PB Fintech shares give up to early gains; here's what analysts expect in Q4

Shares of PB Fintech, the parent company of PolicyBazaar and PaisaBazaar, gave up their early gains to trade lower on Monday ahead of its quarterly earnings for the period ended on March 31, 2023, due later today. The company is likely to announce a decent set of numbers during the January-March 2023 quarter.

Shares of PolicyBazaar dropped over 2 per cent from its day's high of Rs 631.45 on Monday to Rs 618.55. The new-age internet-based company was commanding a market capitalization of Rs 28,000 crore on Monday.

With continued interest rate hikes and heightened inflation, discretionary spending remained subdued in 4QFY23, said analysts. They believe seasonality would play a significant role as PB Fintech will be a key beneficiary. Despite the weaker demand environment, profitability improvement is expected to sustain with PB Fintech likely to report group-level adjusted EBITDA, they said.

Q3FY23 was a difficult quarter for most B2C e-commerce companies and investors were expecting a recovery in Q4FY23E. However, our channel checks indicate B2C growth may underwhelm expectations, said ICICI Securities. "This is in contrast to the buoyancy in some offline discretionary categories such as travel and hospitality," it said.

JM Financial forecasts PB Fintech to deliver 59 per cent and 50 per cent YoY growth in insurance premium and loan disbursals, respectively, with continued rise in insurance and credit penetration while the respective revenue should grow at 36 per cent and 74 per cent YoY, respectively due to base effect.

JM Financial sees losses at the company narrowing to Rs 57.40 crore in the quarter from Rs 87.60 crore in December and Rs 219.60 crore in the year-ago quarter. It sees revenue rising 40.3 per cent YoY to Rs 758.30 crore from Rs 540.30 crore YoY. The brokerage pegs EBITDA loss at Rs 103.7 crore against Rs 255 crore YoY and 133.2 crore QoQ.

"We anticipate sequential premium/disbursals growth would be 15 per cent /8 per cent  as year-end makes Q4 a strong quarter for these sectors As guided by the management, we expect PB Fintech to report profitable Adjusted EBITDA this quarter. We anticipate core Policybazaar vertical to show improvement in contribution margin driven by better conversions," it added.

Shares of PB Fintech have rallied more than 55 per cent in the last six months, while the stock has jumped about 80 per cent from its 52-week low at 356.20 on November 17, 2022.

Nuvama Institutional Equities sees an adjusted loss of Rs 63 crore. It sees revenue surging 63 per cent YoY to Rs 882 crore. The domestic brokerage firm expects a revenue growth of Rs 63.3 per cent YoY, mainly driven by premium growth of 67.5 per cent on a yearly basis.

"Growth of premiums in the life and health segments will be crucial to monitor. Core and new initiatives adjusted Ebitda growth and guidance will be key. The management commentary on the impact of changes in regulations will be key especially, IRDAI’s regulation requiring insurers to offer differential pricing for direct sale," it said.

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