The company reported a profit of Rs 37 Crore in the third quarter of FY24, rebounding from a net loss of Rs 87 crore in the same period the previous year. Analysts anticipate the profitability trend to persist in the coming quarters, but they caution that the stock may experience a slowdown after its recent outperformance.

PB Fintech’s shares surged by 11 percent, surpassing its issue price of Rs 1,020 per share on January 31 in early trading. Over the past month, the stock has experienced a remarkable increase of over 14 percent, while the benchmark Sensex witnessed a 1 percent decline. Analysts from Morgan Stanley have assigned an ‘overweight’ rating to PB Fintech, setting a target price of Rs 965 per share. They noted that the company achieved breakeven in Q3FY24, primarily attributed to the contribution of new initiatives. However, they also highlighted potential downside risks to near-term forecasts due to regulatory changes in unsecured personal loans that could impact the core business.

Despite the positive financial indicators, Macquarie has issued an ‘underperform’ rating for PB Fintech, setting a target price of Rs 610 per share. The rating is based on observed sequential declines in insurance take rates and Paisabazaar revenues. The company experienced a contraction of 189 basis points quarter-on-quarter in its insurance commission rate, dropping to 17 percent in Q3FY24. Additionally, Paisabazaar revenues recorded a 6 percent decline quarter-on-quarter, amounting to Rs 145 crore.

During Q3FY24, PB Fintech demonstrated robust growth in its core online marketplace revenue, registering a substantial 39 percent year-on-year increase to Rs 593 crore. Moreover, new protection premiums, encompassing health and term insurance, experienced a notable surge of 44 percent. The company’s adjusted EBITDA witnessed a year-on-year improvement of Rs 50 crore in Q3FY24, in line with the annual guidance provided by the company. Analysts from Macquarie attributed the substantial EBITDA beat to a decrease in ESOP (employee stock ownership plan) costs. The brokerage firm expressed optimism about the company’s consensus estimates, indicating a profit exceeding Rs 37 crore in Q4FY24, driven by strong seasonality.

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