Hold PB Fintech: target of Rs 1840: ICICI Securities

Hold

ICICI Securities's research report on PB Fintech

PB Fintech’s (PBF) Q1FY26 tick marked all important growth parameters (65% in new health, 42% in core premium ex of savings, 47% in renewal revenue—all on YoY basis). This is after Q4FY25 when it was a more balanced performance in terms of growth and margins. As such, there is clear penchant to prefer growth over margin. The choice is important considering the high new business strain for fresh health impacting margins. As of now, path to more than INR 10bn PAT in FY27E is likely be driven by more renewal revenue and better contribution margin in new initiatives. This could offset the weakness in core Paisabazaar and savings as well as the margin impact of higher growth in health. There is a sense that management is confident of being able to use the available levers for favourable results.

Outlook

Retain HOLD with DCF-based TP of INR 1,840 (unchanged), implying a valuation multiple of ~80x for FY27E. Less-than-expected growth in core premium poses downside risk, while upside risk stems from better cost optimisation, leading to a healthier contribution ratio; and continued growth trajectory basis superior execution including new initiatives.

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