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Dolat Capital Report
PB Fintech Ltd. reported rev. growth of 25% YoY (our estimate: 15.5%) led by Core insurance biz., up 36% YoY, while revenues in credit biz were flat QoQ. Adjusted Ebitda margin expanded 183 bps QoQ to 6.3% (our estimate: 5.7%) as it saw moderation in costs in the core business (up 290 basis points YoY and 320 bps QoQ).
Management anticipates sustained weakness in credit biz. in Q1 FY25, projecting a 0-10% YoY growth due to scaling back of unsecured loans. With 16% of revenue witnessing uncertainty, we have scaled our growth estimates.
We tweak our FY25/26E EPS estimates by -2.2%/-10.7%, as we expect moderation in growth to slow down PAT recovery. Insurance segment continues to do well, but we believe that upside is well captured in the price and does not bake in the risk of growth moderation.
Thus, we downgrade to ‘Sell' rating (Buy earlier) with target price of Rs 1,100 which implies eight times on FY26E enterprise value/sales, from the recent sharp run up in stock price.
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