PB Fintech share price can rise 91%, Bernstein projects in its bullish call; Here's why

Brokerage firm Bernstein has projected a 91% upside for shares of PB Fintech Ltd., which sold off sharply across Thursday and Friday after the draft IRDAI guidelines on distribution norms.

The proposed guidelines led to PB Fintech shares falling 36% on Thursday, the most on record, and another 4% on Friday, even slipping below its listing price of ₹1,150 at one point.

In its note on Monday, September 28, Bernstein has maintained its "outperform" rating on PB Fintech with a price target of ₹2,310, which implies an upside potential of 91% from Friday's closing price.

Bernstein believes that the proposed IRDAI framework implies a 40% reduction in insurance take rates for PB Fintech, which will translate into a potential cut of 36% for its consolidated revenue in financial year 2028. That impact will only partially be cushioned by Paisabazaar.

A shift in term plans towards a trail-based structure will also defer cash flows for PB Fintech, thereby creating an initial drag on the company's working capital, Bernstein said in its note.

The management, in its analyst call, indicated that there is room to rationalize growth-linked costs in financial year 2028, particularly call-center hiring, variable payouts and performance-marketing spends.

In such a scenario, Bernstein said that assuming an organic permia growth of 35% to 40% for PB Fintech, will reset to a lower level in financial year 2028, with lower customer pricing driving partial volume offset as well. The brokerage is also factoring in a potential 4% cut with a possibility for a wider range, in its financial year 2028 permia growth, along with a 40% take-rate reduction.

PB Fintech's core business direct costs can reduce meaningfully in financial year 2028 as the push for growth pulls back, before normalcy returns in financial year 2029, Bernstein said.

Bernstein's scenario analysis also suggests a potential cut of 34% to PB Fintech's financial year 2028 profit after tax (PAT) estimates, with profit of ₹1,100 crore likely to be lower than the financial year 2027 projection of ₹1,250 crore, despite the cost control measures. By Financial year 2030, that figure could recover to ₹2,000 crore, much below the prior estimate of ₹3,200 crore, Bernstein said.

PB Fintech is tracked by 25 analysts, of which 16 have a "buy" rating, five say "hold", and four have a "sell" recommendation on the stock.

Shares of PB Fintech ended 3.5% lower on Friday at ₹1,164.8.