PB Fintech shares fell more than 5% on Tuesday, 29 September, extending a sharp sell-off that has wiped out around 41% of the stock’s value over the past four sessions. The Policybazaar parent, however, rebounded more than 3.5% in early trade on Monday after Bernstein retained its ‘Outperform’ rating on the stock with a target price of ₹2,310 per share.
Bernstein’s target price implied an upside of more than 98% from PB Fintech’s Friday closing price, even as the brokerage expects the proposed changes to the insurance distribution framework to have a significant impact on the company’s earnings, according to media reports. The brokerage estimates that the proposed regulatory framework could result in a 40% reduction in insurance take rates, potentially reducing PB Fintech’s FY28 consolidated revenue by 36%. However, it expects Paisabazaar to provide some cushion against the impact.
IRDAI proposals trigger sharp sell-off
The recent volatility in PB Fintech shares comes after the Insurance Regulatory and Development Authority of India (IRDAI) proposed sweeping changes to insurance distribution rules, including restrictions on certain “dark patterns” used on insurance and distributor websites. The regulator’s consultation paper also proposes changes and caps on commissions across health, motor and life insurance, potentially altering the economics of insurance distribution platforms such as Policybazaar.
Monday’s recovery came after a particularly sharp two-session sell-off triggered by concerns over the proposed overhaul of insurance distribution economics. Bernstein had warned last week that the proposed commission changes were more severe than expected and that PB Fintech could be among the companies most affected. The brokerage said the proposed take-rate caps could materially pressure the company’s unit economics in health and motor insurance, with larger-than-expected commission reductions weighing on the stock in the near term.
Brokerages flag earnings risks
Other brokerages have also highlighted the potential impact of the regulatory changes on PB Fintech’s earnings. HSBC downgraded the stock to ‘Hold’ and cut its target price to ₹1,150 from ₹2,100, while Motilal Oswal retained its ‘Neutral’ rating with a target price of ₹1,150.
The divergent brokerage views come as investors assess how the proposed IRDAI framework could affect the revenue and profitability of insurance distribution platforms. While Bernstein continues to see significant upside in PB Fintech, its estimates also indicate a substantial near-term earnings impact if the proposed changes are implemented in their current form.
PB Fintech shares – What investors should do?
Sudeep Shah, Vice President – Technical and Derivatives Research at SBI Securities, said Policybazaar (PB Fintech) has declined sharply by 41% over the last four sessions, significantly weakening its chart structure. The stock has slipped below key moving averages, indicating a deterioration in the broader trend. The RSI has fallen to 22 from 61, signalling strong bearish momentum, while the MACD has moved below the zero line, further reinforcing the negative bias, he said.
Shah noted that the ₹1,160– ₹1,150 zone is likely to act as an immediate resistance area. This was the zone from which the stock had witnessed a sharp rebound in May 2024 and could now act as a supply zone. According to him, the bearish bias is likely to persist as long as the stock trades below this range.
“Given the sharp deterioration in technical indicators across the insurance sector, bottom fishing in the affected stocks may be premature at this stage,” Shah said. He added that investors should wait for greater clarity in price action, signs of stabilisation and further regulatory announcements before considering fresh positions.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
