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PB Fintech FY28 core online insurance revenue could take 30% hit if commission changes implemented

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PB Fintech FY28 core online insurance revenue could take 30% hit if commission changes implemented

PB Fintech FY28 core online insurance revenue could take 30% hit if commission changes implemented

Under the draft, the NPV of PB Fintech’s general insurance business could fall to around 35-40% of current levels, implying a 60-65% cut. Life insurance NPV is expected to remain “in the same neighborhood”, albeit not the same.

General insurance NPV could fall 60-65% under the draft commission rules, while life insurance NPV is expected to remain in the same neighborhood. PB Fintech expects to recover 15-20% of the impact through volume growth as lower commissions are passed through to customers through lower prices. The company could cut costs by 10-15% from its Rs 30 billion cost base and pursue new revenue streams including services, reinsurance broking and manufacturing.Management expects no impact in FY27, with implementation most likely from FY28, while health renewal commissions remain the biggest open risk.

PB Fintech ’s core online insurance revenue could take a potential 30% hit in FY28 if proposed changes to insurance commissions are implemented as proposed. The company’s earnings estimates could decline by 46% if FY28 core online insurance revenue falls by 30%, without factoring in any adjustments to expenses or additional revenue streams highlighted by the company. On these earnings, the stock would trade at 73x. Assuming PB Fintech is able to cut employee and advertisement costs by 20% compared with current assumptions, the earnings cut would be about 30% and the stock would trade at 57x. The brokerage reiterated its Neutral rating and revised its target price to Rs 1,150, based on 50x the average of the current and worst-case FY28 EPS, according to Motilal Oswal Financial Services.


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