Target: ₹1,420
CMP: ₹1,476.50
In Q1 FY25, PB Fintech’s revenue surged by 51.8 per cent on a y-o-y basis, driven by a growth of 65.9 per cent in the insurance business. Within the insurance business growth, the new initiative business grew by 132.2 per cent. Credit business disappoints by de-growing 3 per cent.
The company improved its EBITDA margins from -11.6 per cent in Q1 FY24 to -3.9 per cent in Q1FY25 on the back of controlled employee expenses. Further, owing to higher other income on investments and exceptional items, the company reported a PAT of ₹60 crore in Q1FY25. We expect the operating profitability of the Company to improve going ahead.
We have revised our estimates and maintained our view to Reduce for PB Fintech, with a target price of ₹1,420 (13.5x FY25E P/S multiple). The company stands 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 favourable operating leverage.
Further, the Company has reported profitability for the first time, and we expect this momentum to continue. But a lot of this optimism seems to be priced in.