PB Fintech shares plunged 7% to hit a 52-week low of ₹928.20 on the NSE on Monday, marking a decline from the previous close of ₹1,000.10. The stock had earlier hit the day's low of ₹928.05 on the BSE, with analysts believing the risk-reward has turned favourable following a 47% crash in PB Fintech shares on IRDAI's consultation paper, making the current price an "attractive entry point" for investors. HSBC maintained its 'hold' rating with a target price of ₹1,100, indicating an upside of around 10% from the previous closing price, while Nomura also has a 'neutral' rating with a target price of ₹1,100 per share. JM Financial upgraded the stock to 'buy' with a revised target price of ₹1,200, against its earlier target of ₹1,780, stating that the consultation paper has driven a ~47% fall in the stock since the draft was released. Jefferies has now upgraded the stock with a target price of ₹1,540, representing a significant upgrade from previous targets, with the brokerage maintaining a 'buy' rating based on 26x Dec'28e EV/adj. EBITDA.
PB Fintech has delivered robust financial results for the quarter ending September FY27, with consolidated Profit After Tax surging 43% year-on-year to ₹192 crore compared with ₹135 crore in the corresponding quarter last year. According to the company's exchange filing, the company's consolidated revenue from operations increased 35% YoY to ₹2,178 crore in Q2 FY27, against ₹1,698 crore in Q2 FY26. Jefferies noted that September quarter revenue grew by 35% Yo-Y, ahead of their expectations, while adj. EBITDA at ₹220 crore (+39% Yo-Y) was a miss due to higher expenses. The company's EBITDA margin stood at 9.92% in the second quarter, compared with Nomura's expectation of 9%, though operating profit rose 69% YoY, but fell short of expectations as a 59% jump in advertising spend held the margin at 7.6% against the estimate of 9.3%. As per Business Standard, Elara noted that the operating profit figure was 16% below its estimate, with the brokerage raising FY27E revenue by 1.8% on stronger premium growth but cutting operating profit estimates for FY27E/28E/29E to reflect higher marketing and employee costs.
Total insurance premium increased 38% YoY to ₹9,390 crore during the quarter, led by its core online insurance business with core online insurance premium rising 38% YoY. New protection premium, comprising health and term insurance, grew 42%, with new health insurance premium increasing 46% YoY. The company maintained core new insurance premium growth of more than 34% for 14 consecutive quarters, excluding the savings business. The core insurance take rate improved by around 60 basis points year-on-year to 7.9% on account of a higher share of health renewals and the transition to a "Combined Operating" model. The renewal revenue rose 42% year-on-year on a rolling 12-month basis. Management expects PB Health to reach a monthly revenue run-rate of ₹40-50 crore by Mar'26, equivalent to ₹500 crore annualised, with the business broadly around break-even. With premium growth of 31% from the year-ago period in the first half of FY27, the company is running ahead of its full year premium growth estimates of 25% for FY27, as noted by Nomura. Management expects FY27 premium to exceed ₹40,000 crore, though JM Financial noted that reported growth could moderate as the GST-led demand boost normalises.
The Insurance Regulatory and Development Authority of India (IRDAI) has proposed changes to insurance distribution and commission norms to address rising costs and protect policyholders, which continues to cloud near-term sentiment. JM Financial has cut its FY28 and FY29 revenue estimates by 55% and 53% respectively, while reducing its EPS estimates by 55% and 40% due to the regulatory uncertainties. The proposed caps are significantly below current take rates and have weighed on the stock, which has fallen around 47% since the draft was released. JM Financial has factored the proposed regulatory framework into its estimates from FY28, expecting blended take rates to move towards the proposed capped levels and assuming that PB Partners could become unviable under the new framework. Jefferies noted that PB discussed levers to offset regulatory risks, including building non-insurance revenue, improving productivity, and aligning costs with NPVs. The proposed regulatory changes are expected to impact the company's growth trajectory, with Jefferies cutting FY27e PAT by 3% to account for higher operating expenses. HSBC noted that uncertainty surrounding regulatory changes is likely to keep the stock range-bound, with clarity on regulations and the company's strategic initiatives needed to ease concerns. Management remains committed to aligning the cost base to the lower customer NPV and the final framework may prove softer than the draft.
Total lending disbursals stood at ₹4,739 crore during Q2 FY27, with core lending disbursals increasing 22% YoY to ₹2,791 crore. The company's core credit revenue grew 19% YoY to ₹125 crore during the quarter, with core credit disbursals recording sequential growth for five consecutive quarters. PB Partners, the company's agent aggregator platform, now supports more than 5.7 lakh advisors with its active partner count increasing 55% YoY to 1.31 lakh in Q2 FY27. The platform is present across 19,000 pin codes, covering 99% of India's pin codes, with Tier-2 and Tier-3 markets contributing 76% of its overall gross written premium during the quarter. However, Paisabazaar's growth momentum remained muted as the company kept marketing expenditure subdued, with credit disbursal were broadly flat quarter-on-quarter as the company maintained subdued marketing growth. Jefferies expects growth to moderate in the second half of FY27 as the tailwinds from GST-related changes diminish. The company highlighted the risk of slower 2H growth, as GST tailwinds are behind, which could impact future performance expectations.
