New-age tech stocks bounced back strongly from their poor show in CY22, and PB Fintech, the flagship company of Policy Bazaar and Paisa Bazaar, was one of those that delivered a tremendous return in CY23 after a steep fall in the previous calendar year.
The stock this year so far has given a return of 82%, appreciating from ₹451 per to ₹821.40. Despite a weak start in January with a decrease of 4.4%, the shares gained momentum from February onwards, marking a large increase of 30.26%. This positive trend continued into November, with the stock already registering a 17% increase this month.
Also Read: Nykaa share price rises more than 4% today, gains more than 19% in the last two weeks
This rally contrasts with the stock’s weak performance in CY22, during which it lost 53% of its value. The resurgence in the stock is primarily attributed to the company’s strong financial performance.
In the last September quarter, the company showed signs of improvement, as its net loss narrowed to ₹21 crores of ₹187 crore in the same quarter of the previous year. Its total revenue from operations reached ₹812 crore in Q2, reflecting an increase of 42% YoY.
Also Read: Zomato vs Paytm: Which online stock should you choose in the long run?
EBITDA margins improved from -39.4% (Q2 FY23) to -11.0% (Q2 FY24). This positive change was fueled by prudent cost management initiatives, including reductions in ESOPs, controlled employee costs, and advertising costs, resulting in significant operating leverage benefits.
Its renewal and trial revenue is at an ARR of ₹436 crore, up from ₹294 crore in the same quarter last year. Notably, its core online business segment, Health and Term Insurance, witnessed an impressive growth of 53% YoY in new premium during Q2 FY24, marking the highest performance in the last 7 quarters.
Also Read: India is third among countries with most fintech unicorns in 2023
In light of the strong Q2 performance, domestic brokerage Keynote Capitals maintained its “buy” recommendation on the stock with a target price of ₹968 each. The brokerage highlighted the positive impact of PaisaBazaar’s collaborative efforts on co-created products with lending partners, evident in the trail commission’s contribution of 14% to credit trading revenue.
The company’s focus on unassisted sales lowered costs and boosted profitability. In particular, more than 75% of credit cards and 50% of unsecured loans are now fully digitized. Additionally, PaisaBazaar’s platform has achieved end-to-end digitization for 13 lending partners. Similarly, 80% of motor and travel insurance transactions are now unassisted.
The company stands at a pivotal juncture, driven by catalysts such as renewal commission growth, strategic expansion into Tier 2/3 cities through offline channels, and rigorous cost management, all poised to generate favorable operating leverage, the brokerage emphasized.
Also Read: The Bull Market Plays with Your Head
PB Fintech is engaged in providing integrated online marketing, IT consulting and support services mainly for the financial services industry, including insurance. PB Fintech operates PolicyBazaar, India’s largest digital insurance marketplace, and PaisaBazaar, which provides services related to loan products.
The insurance and financial aggregator made a decent debut on the exchanges on November 15, 2021, listing at a premium of 22.7% at ₹1,202 per against the issue price of ₹980. However, considering the current market price, the stock is trading at 16.22% lower than the issue price.
Disclaimer: The opinions and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
Milestone Warning!Livemint tops charts as the fastest growing news site in the world 🌏 Click here to know more
Catch all Business News, Market News, News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More or less
Updated: 23 Nov 2023, 14:08 IST