International brokerage Citi maintained a 'buy' rating on Policybazaar PB Fintech, with a target price of Rs 1,925 per share.
The broking firm highlighted a 30-day upside catalyst, driven by strong momentum in high loan-to-value (LTV) and customer acquisition cost (CAC) segments for retail health and protection. Additionally, narrowing gaps between contribution margins and EBITDA margin are a positive catalyst for growth.
Citi's target price of Rs 1,925 indicates an upside of around 18 percent from the previous session's closing price.
PB Fintech shares jumped over four percent after the announcement. At 2.15 pm, shared of the Policybazaar parent were quoting Rs 1,680.4 on the NSE, higher by 3.6 percent.
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Earlier in June, Citi had raised its target price on PB Fintech to Rs 1,600 per share, after the company's strong business momentum and execution of its phy-gital strategy impressed the brokerage. Citi anticipates the company to show steady growth in new retail health and term insurance premiums, along with ongoing improvement in point-of-sale margins.
In September, PB Fintech announced it was considering a foray into the healthcare sector. The firm clarified that it will be a minority investor in the proposed venture, with a one-time non-recurring investment.
Chairman and Group CEO Yashish Dahiya said in an interview with CNBC TV18 that PB Fintech intends to acquire a 20-30 percent stake in the venture, with a potential investment amounting to up to $100 million, subject to board approval.
As for the reason behind the company’s decision to tap into the healthcare sector, Dahiya said, “A middle-class person can’t afford a bed for Rs 78,000 per night. We are looking to bridge the trust gap between hospitals and insurance companies.”
The investment strategy has garnered mixed reactions from analysts. Brokerage firm Bernstein maintained its “outperform” rating on PB Fintech, setting a price target of Rs 1,760.
They noted that while investors are attracted to PB Fintech’s high growth and strong business model, some may view this backward integration into healthcare as a significant shift from its capital-light business model, which appears to be weighing on the stock currently.
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