Shares of PolicyBazaar parent PB Fintech fell over a percent on November 11 as UBS downgraded the stock to 'Sell' from 'Neutral' earlier. However, it raised the target price to Rs 1,550 from Rs 1,205.
Despite a strong Q2FY25 performance and steady growth in the core insurance business, UBS cited concerns over slower disbursements affecting credit offtake.
The brokerage anticipates the company's new initiatives will help it achieve EBITDA break-even by FY27, and noted that a steady renewals pool should support long-term profitability. However, UBS believes these positives are already reflected in the current valuation.
PB Fintech on November 5, reported a fourth straight quarter of profit in the September quarter, fuelled by the high growth in health and life insurance premiums. Its operation incomes grew 44% year-on-year (YoY) to Rs 1,167 crore in Q2FY25.
The company's net profit also grew to Rs 51 crore during the second quarter of FY25, compared to the Rs 21 crore loss it had reported in the September quarter of FY24.
Follow our market blog to catch all the live action
Jefferies remained bullish on PB Fintech stock as it highlighted the company's strong growth trajectory, bolstered by increasing online premiums and renewal revenues that are expanding the company’s EBITDA margins.
The brokerage firm noted that while there have been some drags in the credit business, the strong performance in renewal revenues has offset these challenges, positioning PB Fintech favourably in the market.
Jefferies also raised its growth forecasts for PB Fintech, expecting an increase in discount cash flow (DCF) growth by approximately 100 basis points. They project a solid 31% growth rate in DCF for FY25 to FY29, with a sustained 20% annual growth over the next five years.
In line with these projections, Jefferies maintained its “buy” call on the stock with a raised target price of Rs 1,800 per share.
As of 1:32 pm, PB Fintech shares were trading 1% lower at Rs 1,658.65 on the National Stock Exchange (NSE). The stock has zoomed 107% so far this year, outperforming Nifty's 10% gain by a margin.
Over the past 12 months, the stock has rallied 121%, more than doubling investors' capital while Nifty rose 74% during the same period
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
