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ICICI Securities Report
PB Fintech Ltd.’s Q1 FY24 performance continued to track along the expected lines of premium growth, credit disbursement growth, stable contribution margins, range-bound fixed costs and controlled losses in new initiatives.
The roadmap remains to become profitable in FY24 and attain ~Rs 9 billion-10 billion in adjusted Ebitda/profit after tax 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 constituting 20% of core new business).
We downgrade PB Fintech from 'Buy' to 'Add' basis high valuations. Our revised discounted cash flow-based target price stands at Rs 818 (earlier: Rs 715), implying a valuation multiple of ~40 times for FY27E.
Risks include less than expected growth in core premiums basis lower demand or competition from other channels.
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