Morgan Stanley Cuts Policybazaar’s Forecasts As Growth Slows

Morgan Stanley has revised its forecasts for PB Fintech Ltd., operator of Policybazaar, owing to slower growth in core insurance premiums, led by weaker growth in retail protection and motor insurance segments.

“We have cut our headline revenue forecasts by 8–28% for fiscal 2023–2027,” said the brokerage in its investor note dated Oct. 11. “Our core revenue forecasts fall 4-27% for fiscals 2023-2027.”

The brokerage, while expecting cost-control measures by the insurance company, kept its headline adjusted Ebitda margin forecast for fiscal 2027 unchanged at about 26%. The absolute adjusted Ebitda forecast of Rs 1,510 crore is, however, down 25%, the note stated.

The brokerage also lowered valuation multiples to factor in weaker profitability and investor sentiment.

Morgan Stanley cut PB Fintech’s price target from 840 to Rs 620 apiece, implying a 29% upside from the current share price, but maintained “overweight” ratings on the stock, given its structural profit pool and franchise strength. 

“Although headline insurance premiums have been strong (boosted by new initiatives such as POSP), growth in core insurance premiums has been slowing,” the note stated.

The brokerage pointed out that industry premium growth in retail protection and the company’s growth in motor insurance segments have been under pressure.

whereas the savings business has been enjoying strong growth aided by the offline channel, said the brokerage.