PB Fintech rallied 9 per cent in Friday’s trade, taking its 5-day gains to 18 per cent. The stock has been gaining of late, as the management seemed optimistic over its guidance on profitability.
The company management had guided around Rs 1,000 crore in profit after tax by FY2027 and, in an interview to ET NOW, CEO Yashish Dahiya maintained that target this week.
“That is my stated objective as I look at the next four years because we are at the end of 2023 now. By 2026-2027, we should make a thousand-crore profit. I think it takes away the question that are you profitable? Is your business fundamentally profitable?,” he told ET NOW.
Besides, in its recent analyst call, the management said it saw growth in the first nine months of FY23 and that its profitability was lifted by growth, and not due to cost reduction measures.
On Friday, the stock rose 10 per cent to hit a high of Rs 573.70.
The company management noted it was seeing a sequential improvement in margin profile and that two things were driving the trend. One was that a proportion of non-motor business, which is health and life business and commercial lines, continued to grow. PB Fintech said it is significant market leader in that part of the business.
“On our motor business also, we are becoming increasingly more and more efficient. And I think you should see this sort of improvement into Q4 and as we go forward into next year. At some point, obviously, the rate of change and will not remain the same. But, the idea is very much to put the business on a very sustainable path,” it said.
The company management said its new initiatives would make less loss. “But in January, our core business has made enough profit to cover the loss of the entire quarter of the new initiatives. So, we are very, very happy about the situation we are in.. We had a plan for the core business profit. It seems like we will get 1.5 times of that for the quarter,” the management said in its investor call.
The management said since the COVID share has subsided, the credit industry has started growing back at the pre-COVID rate, which was about 20 per cent.
It said the digitisation has started to become real on the ground. “So, the percentage of one of the metrics that we mentioned was 75 per cent of the cards that were issued in the quarter, was end-to-end digital. This number was almost zero if we go three, four years back. What happens is that as things become more and more digital, we see lesser drop-offs, as the customer doesn’t need to move from one platform to another platform or needs to go physical, that improves our conversion.”
PB Fintech said it increased its credit score customer base, which allowed it to work with the lenders to create better, more seamless, pre-approved programs.
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