PB Fintech: First-ever quarterly profit fails to impress Macquarie as it sees 40% downside! What's the pain point?

Shares of PB Fintech in early trade on Wednesday (January 31) climbed as much as 12 per cent to a new 52-week high of Rs 1,020.55 apiece after the company posted its first quarterly profit on a consolidated basis since listing in the December-ended quarter of the ongoing fiscal year.

At around 9:49 am, shares of the company operating Policybazaar traded 10.82 per cent higher at Rs 1,010.2 apiece on the BSE.

In the December quarter, the company posted a consolidated net profit of Rs 37 crore as against a net loss of Rs 87 crore a year ago. In the September quarter, the company reported a net loss of Rs 20 crore.

Revenue from operations for the period under review also registered a healthy growth of 43 per cent year-on-year (YoY) to Rs 871 crore. The company also highlighted that its cash position had improved substantially to Rs 5,150 crore. The new premium for health and term insurance businesses grew by 44 per cent, the company added.

PB Fintech shares debuted on the Indian bourses over three years ago.

Here is what brokerages suggest for fintech major PB Fintech

CLSA continued with its ‘outperform’ rating on the stock and raised the target to Rs 1,020 from the earlier Rs 890. CLSA is of the view that the fintech player posted strong growth in insurance premiums and healthy margins. The brokerage said that after posting a net profit of Rs 37 crore in 3Q, the company is well set to deliver a net profit in FY24 as well.

Credit disbursements slowed with the impact of the latest RBI regulations on unsecured personal loans, noted the brokerage. CLSA expects the company to post 25–30 per cent growth in premiums over the next two years.

Morgan Stanley maintained its ‘overweight’ stance on the counter with a target of Rs 965. The brokerage held that the company’s core business has been weaker than its estimates due to regulatory changes in unsecured personal loans. Further, it added that the contribution from new initiatives resulted in a breakeven for 3Q. There could be downside risks to near-term forecasts, noted Morgan Stanley.

Macquarie, on the other hand, is bearish on the counter and sees a significant downside of over 40 per cent from the last traded price. The brokerage noted that PB Fintech’s large EBITDA beat is driven by the decline in ESOP costs. It further said that the ask rate for the fourth quarter looks achievable.

Shares of PB Fintech in the past year have delivered multi-bagger returns to its investors, as they surged a whopping 147 per cent.