PolicyBazaar hits fresh 52-week high; stock nearly doubles from 52-week low

Shares of PB Fintech, the parent company of Policybazaar, hit a 52-week high of Rs 696.40, as they surged 7 per cent on the BSE in Monday's intra-day trade on improved financial outlook.

The stock of fintech company was trading at its highest level since May 2022. The market price of the company has nearly doubled or zoomed 96 per cent from its 52-week low of Rs 356.20, touched on November 17, 2022. It had hit a record high of Rs 1,470 on November 17, 2021.

PB Fintech is a leading online platform for insurance and lending products in India. The Company operates PolicyBazaar, which is India's largest online insurance platform, and PaisaBazaar, an independent digital lending platform. PB Fintech has an asset-light business model and acts as an aggregator for insurance and lending products, enabling customers to make informed purchase decisions.

PB Fintech expects to wipe out accumulated losses in the next four years on the back of revenue growth. The total revenue of the company increased 80 per cent year-on-year (YoY) to Rs 2,558 crore in FY23. As a result, the loss narrowed to Rs 488 crore from Rs 833 crore in the previous fiscal. The management said it is hopeful for FY24 to be profit after tax positive.

Meanwhile, in January-March quarter (Q4FY23), the company's consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was a positive Rs 28 crore which was a 3 per cent EBTIDA margin, an improvement from minus Rs 80 crore (-15 per cent margin) same quarter of FY22.

The company's existing businesses comprising of Policybazaar and Paisabazaar which are the insurance and credit marketplaces respectively have been adjusted EBITDA positive for more than a year with Paisabazaar individually being EBITDA positive since December 2022. This growth is driven by three things - growth of renewal income, growth of new business, and higher efficiency on new business, the company said.

PB Fintech has a dominant market share in the digital insurance and lending marketplaces in India, making it a significant player in the fintech industry. Post receiving its broker license in June 2021, revenue opportunities broadened, and the value proposition for consumers has enhanced. With disciplined cost management and a rising share of renewal commissions, PB Fintech is well-positioned to achieve profitability, analyst at Keynote Capitals said in initiate coverage on PB Fintech. The brokerage firm has 'Buy' rating on the stock with target price of Rs 789.

The roadmap presented by the management is to reach ~Rs 800 crore-1,000 crore in adjusted EBITDA as well as PAT by FY27. The crux of the business remains an exponential increase in contribution driven by renewals, new business growth and efficiencies in new business growth (offline is a big imperative here), analysts at ICICI Securities said in Q4 result update. The brokerage firm maintain BUY with a revised DCF based target price of Rs 715 and implied valuation multiple of 35x for FY27E.