Macquarie flags risks in PB Fintech’s global ambitions over capital allocation

Yashish Dahiya, Group CEO and Chairman of PB Fintech

• PB Fintech dropped 7% as Macquarie highlighted risks in global expansion plans.
• Macquarie raised concerns over capital allocation and unrelated diversification
• PB Fintech's India business continues strong growth and market dominance

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PB Fintech closed almost 7 percent down on February 3, underperforming the broader market which rode the India-US deal euphoria to end the day 2.6 percent higher, as Macquarie raised concerns around the firm’s global ambitions.

Macquarie flagged risks linked to capital allocation and strategic focus as PB Fintech signalled plans for international expansion and a potential capital raise to pursue inorganic opportunities.

The brokerage’s commentary may have reignited investor unease over unrelated diversification, particularly at a time when the company’s India business continues to deliver strong growth, profitability and market dominance, and when the original investment thesis was firmly anchored in domestic scale rather than overseas expansion.

“When a company is growing its India revenues at over 40 percent, commands more than 90 percent market share in its core line of business, and accounts for close to 25 percent of the term and retail health insurance market, the investment narrative is usually built around deepening domestic dominance rather than geographic expansion,” Macquarie said.

The scale of the domestic opportunity remains structurally compelling.

According to the most recent annual report by the Insurance Regulatory and Development Authority of India (IRDAI), retail health insurance added 40 lakh new lives in FY25, of which Policybazaar accounted for roughly 40 percent. That translates into nearly 16 lakh new insured lives coming through a single platform in one year, underlining both market power and the continued depth of underpenetration in India’s insurance ecosystem.

Operationally, the business continues to deliver strong numbers.

PB Fintech reported a 165 percent year-on-year jump in profit after tax in Q3 FY26 to Rs 1.9 billion, driven by revenue growth of 37 percent year-on-year. Insurance revenues grew 39 percent, total insurance premiums rose 45 percent, and growth was led by the protection business, which expanded 68 percent year-on-year, and the new health insurance business, which grew 79 percent.

Margins improved across EBITDA and PAT, reinforcing the strength of the core India franchise.

Against this backdrop of accelerating domestic performance, management has indicated plans to pursue international expansion through inorganic opportunities.

Macquarie said the company has called a board meeting to seek approval for a qualified institutional placement (QIP) to fund strategic investments, acquisitions or partnerships in local or international markets, with management stating that a target has already been identified.

The brokerage categorises this as “unrelated diversification” and flags renewed concerns around capital allocation, particularly considering investor unease following the company’s earlier hospital venture.

Founder Yashish Dahiya defended the strategy on the earnings call, arguing that international financial services markets are highly profitable but lack innovation, positioning PB Fintech as a potential disruptor.

He also framed global expansion as both a diversification strategy and a statement of ambition, saying that India should create its own multinational companies rather than remaining only a market for global tech giants. The vision, as articulated by management, is “one of value creation through innovation export and geographic diversification”.

Macquarie, while maintaining a “neutral” rating, said the stock already trades at valuations that factor in strong revenue and earnings growth, leaving limited room for strategic missteps.

The brokerage highlighted risks associated with unrelated diversification and capital deployment outside the core business.