Shares of PB Fintech, the parent company of Policybazaar, hit another 52-week low of Rs 1,131.05 on friday following the proposed regulatory changes to insurance commissions which may materially impact the company's earnings trajectory, according to a report by Motilal Oswal Financial Services.
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Motilal Oswal Report
Shares of PB Fintech, the parent company of Policybazaar, hit another 52-week low of Rs 1,131.05 on friday following the proposed regulatory changes to insurance commissions which may materially impact the company's earnings trajectory, according to a report by Motilal Oswal Financial Services.
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The brokerage has reiterated its 'Neutral' rating on the stocks and has cut its target price upto 50% to Rs 1,150, implying a potential based on 50 times average of the current and worst-case FY28 earnings per share.
Based on management commentary, if the proposal is implemented in its current form, PB Fintech's core online insurance revenue could witness a nearly 30% impact by FY28, largely due to pressure on general insurance economics.
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According to the company, the net present value of the general insurance business could fall to nearly 35-40% of current levels under the draft framework, while life insurance economics are expected to remain relatively stable. Motilal Oswal estimates that a 30% reduction in core online insurance revenue could result in a much sharper impact on earnings if mitigating measures are not implemented.
Until the final regulations are announced, we believe the stock would continue to underperform.
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