PB Fintech zooms 9%, hits 52-week high in weak market; stock up 41% in 2024

PB Fintech Ltd, turned profitable for the first time in the October to December quarter with a profit after tax of Rs 37.2 crore

Shares of PB Fintech, the parent company of Policybazaar, jumped 9 per cent to a fresh 52-week high of Rs 1,119 per share on the BSE in Monday's otherwise weak session. At 1:25 PM, the benchmark S&P BSE Sensex was down 0.3 per cent as against 7 per cent rally in the counter.

A combined 3.2 million shares had changed hands on the counter on the NSE and BSE till the time of writing of this report. The stock had hit a record high of Rs 1,470 per share on November 17, 2021. 

PB Fintech Ltd, turned profitable for the first time in the October to December quarter. It posted a profit after tax of Rs 37.2 crore in Q3FY24 as againat a loss of Rs 87.6 crore in Q3FY23. 

The company's revenue from operations jumped 42.7 per cent to Rs 870.9 crore against Rs 610.1 crore in the corresponding period of the preceding fiscal.

Revenue of core online marketplaces, Policybazaar and Paisabazaar, rose 39 per cent to Rs 593 crore, while improving adjusted Ebitda by Rs 50 crore year-on-year during the quarter under study, the company said in an exchange filing.

Insurance premiums grew by 40.7 per cent on a year-on-year (Y-o-Y) basis. New protection (Health + Term) premiums increased by 44 per cent on a Y-o-Y basis, with the primary driver being the substantial growth in health insurance. Lending disbursals grew by 18.5 per cent on a Y-o-Y basis, reaching a total of Rs 3,580 crore in Q3FY24.

Furthermore, the company issued 141,000 credit cards during the quarter, achieving a growth of 14.6 per cent on a Y-o-Y basis. Growth in lending disbursals slowed down owing to RBI guidelines on unsecured credit during the quarter.

Moreover, revenue from the insurance and credit business grew by 44.3 per cent and 35.5 per cent on a Y-o-Y basis, respectively.

"The company's focus on unassisted sales has lowered costs and boosted profitability. Notably, over 75 per cent of credit cards and 50 per cent of unsecured lending are now fully digitalized. Additionally, PaisaBazaar's platform has achieved end-to-end digitalisation for 13 lending partners. Similarly, 80 per cent of motor and travel insurance transactions are now unassisted," said analysts at Keynote Capital.

They have revised their estimates and maintained a 'BUY' Rating for PB Fintech Ltd, with a target price of Rs. 1,147 (11x 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 favorable operating leverage. Further, the company has reported profitability for the first time, and we expect this momentum to continue," it added.

Since the result presentation on January 30, the stock has leapt 12.5 per cent on the BSE. By comparison, the benchmark 30-share index has risen only 3 per cent during the period.

A day after the result announcement, on February 1, New World Fund bought 12.4 million shares (2.75 per cent), Capital Group Global Equity Fund (Canada) mopped up 2.53 million shares (0.56 per cent), New World Fund Inc purchased 2.1 million shares (0.46 per cent), and Small cap World Fund bought 6.34 million shares (1.41 per cent) at Rs 992.8 apiece.

Foreign venture capital investor Claymore Investments (Mauritius) was the seller, that sold 5.42 per cent stake in PB Fintech Ltd for over Rs 2,425 crore. Claymore Investments offloaded 24.4 million shares at Rs 992.8 apiece, according to block deal data from the Bombay Stock Exchange.

Capital Group New World Fund, American Funds Insurance Series New World Fund, and Capital Group Global Equity Fund were also among the other buyers.

Meanwhile, shares of PB Fintech have zoomed 41 per cent thus far in calendar year 2024 as against just 1 per cent rise in the benchmarks. 

Recently, on February 16, Insurance Regulatory and Development Authority of India (IRDAI) granted In-Principle approval to Policybazaar Insurance Brokers Private Limited for upgradation of license from Direct Insurance Broker (Life & General) to Composite Insurance Broker under IRDAI (Insurance Brokers) Regulations, 2018.

"This will allow us to deepen the insurance penetration in the country by bringing more technology, process control and data analytics based innovation into re-insurance capacity," it said.