PB Fintech Ltd. reported a mixed set of earnings for the September quarter, with strong growth in its core insurance business offset by higher advertising and operating expenses, which weighed on profitability. Following the results, brokerages maintained divergent views on the stock, with Jefferies retaining its Buy rating, Bernstein remaining positive and HSBC maintaining a Hold recommendation.
Jefferies maintained its Buy rating on PB Fintech with a target price of Rs 1,540, despite trimming its FY27 profit after tax (PAT) estimate by 3% due to higher operating expenses. The brokerage said revenue exceeded expectations, but adjusted EBITDA missed estimates amid elevated costs.
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Jefferies highlighted continued strength in core insurance growth, supported by new health and term insurance products. Renewal take rates also improved, aided by higher health insurance renewals and the company's Combined Operating model. PB Health remains on track to achieve break-even at its targeted revenue run rate.
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However, Paisabazaar's growth momentum remained muted as the company kept marketing expenditure subdued. Jefferies expects growth to moderate in the second half of FY27 as the tailwinds from GST-related changes diminish.
HSBC maintained its Hold rating but lowered its target price to Rs 1,100 from Rs 1,150. It flagged the Q2 earnings miss, attributing the pressure on profitability to higher advertising and operating expenses. While insurance premiums grew around 38% year-on-year (YoY), regulatory uncertainty remains a key concern. HSBC cut its FY27-29 EPS estimates by 2-4%, identifying cost optimisation and potential commission changes as key monitorables.
Meanwhile, Bernstein maintained its Outperform rating with a target price of Rs 1,085. It highlighted 38% YoY growth in consolidated premiums and a 22% increase in core credit disbursements. Contribution margin remained around 29%, while adjusted EBITDA margin stood at approximately 10%, despite higher marketing expenditure.
Bernstein also noted management's 1,000-day plan, which focuses on cost discipline, expanding non-insurance revenue and exploring an insurer licence.
Overall, brokerages remain constructive on PB Fintech's insurance growth prospects, but rising costs, regulatory uncertainty and the sustainability of growth will be crucial factors to watch.
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