Target: ₹951

CMP: ₹726.60

PB Fintech’s revenue surged by 31.8 per cent on a YoY basis, driven by a remarkable growth of 119.5 per cent on a YoY basis in the insurance business. EBITDA margins improved from -46 per cent (Q1 FY23) to -12 per cent (Q1 FY24), propelled by cost reductions in ESOPs, controlled employee and advertising expenses, resulting in significant operating leverage benefits. We expect this trend to continue for the foreseeable future.

Renewal and trail commissions surged from ₹273 crore (Q1 FY23) to ₹418 crore (Q1 FY24), a robust 53 per cent growth on a YoY basis. They have an operating margin of 85 per cent+.

Insurance premiums grew by 23.9 per cent on a YoY basis. New protection (Health + Term) premium grew by 40 cent on a YoY basis. Savings product growth was subdued during the quarter due to a change in the tax incentives.

We revised our estimates and maintained a Buy Rating for PB Fintech Ltd, with a target price of ₹951 (10x FY25E P/S multiple). The company is poised at a pivotal juncture, driven by catalysts such as renewal commission growth, strategic expansion into tier-2/3 cities through offline channels, and rigorous cost management, all poised to generate favorable operating leverage.