PB Fintech share price rallied over 4% on Monday, as investors opted for short-covering and value buying in the stock after a sharp fall in the past two sessions. The stock rallied as much as 4.13% to Rs 1,213.70 apiece on the BSE.
The rally in PB Fintech shares today came after the stock witnessed more than 38% slump in the two sessions, after the release of IRDAI's consultation paper.
Bernstein maintained ‘Outperform' rating on PB Fintech shares, with a target price of Rs 2,310 apiece, implying an upside potential of over 98% from Friday's closing price.
The brokerage firm said PB Fintech could face major earnings reset if the proposed insurance framework comes into effect in its most adverse form. It estimates a potential 38% hit to FY30 profit for the company, expecting FY30 profit at around Rs 20 billion under their scenario, versus Rs 32 billion before the proposed regulations.
However, Berstein argued that cost optimisation can cushion the near-term impact before growth and margins recover from a lower base.
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The brokerage firm's detailed scenario analysis following the draft consultation paper suggests the proposed framework could reduce PB Fintech's insurance take rates by around 40%.
It expects FY28 to be a year of ‘rational growth' with cost optimization to protect bottom-line. FY29 onward, growth and margin expansion trajectory is expected to resume from a lower base.
The brokerage believes PB Fintech will likely look for ways to monetize the health franchise through asset light options or be pushed towards a manufacturing solution.
Technical Outlook
Kush Bohra, Founder Kushbohra.Com noted that around 40% capitulation on proposed regulatory changes, accompanied by heavy volume, has reset PB Fintech share price to June 2024 levels.
“While mean-reversion buyers may feel compelled to step in, knife-catching into high-volume news-driven momentum is high risk. Base-building will likely be prolonged, making any recovery gradual. Tactical longs should initiate only small positions, strictly anchored by a stop-loss at the Rs 1,100 multi-month swing low,” said Bohra.
He suggests adding further only on confirmed strength and higher highs.
At 9:40 AM, PB Fintech share price was trading 1.89% higher at Rs 1,187.50 apiece on the BSE.
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