On Thursday, BofA Securities updated its outlook on PB Fintech Limited (POLICYBZ:IN) stock, the parent company of PolicyBazaar, increasing the price target to INR1,975.00 from INR1,660.00, while maintaining a Neutral rating on the stock. The adjustment follows a reassessment of the company's growth prospects and market position.
According to BofA Securities, PB Fintech's strong fundamentals are underscored by its commanding presence in the online insurance sector, where it holds over a 90% market share. The company is also well-positioned for growth in the health and life insurance segments, which offer higher take-rates compared to motor insurance.
Additionally, PB Fintech's capabilities in monetizing online leads through its extensive network of offline stores, feet on street, and call centers contribute to its robust outlook.
The firm's revised price objective comes after recent industry checks and recognition of PolicyBazaar's consistent, superior execution. BofA Securities has slightly adjusted its earnings per share (EPS) estimates for fiscal years 2025 and 2026 by 2-3%. This change is accompanied by an increase in the target multiple for PolicyBazaar from 12X to 15X FY26E enterprise value to sales (EV/Sales).
Despite the optimistic view on the company's operational strengths and growth potential, BofA Securities expressed a cautious stance on valuation. The current price-to-earnings (P/E) ratios for fiscal years 2026 and 2027 are estimated at 169X and 96X, respectively.
These valuations are believed to fully reflect the positive aspects of PB Fintech's business, justifying the decision to maintain a Neutral rating. The price objective is derived from an average of discounted cash flow (DCF) and sum of the parts (SOTP) valuation methods.
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