PB Fintech Ltd shares saw a volatile open during Friday's trading session, after a sharp 34% sell-off on Thursday. This comes after the Insurance Regulatory and Development Authority of India (IRDAI) proposed sweeping changes to insurance distribution regulations yesterday.
Shares of the Policybazaar parent opened higher by 3.91% at Rs 1,160 apiece, before trading in a volatile manner. The stock is trading 3% lower as of 10:25 am. The shares fell as low as 5.57% intraday.
The regulator had suggested a five-year glide path to cap company-level Expenses of Management (EoM), along with mandatory cost audits and public disclosure. IRDAI also proposed explicit caps on distributor commissions and rewards, with all payments made to distributors to be considered under the proposed framework. The proposed changes have raised concerns over their potential impact on insurance distributors such as PB Fintech.
Brokerages have sharply cut their price targets on PB Fintech after IRDAI's proposed insurance distribution reforms raised concerns over the economics of Policybazaar's business, particularly in non-life insurance.
HSBC delivered the steepest cut, slashing its target by 45% to Rs 1,150 from Rs 2,100 and downgrading the stock to Hold from Buy. BofA retained its Neutral rating but cut its target by 28.4% to Rs 1,410 from Rs 1,970, while Jefferies retained Buy but lowered its target by 24.9% to Rs 1,540 from Rs 2,050.
The proposed regulations could weigh on PB Fintech as tighter commission caps may affect distribution revenues and put pressure on the company's revenue growth and margins. The changes could also result in lower take rates across key insurance segments, depending on the final regulatory framework and its implementation.
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