CONNECT WITH US
Funding Tracker

Funding Tracker

BofA cuts PB Fintech price target by 19%; anticipates strong Q2 for Paytm

Entrackr logo

Published on

Add as a preferred source on Google
BofA cuts PB Fintech price target by 19%; anticipates strong Q2 for Paytm

BofA expects PB Fintech and Paytm to post strong Q2 FY27 growth, but regulatory changes could affect the two differently. It cut PB Fintech’s price target by 19% to Rs 1,145, while maintaining a Buy rating on Paytm with a Rs 1,775 target.

The brokerage estimates that PB Fintech’s earnings per share (EPS) could  decline 39-41% in FY28 and FY29 if the proposed rules are implemented in their current format. However, it maintained its Neutral rating on the company.

The concerns follow IRDAI’s consultation paper proposing changes to insurance commissions. PB Fintech’s shares had fallen sharply after the proposal as investors assessed the potential impact on Policybazaar’s commission income.

Despite the regulatory concerns, BofA expects PB Fintech to post 31% year-on-year revenue growth in Q2 FY27, while premiums are projected to rise 35%. Revenue is estimated at Rs 2,115.7 crore, compared with Rs 1,613.6 crore in the year-ago quarter.

PB Fintech’s EBITDA is expected to more than double to Rs 204 crore, with its EBITDA margin improving to 9.6% from 7.4% in Q1 FY27. Profit after tax is estimated to rise 62% year-on-year to Rs 218.7 crore. Paisabazaar is also expected to record 26% year-on-year revenue growth.

BofA believes PB Fintech could reduce some of the impact of lower commissions by cutting call-centre and customer acquisition costs. According to the brokerage, around 25% of its call-centre sales staff generate 65-70% of sales, while 80% of customer traffic comes directly to the platform. The company could also increase its focus on products such as loans and credit cards.


Source link
Related Topics:Funding Tracker

Disclaimer

We strive to uphold the highest ethical standards in all of our reporting and coverage. We TheMorningPulse.fyi want to be transparent with our readers about any potential conflicts of interest that may arise in our work. It's possible that some of the investors we feature may have connections to other businesses, including competitors or companies we write about. However, we want to assure our readers that this will not have any impact on the integrity or impartiality of our reporting. We are committed to delivering accurate, unbiased news and information to our audience, and we will continue to uphold our ethics and principles in all of our work. Thank you for your trust and support.