PB Fintech, the mum or dad firm of PolicyBazaar, has seen its shares tank 20% to this point since its IPO in 2021. Initiating protection of the inventory, analysts at ICICI Securities stated that PB Fintech is effectively positioned to profit from the rising insurance coverage penetration in India, particularly by way of digital distribution. The brokerage agency has initiated the protection with a ‘ Buy’ name and a goal worth of Rs 940 per share. The inventory got here beneath stress earlier this 12 months together with different web shares and has not recovered fully to this point. On Tuesday morning, PB Fintech shares started buying and selling at Rs 777 per share.
Better than different insurance coverage gamers
Analysts at ICICI Securities consider that PolicyBazaar’s enterprise mannequin may get pleasure from larger development than different insurance coverage gamers. “The prime growth driver for PB Fintech should be in the increasing premium income expected in digital medium,” they added. Industry estimates present that premium by way of on-line channels stood at $1 billion for India representing 1% of the entire FY20 premium which is considerably decrease than the US (13%) and China (5.5%), leaving area for development. In the monetary 12 months 2020, PolicyBazaar was India’s largest digital insurance coverage market with a 93.4% market share when it comes to the variety of insurance policies offered.
Insurance in India has huge scope to develop and this bodes effectively for PolicyBazaar. High development, working leverage, sturdy steadiness sheet and established model recall among the many Indian populace are a number of the key enterprise moats. This is anticipated to assist the corporate generate sturdy free money flows.
Digital shopper lending enterprise has development potential
ICICI Securities stated that India’s shopper lending market stood at Rs 36.8 lakh crore (banks + NBFCs) throughout the first half of the earlier monetary 12 months. “Despite the large market size, penetration in FY20, measured in terms of outstanding consumer debt as % of nominal GDP, is considered relatively low at 16.7% vs 79.2% in the US and 55.6% in China,” they stated. The low shopper lending penetration in India is essentially because of insufficient monetary literacy amongst debtors, restricted attain of lending establishments.
Here once more, PB Fintech has the potential to develop as in monetary 12 months 2020, PaisaBazaar was India’s largest digital shopper credit score market with a 51.4% market share, based mostly on disbursals. In the earlier monetary 12 months, disbursement of loans from PaisaBazaar platform stood at Rs 6,600 crore, up 126% on-year and bank card issuance elevated from 45,000 within the monetary 12 months 2020 to 1,62,000 in monetary 12 months 2021.
“We have assumed terminal growth at 7% and cost of equity at 12% to arrive at the target price of Rs 940,” analysts at ICICI Securities stated. The brokerage agency additional expects Rs 1,020 crore EBITDA (adj) by FY26E pushed by sturdy development outlook.
Source: www.financialexpress.com”