Q2 results impact: PB Fintech shares fall 7% to hit 52-week low amid mixed views from brokerages

However, it noted that customer acquisition and growth momentum remained healthy. The brokerage maintained its 'hold' rating on the stock with a target price of Rs 1,100, indicating an upside of around 10 percent from the previous closing price. HSBC said uncertainty surrounding regulatory changes is likely to keep the stock range-bound. Clarity on regulations and the company's strategic initiatives could help ease concerns, it added.

The Insurance Regulatory and Development Authority of India (IRDAI) has proposed changes to insurance distribution and commission norms to address rising costs and protect policyholders. HSBC has also cut its FY27-29 earnings per share (EPS) estimates by 2-4 percent. Nomura also has a 'neutral' rating on PB Fintech, with a target price of Rs 1,100 per share. The brokerage said the company's September quarter net profit was 13 percent above its estimates.

Its EBITDA margin stood at 9.92 percent in the second quarter, compared with its expectation of 9 percent. Bernstein has an 'outperform' rating on the stock and sees an upside potential of around 10 percent. Meanwhile, JM Financial maintained a positive view on the company, upgrading its rating to 'buy' with a revised target price of Rs 1,200, against its earlier target of Rs 1,780. JM Financial said PB Fintech reported a strong performance in the September quarter, with revenue rising 35 percent year-on-year and 15 percent sequentially.

Net profit increased 43 percent year-on-year and 18 percent quarter-on-quarter. Total insurance premium grew 38 percent year-on-year, led by growth of 42 percent in new protection and 46 percent in new health insurance. The core insurance take rate improved by around 55 basis points year-on-year to 18.5 percent. Renewal revenue rose 42 percent year-on-year on a rolling 12-month basis. However, the brokerage noted that advertising and promotional (A&P) expenses increased 59 percent year-on-year as the demand boost following the Goods and Services Tax (GST) changes faded.

This kept the adjusted EBITDA margin largely flat at around 10 percent. Management expects insurance premiums to exceed Rs 40,000 crore in FY27, although reported growth could moderate as the GST-led demand boost normalises, JM Financial said. The brokerage added that the IRDAI consultation paper on commission caps remains a key concern for the company. The proposed caps are significantly below current take rates and have weighed on the stock, which has fallen around 47 percent since the draft was released.

JM Financial said it has factored the proposed regulatory framework into its estimates from FY28. It expects blended take rates to move towards the proposed capped levels and assumes that PB Partners could become unviable under the new framework. The brokerage has cut its FY28 and FY29 revenue estimates by 55 percent and 53 percent, respectively, while reducing its EPS estimates by 55 percent and 40 percent.

It has valued PB Fintech at 47.5 times its September 2028 estimated EBITDA and revised its target price to Rs 1,200 from Rs 1,780, while upgrading the stock to 'buy'.