PB Fintech Limited's (NSE:POLICYBZR) P/S Is Still On The Mark Following 28% Share Price Bounce

PB Fintech Limited (NSE:POLICYBZR) shares have continued their recent momentum with a 28% gain in the last month alone. The last month tops off a massive increase of 103% in the last year.

Following the firm bounce in price, when almost half of the companies in India's Insurance industry have price-to-sales ratios (or "P/S") below 1.3x, you may consider PB Fintech as a stock not worth researching with its 15.8x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

View our latest analysis for PB Fintech

What Does PB Fintech's P/S Mean For Shareholders?

With revenue growth that's superior to most other companies of late, PB Fintech has been doing relatively well. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on PB Fintech.

Do Revenue Forecasts Match The High P/S Ratio?

The only time you'd be truly comfortable seeing a P/S as steep as PB Fintech's is when the company's growth is on track to outshine the industry decidedly.

Retrospectively, the last year delivered an exceptional 44% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 263% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Shifting to the future, estimates from the analysts covering the company suggest revenue should grow by 26% per annum over the next three years. That's shaping up to be materially higher than the 6.9% per annum growth forecast for the broader industry.

In light of this, it's understandable that PB Fintech's P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On PB Fintech's P/S

Shares in PB Fintech have seen a strong upwards swing lately, which has really helped boost its P/S figure. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

We've established that PB Fintech maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Insurance industry, as expected. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

A lot of potential risks can sit within a company's balance sheet. Take a look at our free balance sheet analysis for PB Fintech with six simple checks on some of these key factors.

If these risks are making you reconsider your opinion on PB Fintech, explore our interactive list of high quality stocks to get an idea of what else is out there.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.