PB Fintech share prices soared 6% in trade on Friday morning before settling to trade 2% higher amid reports of Softbank divesting a 5% stake in the PolicyBazaar parent. Despite reports of the block deal being sold at a discount from Thursday’s closing price, Policybazaar shares rallied to hit an intraday high of Rs 489 on NSE, up 6% from previous close.
Softbank’s sale will raise the company Rs 1,000 crore, as it is likely to sell 2.2 crore shares in a block deal. The base price for this deal is Rs 440, compared to the closing price of the scrip on Thursday which was Rs 461. After the sale, Softbank will still retain a 5% stake in the insurance aggregator.
Over the last month, Policybazaar shares have seen a jump of 20%, even though it is down 64% from its listing price. Earlier last month, Tiger Global sold their 3.5% stake of 1.6 crore shares in PB Fintech.Last week, hedge fund WF Asian Smaller Companies Fund bought a 1.5% stake in the company. The fund bought 67.75 lakh shares at Rs 400 per share, the total deal size being Rs 271 crore which caused the share price to rally significantly.
Strong upside for Policybazaar shares in long term
“Being market leader with 90% market share in the digital insurance market under Policybazaar, and 50%+ market share in the digital consumer lending market under Paisabazaar, it has a high efficient asset light business model to scale it multi x, hence considering these rationales, we believe it’s a right time to look into this story with limited calculated downside risk and followed by strong upside in long term,” stated Prashanth Tapse, Research Analyst, Sr VP Research, Mehta Equities earlier last week.
“The PB Fintech IPO came out with unrealistic valuations, similar to other new-age businesses during the period of technological euphoria. As the easy liquidity cycle turned with unexpected speed, we saw a sharp fall in all new-age business stocks”, said Santosh Meena, Head of Research, Swastika Investmart last month, adding, “The sharp jump in losses in FY21 and H1FY23 gave momentum to the fall in stock prices.”