
Morgan Stanley has downgraded PB Fintech to underweight from equal weight, citing concerns over valuation and profit emergence. The brokerage has set a target price of ₹1,400, representing a significant downside from the current market price of ₹1,851.30.
Key Highlights:
- Valuation Concern:
- The FY27 EV/adjusted EBITDA is pegged at ~65x, raising red flags for sustainability.
- Profitability Challenges:
- The emergence of profits has been weaker than expected, raising questions about the stock’s high valuation.
- Growth Trends:
- The stock’s outperformance has largely tracked strong core new business premium growth, which was over 60% in 1HFY25.
- However, Morgan Stanley expects growth in core new business premiums to moderate in FY26, leading to potential derating.
- Impact on Paisabazaar:
- The platform has also been facing challenges, adding to concerns about PB Fintech’s overall performance.
Morgan Stanley believes the stock’s valuation does not align with the expected slowdown in growth, leading to its cautious stance.
Disclaimer: The above information is for informational purposes only and does not constitute investment advice. Please consult your financial advisor before making any investment decisions.