PB Fintech Share Price Target Q4 FY24: Revised from BUY to REDUCE, Target Price: Rs. 1,223 (-1.8%)
PB Fintech Share Price: In an impressive display of financial growth and strategic business maneuvers, PB Fintech Ltd., a leading player in the fintech sector, has reported a substantial increase in its financial metrics for the fourth quarter of the fiscal year 2024.
The company, well-known for its insurance aggregator PolicyBazaar and lending platform PaisaBazaar, has shown remarkable improvement in its revenue and profitability.
In Q4 FY24, PB Fintech reported a significant 25.4% year-on-year (YoY) increase in revenue. This was mainly fueled by a 26.0% growth in the insurance business and a 21.7% growth in the credit business. Notably, this quarter marked the first time the company reported a positive EBITDA margin of +0.5%, a significant turnaround from the -7.8% reported in the same quarter last year.
Breakthrough in Profitability
The improvement in EBITDA margin is attributed to controlled employee expenses and an increasing share of the renewal book, which is known for its high margin. Additionally, the company benefited from higher other income earned on investments, culminating in a healthy profit after tax (PAT) of Rs. 602 million in Q4 FY24 and Rs. 644 million for the entire fiscal year.
Renewal and Trail Commission
The renewal and trail commission surged by 48.7% YoY, from Rs. 3,880 million to Rs. 5,770 million. This segment now boasts an operating margin of over 85%. The growth in this area is particularly significant as it now contributes more than 15% to the credit business’s revenue, thanks to effective collaborations on co-created products with lending partners.
Insurance and Credit Businesses Thrive
The insurance premiums grew by 43.0% YoY, with new protection (Health + Term) premiums increasing by 53% YoY, driven primarily by substantial growth in health insurance. On the other hand, lending disbursals experienced a modest growth of 5.7% YoY due to stricter RBI guidelines on unsecured credit. The company also issued 153,000 credit cards during the quarter, marking a 16.8% YoY growth.
Forward-Looking Strategy
Despite the strong performance, PB Fintech has revised its stock recommendation from “BUY” to “REDUCE” with a new target price of Rs. 1,223. This adjustment reflects a valuation pegged at 12.1 times the FY25 estimated price-to-sales multiple. The company is at a pivotal juncture, benefiting from the growth in renewal commissions, strategic expansion into tier-2/3 cities through offline channels, and stringent cost management strategies, all set to yield favorable operating leverage.
Digitalization Drives Efficiency
PB Fintech’s emphasis on digitalization has notably enhanced efficiency across its operations. Over 75% of credit card issuances and 50% of unsecured lending transactions are now fully digitalized. PaisaBazaar’s platform has achieved complete digitalization with 13 lending partners, and 80% of motor and travel insurance transactions are conducted without human assistance, highlighting a significant shift towards automated, cost-effective operations.
This robust financial performance and strategic focus on digital efficiency and product innovation set PB Fintech on a promising path toward sustained growth and profitability in the ever-evolving fintech landscape.
| Metric | Q4 FY24 |
|---|---|
| Revenue Growth (YoY) | 25.4% |
| EBITDA Margin (YoY) | +0.5% |
| PAT | Rs. 602 Mn |
| Promoters | 0 |
| FIIs | 49.0% |
| DIIs | 16.6% |
| Non-Institutional | 34.4% |
| Revenue | Rs. 34.4 Bn |
| EBITDA | Rs. -1.9 Bn |
| Net Profit | Rs. 0.7 Bn |
| Total Assets | Rs. 67.3 Bn |
| ROCE (%) | -2% |
| ROE (%) | 1% |
| ARR (Annual Recurring Revenue) | Rs. 5770 Mn |
| Operating Margin | 85%+ |
| Target Price | Rs. 1,223 |
| Recommendation | REDUCE |
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