What should investors do with PB Fintech shares after company's EBITDA breaks even in Q4?

Shares of PB Fintech, which operates under the brand name PolicyBazaar, pared early morning gains to trade flat with a positive bias on Tuesday. The stock jumped around 6 per cent to touch the day’s high level of Rs 654.35 per share on the BSE today.

PolicyBazaar – a new-gen online insurance broker – narrowed its losses and broke even in terms of EBITDA on the back of lower contribution losses at new initiatives; productivity improvement in core business; traction in renewals, including robust growth in retail health among other triggers.

On Monday, the company’s consolidated net loss stood at Rs 8.95 crore for the March quarter of the financial year gone by as compared to a net loss of Rs 220 crore a year ago. While its consolidated revenue from operations rose by 60.92 per cent year-on-year to Rs 869 crore in Q4FY23.  

At around 11:00 AM, PB Fintech shares quoted at Rs 620.50 per share, up 1.45 or 0.23 per cent on Tuesday as compared to the previous session of Rs 619.05 per share on the BSE.

Most brokerages are upbeat on PB Fintech shares as CLSA has an ‘outperform’ rating with a target price of Rs 720 per share, Morgan Stanley maintained an ‘overweight’ stance with a target of Rs 810 per share and Citi give a ‘buy’ call with a target of Rs 820 per share.  

Morgan Stanley in its report on PB Fintech said, “Adjusted EBITDA turned positive, as guided. Key positive catalysts for F24 include a likely pickup in industry term life premiums, strong growth in savings for PB Fintech from a small base, and cost controls.”

Similarly, a domestic brokerage firm Kotak Institutional Equities noted, “PB Fintech continued to deliver solid growth, with marginally positive EBITDA, before accounting for ESOP expenses for the first time.” It revised its rating to ‘add’ from ‘buy’ with a target price of Rs 725 per share.

The brokerages see an upside potential of up to 32 per cent or Rs 200 in PB Fintech shares on a long-term basis on the back of a good growth outlook.