the last one, just to the previous question. You are actually now seeing in Axis Bank, previously, to the extent I understood that Tata products were largely limited to Citibank branches. And now you are seeing even Tata products getting sold in Axis Bank branches, that's the understanding should I pick up?

So, I don't know where you picked it up from right now, the answer is no, but I really can't confirm that it is going to be so in future.

Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you, everyone, for having joined our earnings call, and we continue to look forward for such interactions. Have a good day, and goodbye to everyone.

Thank you, members of the management. Ladies and gentlemen, on behalf of Max Financial Services Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.