PB Fintech posts Rs 37 crore profit for the first time ever; should you buy, sell, or hold?

PB Fintech, the parent company that houses online marketplaces Policybazaar and Paisabazaar, turned profitable for the first time in its history. The company posted a third-quarter (Q3FY24) profit of Rs 37 crore, recovering from a net loss of Rs 87 crore seen in the year-ago period. Going ahead, analysts expect profit run to continue in upcoming quarters as well, but the stock could see some breather post outperformance.

PB Fintech shares soared 11 percent to cross its issue price at Rs 1,020 per share on January 31 early deals. The stock has soared over 14 percent in the past month, as against a percent decline in the benchmark Sensex.

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Analysts at Morgan Stanley shared an ‘overweight’ rating on PB Fintech, with a target price of Rs 965 per share, saying that the contribution of new initiatives helped the company break-even in Q3FY24. However, they flagged off downside risks to near-term forecasts as regulatory changes in unsecured personal loans could potentially impact core business.

PB Fintech’s revenue of core online marketplaces grew 39 percent on-year to Rs 593 crore in Q3FY24, while new protection premiums (health insurance and term insurance) surged by 44 percent. The company’s adjusted EBITDA improved by Rs 50 crore YoY in Q3FY24, in line with the company’s annual guidance.

The large EBITDA beat was driven by a decline in ESOP (employee stock ownership plan) cost, said analysts at Macquarie. The brokerage firm believes that the company’s consensus estimates of achieving more than Rs 37 crore profit in Q4FY24 looked promising due to strong seasonality.

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That being said, Macquarie shared an ‘underperform’ call, with a target price of Rs 610 per share on PB Fintech as it saw a sequential decline in insurance take rates and Paisabazaar revenues. The company’s insurance commission rate contracted by 189 basis points QoQ to 17 percent in Q3FY24, while Paisabazaar revenues declined by 6 percent QoQ to Rs 145 crore.

Meanwhile, analysts at Kotak Institutional Equities shared an ‘add’ rating on the counter, with a target price of Rs 950 per share. “Going forward, we expect the company to deliver about 2x industry topline growth and see headwinds on specific products to have limited impact,” they said in a post result-review note.

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