PB Fintech Ltd, the parent of Policybazaar, rallied 16 per cent to hit a fresh record high in Wednesday's trade after the fintech player's June quarter results, where it reported a consolidated profit of Rs 60 crore compared with a Rs 12-crore loss in the year-ago quarter.
Analysts noted that a 46.1 per cent YoY jump in core online premiums lifted core platform business insurance revenue by 40.1 per cent YoY. The premium growth for new initiatives was stronger at 2.3 times YoY. Adjusted Ebitda margin climbed 144 basis points YoY to 4.9 per cent, driving overall adjusted Ebitda to Rs 49 crore against the estimate of Rs 38.20 crore, analysts said.
PB Fintech shares rose 16.23 per cent to hit a high of Rs 1,664.35. The scrip later cut gains and was trading at Rs 1,516.35, up 5.90 per cent.
The stock's valuations continue to be steep at 106.7 times FY26 EV/Ebitda and 56.1 times FY27 EV/Ebitda, said Nuvama.
"We are increasing revenue estimates, but lowering margin expectations, which changes our FY25E/26E adjusted -1.4 per cent/1.6 per cent. We are reducing our cost of equity assumption to 13.5 per cent and rolling over the valuation to Sep-26E, yielding an increased DCF-based target price of Rs 1,370 earlier Rs 1,160)," said Nuvama Institutional Equities.
Jefferies has reportedly maintained its 'Buy' on the stock and raised its target price to Rs 1500 per share. Morgan Stanley maintained an Equal weight on the stock and raised its target price to Rs 1,125 apiece.
Nuvama said the PB Fintech's core platform insurance revenue grew 40.1 per cent YoY led by a 46.1 per cent YoY jump in premium and a 69 bps YoY moderation in take rates to 15.9 per cent.
Growth in total premium was impressive as new online business premiums surged 66 PER CENT YoY -- within which online term and life new premium growth was 78 per cent YoY.
The management said take rates moderated due to a change in product mix towards ULIP sales within savings business—diluting the improvement from a greater share of term and health business.
The core online insurance renewal premium (85 per cent margin) grew 28.9 per cent YoY, and the management guided for 45 per cent growth in FY25E.
"Disbursements slid 11.3 per cent YoY due to restrictions imposed by the RBI on the industry. Contribution margin for existing business came in at 43 per cent (down 234 bps YoY). The management stated that increased contribution of new health business (higher proportion of single year business) impacted margins; it also had to spend Rs 25 crore on increasing call centre capacity, dragging margins by 376 bps," Nuvama said.
The PB Fintech's management expects scale-up to aid margin uptick in quarters ahead. It remains bullish on premium growth and on growing trail revenues.