Pics NV

Bull case

• PicS is attractive because it is demonstrating powerful operating leverage, with 2Q26 revenue of R$4.12B and adjusted net income of R$283M both ahead of expectations, while ROE rebounded to the 20% range and the adjusted efficiency ratio improved to 44.8%.
• Its growth is increasingly anchored in lower-risk activity, as 71% of revenues now come from no/low-risk loans versus 63% a year ago, and the credit portfolio expanded to R$31.9B, up 99% y/y, supported by secured products and private payroll loans.
• Although NIMAL fell to 12.1% and 90+ NPLs rose to 9.8%, management attributes the deterioration to portfolio aging and seasonality rather than structural credit weakness, while ARPAC gains of 45% y/y to R$83.3 and a large 68.6M active account base support continued monetization.

Bear case

PicS is viewed negatively because its growth outlook appears increasingly fragile as downside cases imply only ~$US3.41 of CY27 RBCe adjusted EPS and ~$US1.15 of CY26 RBCe adjusted EPS, both below base-case estimates, which would likely compress investor confidence and valuation multiples. Its business is also exposed to elevated credit and operating risks, with NIMAL down 1.1 ppts year over year to 8.9% and >90-day NPLs rising to 8.9% from 7.2% in 4Q25 and 4.0% in 1Q25, while the company remains vulnerable to cybersecurity breaches, data loss, and system outages. On top of that, operating entirely in Brazil brings macro, currency, and regulatory risk, and the controlling shareholder’s 96.3% combined voting power heightens governance concerns and share volatility.