PB Fintech Q1 Results Review - Insurance Led Growth Beat While Credit Remained Sluggish: Dolat Capital

Dolat Capital Report

PB Fintech Ltd. reported revenue growth of 52% YoY (our estimate: 32.5%) led by New Initiatives biz., up 132% YoY, while core insurance rev up 40% YoY. Adusted Ebitda margin contracted by 150 basis points QoQ to 4.8% (our estimate: 7.8%) as it incurred Rs 250 million additional costs in building operating capacity.

Management has deferred growth expectations in credit biz. to H2, citing sustained weakness in unsecured loans. We foresee a deceleration in the credit biz. growth, and focus on prioritising growth at the expense of profitability may impede PAT recovery.

We cut our FY25/26E earnings by -10%/-1% as despite higher growth traction, profitability gains are slow. Insurance segment continues to do well, but after sharp run up in stock price, we believe that upside is well captured in the price and does not bake in the risk of growth moderation.

Thus, reiterate ‘Sell’ rating with target price of Rs 1,250 (Rs 1,100 earlier) which implies 80 times/55 times P/ER on FY26E/FY27E earnings.

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