This fintech company zoomed over 150% thus far in CY2024; hits new high

Shares of PB Fintech, which owns online financial services platform, PolicyBazaar hit a new high at Rs 2,017, as they rallied 5 per cent on the BSE in Wednesday’s intra-day trade. Thus far in the calendar year 20-2024 (CY24), the stock price of financial technology (fintech) has zoomed 154 per cent, as compared to 11.8 per cent rise in the BSE Sensex. 

 

PB Fintech made its stock market debut on November 15, 2021, and has seen its market price more-than-double against the issue price of Rs 989 per share. The stock has skyrocketed 466 per cent from its record low of Rs 356.20 touched on November 17, 2022.

 

 

The Group is primarily engaged in providing online marketing, consulting and support services through its online portal policybazaar.com and paisabazaar.com largely for the financial service industry, including insurance. By collaborating with financial services companies, including insurance providers, the company aims to enrich its platform and deliver a seamless consumer experience from an e-commerce perspective.

 

PB Fintech’s board on Tuesday, December 03, 2024 has the incorporation of the wholly-owned subsidiary with the proposed name “PB Healthcare Private Limited” or “PB Healthcare Services Private Limited” or any other name as may be approved by the Ministry of Corporate Affairs, Government of India to carry on the business of healthcare services.

 

In the past one month, PB Fintech has outperformed the market by surging 23 per cent after the company reported 61 per cent growth in its new digital business, following 66 per cent growth in Q2FY25. This was higher than 22-41 per cent year-on-year (YoY) in the preceding four quarters. 

 

The company reported a revenue growth of 44 per cent YoY at Rs 1,167 crore led by insurance, up 56 per cent YoY. However, Adjusted EBITDA margin remained flat QoQ to 4.8 per cent as it incurred further additional Opex (Rs 34-42 crore) towards S&M and offline capacity.

 

Strong momentum likely reflects a ramp-up in its health business; PB believes that its strong claims fulfillment support is helping to gain share; it has a 10-12 per cent market share in the retail health business, with a much higher share in the new health segment. ULIPs momentum has buoyed growth for the life sector in the past six months; Policybazaar has made a shift to ULIPs from the non-par sold last year; this led to higher growth, albeit somewhat lower margins, analysts at Kotak Institutional Equities said in result update.

 

Going forward, the company continues to build in moderation and slightly higher take rates as the base effect plays out and portfolio balances in favor of other segments, the brokerage firm said.

 

Meanwhile, PB Fintech believes that it is well positioned to capture opportunities for growth and profitability, on the basis of its competitive strengths. The Company has taken various steps for increasing its profitability including cost rationalisation measures, focussed on liquidity management, operational efficiencies, process improvements, diversification and business optimization. The Company is confident that with improvement in these expenses and having multiple offerings for consumers will enable the company to earn the sufficient revenues to cover the operating expenses going forward in sometime.

 

PB is planning to enter the healthcare sector, with a potential one-time investment of up to $100 million (PB Health). This initiative aims to enhance the overall customer experience on claims turnaround, which is expected to foster greater trust and contribute to long-term growth in the insurance industry. The company projects that this move could drive up to 5 per cent higher volume over next 10 years, analysts at Dolat Capital said in result update.

 

However, the brokerage firm cut its FY25/26E earnings by 22 per cent/3 per cent as despite higher growth traction, profitability gains are slow due to higher-than-expected opex to support Insurance segment growth. Analysts believe the valuation looks stretched as upside is well captured but does not bake in the risk of growth moderation.