PB Fintech shares can rally 91% after 2-day bloodbath, says Bernstein. Here’s why it remains bullish
PB Fintech shares rose 4% after Bernstein retained its Outperform rating and Rs 2,310 target price, despite the stock’s sharp fall following IRDAI’s proposed ban on dark patterns. The brokerage expects lower insurance take rates, revenue and profit estimates, while cost rationalisation could provide some cushion. IRDAI’s draft framework also proposes sweeping changes to insurance distribution and…
Shares of PB Fintech surged nearly 4% to a high of Rs 1,214 on the BSE on Monday following a bullish outlook from international brokerage Bernstein. The firm reaffirmed its Outperform rating and raised its target price to Rs 2,310, signaling a potential 91% upside from the previous close. This optimism follows PB Fintech's significant 39% decline over two days, sparked by the Insurance Regulatory and Development Authority of India (IRDAI) proposing to ban 'dark patterns' on insurance websites.
Such practices include requiring customers to share personal details before accessing product features and pricing information. Bernstein believes the proposed framework could lead to a 40% reduction in insurance take rates for PB Fintech, which could result in a 36% cut in FY28E consolidated revenue. However, management sees opportunities to rationalize growth-linked costs in FY28, such as call center hiring and performance marketing spends.
The brokerage's scenario analysis suggests that PB Fintech's organic premium growth, currently projected at 35-40%, may gradually adjust downwards in FY28E, with lower customer pricing offsetting the impact through higher volumes.
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