PB Fintech stocks give up early gains; here’s what analysts expect in Q4

Shares of PB Fintech, the parent of PolicyBazaar and PaisaBazaar, gave up their early gains to trade lower on Monday ahead of its quarterly earnings for the period ended March 31, 2023, due later today. The company is likely to announce a decent set of numbers during the January-March 2023 quarter. Shares of PolicyBazaar fell over 2 percent from the day’s high of Rs 631.45 on Monday to Rs 618.55. The new internet-based company had a market capitalization of Rs 28,000 crore on Monday. With continued interest rate hikes and rising inflation, discretionary spending remained subdued in 4QFY23, analysts said. They believe seasonality will play a significant role as PB Fintech will be a key beneficiary. Despite the weaker demand environment, the profitability improvement is expected to sustain and PB Fintech is likely to report adjusted EBITDA at the group level, they said. Q3FY23 was a difficult quarter for most B2C e-commerce companies and investors expected an improvement in Q4FY23E. However, our channel checks indicate that B2C growth may underperform expectations,” ICICI Securities said. “This is in contrast to the buoyancy in some offline discretionary categories such as travel and hospitality,” it said. JM Financial estimates that PB Fintech will deliver 59 per cent and 50 per cent annual growth in insurance premiums and loan disbursements respectively, with continued increases in insurance and credit penetration, while the respective revenues should grow by 36 per cent and 74 per cent respectively year on year. due to base effect. JM Financial sees the company’s loss narrowing to Rs 57.40 crore in the quarter from Rs 87.60 crore in December and Rs 219.60 crore in the year-ago quarter. It sees revenue rising 40.3 percent YoY to Rs 758.30 crore from Rs 540.30 crore YoY. The brokerage pegs EBITDA loss at Rs 103.7 crore against Rs 255 crore YoY and 133.2 crore QoQ. “We expect sequential premium/disbursement growth to be 15 percent /8 percent as year-end makes Q4 a strong quarter for these sectors. As guided by management, we expect PB Fintech to report profitable adjusted EBITDA this quarter. We expect core. Policybazaar vertical to show improvement in coverage driven by better conversions,” it added. Shares of PB Fintech have risen more than 55 percent in the past six months, while the stock has jumped around 80 percent from its 52-week low of 356.20 on November 17, 2022. Nuvama Institutional Equities sees an adjusted loss of Rs 63. crore. It sees revenue rise 63 percent year-on-year to Rs 882 crore. The domestic brokerage firm expects revenue growth of Rs 63.3 per cent year-on-year, mainly driven by premium growth of 67.5 per cent y-o-y. “Premium growth in the life and health segments will be critical to monitor. Core and new initiatives adjusted Ebitda growth and guidance will be key. Management commentary on the impact of regulatory changes will be key, particularly IRDAI’s regulation requiring insurers to offer differential pricing for direct sales,” it says.

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