PB Fintech shares slumped over 3 percent on August 9, for the second consecutive session, as investors booked profits after the insurance distributor narrowed losses significantly in the June quarter. The stock had gained 11 percent, ahead of its June quarter results.
On August 7, PB Fintech reported a loss of Rs 12 crore for Q1 FY24, narrowing its from Rs 204 crore reported last year on strong topline and operating performance.
At 10:50 am on August 9, the stock was quoting at Rs 740.80 on the NSE, lower by 2.5 percent from previous close. In the previous session, it closed 4.7 percent lower.
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The company managed to reduce the losses as its contribution margin widened to 45 percent from 42 percent earlier. Its high renewal rate, which has 85 percent margins, contributed to the company's efforts to reduce the losses substantially.
A company's contribution margin shows how much revenue is available after it deducts the variable costs.
Revenue from operations at Rs 666 crore for the quarter increased by 32 percent over last year. Adjusted EBITDA stood at Rs 23 crore for the quarter against a loss of Rs 66 crore and the margin came in at 3 percent against minus-13 percent a year back. New premiums in the protection segment grew 40 percent year-on-year.
CLSA has assigned an 'outperform' rating to the stock with a target price of Rs 890 per share. It has attributed the company's robust performance to strong credit disbursals and substantial growth in the protection segment.
Core EBITDA has remained positive for two consecutive quarters, noted CLSA. However, there has been a marginal increase in expenses that fall outside the realm of contribution, it added.
Morgan Stanley too has an 'overweight' rating on the stock with a target price of Rs 810 per share. Despite the traditionally weaker performance in Q1, the company's core revenue, contribution, and adjusted EBITDA have demonstrated sequential expansion, it said.
However, Bank of America in June had downgraded the stock to 'underperform' with a price target of Rs 600. The broking firm is of the view that the improving prospects of the PolicyBazaar operator are already factored in the current valuations.
The company's credit business under Paisabazaar also did well in the quarter gone by, with an annualised run rate of Rs 16,000 crore disbursal. The platform also managed to issue 5.8 lakh credit card on an annualised basis.
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