Priya Patel
TLDR:
- PB Fintech, the company behind Policybazaar, posted its first-ever quarterly profit in Q3 of FY22, prompting a surge in its share price.
- Macquarie, however, remains bearish on the company, citing a 40% downside and pointing out the decline in ESOP costs as the driver of PB Fintech’s large EBITDA beat.
Shares of PB Fintech rose by 12% to a new 52-week high after the company reported a consolidated net profit of INR 37 crore ($5 million) for Q3 FY22, compared to a net loss of INR 87 crore ($11.6 million) in the same period the previous year. The company’s cash position also improved to INR 5,150 crore ($684 million) and revenue from operations grew by 43% YoY to INR 871 crore ($115.6 million). However, Macquarie remains skeptical, expecting a 40% downside and attributing the EBITDA beat to a decline in ESOP costs.
Despite its profitability, PB Fintech’s share price has already surged by 147% over the past year, creating concerns of overvaluation. Macquarie also highlighted that credit disbursements have slowed due to recent regulations imposed by the Reserve Bank of India on unsecured personal loans.
Macquarie’s skepticism contrasts with the positive outlook from other brokerages. CLSA reaffirmed its outperform rating on the stock and raised its target price to INR 1,020 from INR 890, citing strong growth in insurance premiums and healthy margins. Morgan Stanley maintained its overweight stance and set a target price of INR 965, noting that the company’s core business has been weaker than expected due to regulatory changes in unsecured personal loans.
Overall, PB Fintech’s first-ever quarterly profit has been met with mixed sentiments from analysts. While some remain skeptical, others believe the company’s performance is promising and could lead to further growth and profitability in the future.
