PB Fintech Stock Falls 10% in Two Sessions; What Should Investors Do Now?

Shares of PB Fintech were under pressure for the second day on Wednesday, with the stock falling nearly 10 per cent in the two sessions following its June quarter earnings, where the company narrowed its year-on-year (YoY) losses.

The scrip fell 5 per cent in intra-day trade to hit the day’s low of Rs 720 on the NSE today.

PB Fintech, the owner of PolicyBazaar and Paisabazaar reported June quarter results in which the company’s net loss narrowed compared to last year. It also reported an operating profit compared to an operating loss last year.

The fintech’s operating revenue rose 32 per cent YoY to Rs 666 crore in the reporting period. It was Rs 505 crore in the corresponding quarter of last year.

The consolidated adjusted EBITDA was a positive Rs 23 crore for the first quarter, an improvement from the negative Rs 66 crore in the same quarter last year.

Here’s What Investors Should Know

Kotak recommended an ‘Add’ arguing that the Policybazaar business remains on the path to profitability to achieve its stated guidance. It said that the core business was on track though the new initiatives displayed a slowdown, with the management focus on curtailing losses in these segments. “We are not writing-off new initiatives and expect a pick-up over time,” the brokerage said in a note.

Brokerage firm Macquarie has initiated coverage on PB Fintech Ltd. with an underweight rating. The firm believes that the market is underestimating the risks coming from Bima Sugam, which can be a potential disruptor.

Bima Sugam is touted to be a one-stop shop electronic insurance platform, which will be akin to an e-commerce platform.

Macquarie has a price target of Rs 560 on PB Fintech, which is a potential downside of 26 per cent from Tuesday’s closing levels.

Nuvama recommended a ‘Hold’ on the counter, further reducing its cost of equity assumption to 13 per cent and rolling forward to September 2024E to arrive at a DCF-based target price of Rs 720. It said that the existing business was steady, with the profitability of new initiatives improving. On its June quarter earnings, Nuvama said that PB Fintech reported a strong set of numbers, mainly driven by strong operating leverage, as premium throughput slowed down to 23.9 per cent YoY.

“We raise our FY24E/25E adj. EBITDA estimates by (13.1 per cent)/137.7 per cent,” it said in a note.