PB Fintech shares down over 64% from high! Is there more pain ahead?

The stock tanked over 0.6 per cent to hit an all time low of Rs 521.35 on BSE. With a market capitalisation of Rs 23,699 crore, the shares are trading below 5, 10, 20, 50 and 100 DMA.

The insurance and financial aggregator made a decent debut on Dalal Street. The scrip got listed at a premium of 17.34 per cent at Rs 1,150 on the NSE against the issue price of Rs 980.

Is there more pain ahead?
Manoj Dalmia Founder and Director-Proficient Equities Limited said, “Although the revenues are increasing, the operating profit is still negative. FIIs have also increased their holdings in the March quarter. Looking at the price action we can expect further selling to Rs 454, buying is suggested only above Rs 628,” he added.

“The valuations of the company have corrected significantly since the IPO. However, till the time we do not see operational profitability or a path towards the same, along with a consistent organic growth in the topline, it will find difficulties in gathering interest from retail and institutional investors. Wirth IRDA targeting 30-50 per cent CAGR growth in Gross Written Premium for life insurance policies over the next 5 years, with an intent to increase the insurance penetration in India, tech based platforms like PB will play a major role in the growth,” Divam Sharma, Founder at Green Portfolio, SEBI Registered Portfolio Management Service Provider told ETMarkets.

“We also believe that the industry will go through a consolidation going forward, which will benefit PB. Investors should still skip investing in the stock for now and wait for the road to profitability before investing,” Sharma added.

“The stock looks good for long-term investors at these levels. One can buy this stock in the range of Rs 470 to 520 with a stop loss of Rs 444 and a target of Rs 750,” said Ravi Singhal, CEO, GCL.

Recently, Kotak Institutional Equities initiated coverage on PB Fintech with a target price of Rs 700 per share, signalling a 33.5 upside from the current market price. It believes that high multi-year growth will lead to consistent market share gains, thus improving the unit economics and drive operating leverage over time.

“Policybazaar’s dominant position (90% market share) in the online insurance marketplace is driven by (1) its pioneering market position, industry-first offerings, large brand investments translating into strong brand recall, (2) a robust technological backbone, and (3) use of rich customer insights to improve claims experience for its insurance partners and develop customized products,” the brokerage house added.

Global brokerage firm Morgan Stanley has a target of Rs 945 on PB Fintech, which is below its issue price. It believes that the productivity metrics of the company are poised to improve. Domestic brokerage firm

finds the stock worth Rs 940.

PolicyBazaar reported a widening of losses to Rs 219.60 crore in the March quarter from Rs 64.38 crore in the year-ago quarter, even as revenues doubled for the quarter to Rs 540.29 crore. Losses were, however, down from Rs 298 crore in the December quarter.

Earlier in February this year, Alok Bansal, co-founder of PB Fintech, had sold 28,57,820 shares of the company for Rs 236 crore.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)