Broker’s call: PB Fintech (Buy)

PB Fintech reported a 35% increase in September quarter revenue, surpassing analyst expectations. However, adjusted EBITDA of ₹220 crore, increasing 39% y-o-y, fell short of expectations due to higher expenses. The company addressed regulatory risks by focusing on building non-insurance revenue, improving productivity, and aligning costs with net present values.

PB noted the potential for slower growth in the second half of the fiscal year as GST tailwinds diminish. Insurance premiums surged by 38% y-o-y, with core new health and term policies growing 42%. The renewal take rate improved to 7.9%, driven by a higher share of health renewals and the transition to a combined operating model.

Management anticipates PB Health to achieve a monthly revenue run-rate of ₹40-50 crore by March 2026, which would amount to ₹500 crore annualised, with the business nearing break-even. Overall expenses, excluding ESOP, grew 35% y-o-y, outpacing JEFE's 29% increase, primarily due to higher advertising and promotion costs (+59%). This contributed to the September quarter adj.

EBITDA missing estimates by 3%. The company's sequential momentum in the Paisabazaar segment was muted, with credit disbursal remaining flat quarter-over-quarter as marketing growth was restrained. The FY27e estimated PAT was reduced by 3% to account for increased operating expenses. Based on a SOTP valuation of ₹1,540, using a 26x Dec'28e EV/adj. EBITDA multiple, the company's price target has been set.