Why are analysts optimistic on PB Fintech despite regulatory concerns?

PB Fintech shares fell over 5% despite strong Q4FY26 results with robust premium growth and margin expansion. Analysts remain positive on Policybazaar and Paisabazaar's long-term growth potential.

PB Fintech, the parent company of Policybazaar and Paisabazaar, has reinforced analysts’ confidence after delivering a strong set of March quarter (Q4FY26) results, driven by robust growth in insurance premiums, improving profitability, and sustained operating leverage.

 

The company reported a 36.7 per cent year-on-year (Y-o-Y) rise in consolidated revenue to ₹2,061 crore for Q4FY26, while adjusted Ebitda surged 87 per cent to ₹280 crore.

 

Net profit climbed 53 per cent to ₹261 crore during the quarter. For the full financial year FY26, revenue grew 36.5 per cent to ₹6,794 crore and profit after tax nearly doubled to ₹670 crore.

 

 

Brokerages said the quarter highlighted PB Fintech’s ability to combine high growth with improving operating leverage -- a key factor keeping long-term optimism intact despite concerns around regulatory changes in insurance commissions.

 

That said, PB Fintech shares, which opened higher on Thursday, erased gains to fall 5.4 per cent intraday.

Strong insurance growth remains key trigger

The biggest positive for analysts was the continued strength in the core insurance business. Policybazaar’s online insurance premium grew 44 per cent Y-o-Y to ₹6,195 crore in Q4FY26, led by a sharp rise in protection products such as health and term insurance. New business premium increased 48 per cent, while the protection segment expanded 67 per cent during the quarter.

 

Motilal Oswal Financial Services (MOFSL) believes the company continues to benefit from structural under-penetration in India’s insurance market and improving digital adoption.

 

“We believe Policybazaar holds a strong position in two of India’s most under-penetrated financial services segments, complemented by embedded optionality from new initiatives that offer further long-term convexity,” the brokerage said with a ‘Neutral’ rating and a target of ₹1,870.

 

HDFC Securities echoed a similar view, stating that Policybazaar has “singularly reshaped India’s insurance distribution landscape” by solving industry-wide problems such as high customer acquisition costs and poor lead conversions.

 

The brokerage added that the platform’s evolution into a “data-driven, profit-sharing partner” strengthens its competitive moat in digital insurance distribution.

 

That apart, analysts also highlighted improving customer metrics and renewal income as major positives. JM Financial noted that rising renewals are helping improve contribution margins and profitability visibility over the long term.

 

“New business continues to outgrow renewals, with a balanced contribution from both driving profitability,” it said.

Operational efficiency boosts margins

Another key highlight from the quarter was margin expansion. PB Fintech’s adjusted Ebitda margin improved to 13.6 per cent in Q4FY26 from 9.9 per cent a year ago, supported by productivity gains and improving scale.

 

MOFSL highlighted that strong revenue growth and operational efficiency resulted in profitability outperforming expectations.

 

JM Financial also said improving operating leverage, especially in the core insurance business, supports a stronger earnings trajectory ahead. It expects the company’s core business contribution margin to improve further as renewal income gains share over time.  Check - TOP GAINERS NSE | TOP LOSERS NSE 

Paisabazaar recovery adds growth lever

 

Paisabazaar, PB Fintech’s credit marketplace business, turned Ebitda positive again in Q4FY26, raising hopes that the business has “bottomed out” and is now “seeing improving conversion rates, healthier partner mix, and better business quality”.

 

Core online credit disbursals rose 11 per cent Y-o-Y to ₹2,630 crore in Q4FY26. It generated revenue of ₹123 crore (up 7 per cent Y-o-Y) with take-rates trending upwards.

 

Meanwhile, the company’s push into bonds, mutual funds and savings products is being viewed as a long-term optionality.

 

MOFSL said Paisabazaar is evolving into a broader financial engagement platform beyond just lending, which could open new monetisation opportunities over the next few years.

 

The management, meanwhile, has guided for a stronger profitability trajectory ahead driven by stable cost base and improving scale.

 

“Paisabazaar’s strategy is shifting from a pure origination platform to a deeper engagement-led ecosystem, leveraging its ~58 million customer base through expansion into savings products (bonds, mutual funds) and increasing cross-sell,” JM Financial noted.

 

It has a ‘Add’ rating with a target of ₹1,830.

 

Notable, management suggested that Paisabazaar could pursue its own listing at some point.

Regulatory risks overblown

Additionally, analysts believe PB Fintech’s business model remains resilient even amid regulatory concerns regarding insurance commissions.

 

HDFC Securities said the current expense-of-management framework offers flexibility to insurers and is unlikely to materially alter payout structures for distributors.

 

“We believe PB Fintech offers the best economics of the insurance distribution business and is likely to navigate through efficiently in this scenario as well,” it said with a ‘Buy’ rating. The brokerage has a target price of ₹2,180 on the stock.

Earnings estimates revised

MOFSL has raised its FY27 and FY28 earnings estimates by 2 per cent and 3 per cent, while HDFC Securities has cut revenue and profit estimates by 1-3 per cent and 2-6 per cent for the respective years.

 

HDFC Securities, however, expects revenue/PAT CAGR of 27 per cent/56 per cent over FY26-FY28.,

 

JM Financial has increased premium estimates by 3-7 per cent over FY27-29E, while also increasing Paisabazaar revenue estimates by 1-2 per cent as take-rate improves.     ==========  Disclaimer: Views and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers' discretion is advised.