PolicyBazaar share price has fallen more than 65% since the listing last year, but has rallied for two sessions. However, analysts still advise conservative investors to stay away from PB Fintech stock, while those comfortable with a little risky bet may take measured exposure in it. PB Fintech touched a 52-week low of Rs 356 earlier this month. However, the stock saw a rally on Thursday and Friday, as 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. As the news broke, Policybazaar parent’s shares jumped 10% on Thursday, and rose a further 5% today, touching an intraday high of Rs 466.
An insight into PB Fintech
“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, adding, “PB Fintech has fallen roughly 75% from its high. The sharp jump in losses in FY21 and H1FY23 gave momentum to the fall in stock prices.”
“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.
Price risks to watch
“The company is still losing money on an EBITDA basis, and valuations are still high at 3xFY25E P/B. Its flagship business, Policybazaar, is showing good revenue growth and is the leader in this segment, whereas the Paisabazaar is also gaining positive traction. There is a risk of competition from Bima Sugam, and Policy Bazaar has to cut its commission to compete,” said Meena.
“The stock is currently trading more than 50% below its IPO price. On the chart, its trend is bearish, also sustaining below the 100-Day Simple Moving average price. Recently, from a lower level, recovery is being done. On the higher side, Rs 460 is a strong resistance. In the near term, the stock can continue recovery up to Rs 455 to Rs 460 levels, following which, it may experience selling pressure from higher levels,” said Rameshver Dongre, Research Analyst – Equity Research, CapitalVia Global Research.
PB Fintech stock talk: Buy, sell or hold PolicyBazaar shares?
JM Financial assigns the stock a ‘buy’ rating with the target price of Rs 910, a 126% upside. “We expect the company to achieve profitability in Q4FY23 as Q4 is seasonally a very strong quarter for insurance,” it said.
“I believe the worst is over for some of these new-age companies, as US bond yields appear to be peaking and investors seek valuation relief after a free fall. We are seeing some hedge fund buying in PB fintech in the last few days, which is an encouraging sign. There is still uncertainty about their long-term outlook; therefore, conservative investors should stay away from such companies, while aggressive investors may buy this stock, where Rs 600 looks like an imminent target,” added Meena of Swastika Investment.
“On long term PB Fintech has bright prospects going forward with all industries growth rationales and discounted valuations, risk seeking investors can consider accumulating this only for the long term with a possible 15-20% upside from the current levels and near term there would be some volatility due low confidence in loss making new age tech businesses,” said Tapse of Mehta Equities.
“As the overall trend of PB Fintech is weak and sustaining below the downward trend line, investors should remain patient and hold their positions, as long as it holds the support of Rs 360. In the near term, it can face strong resistance at the Rs 460 level but once it crosses and sustains above the resistance, then the Rs 620 level can be seen,” said Dongre of CapitalVia.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)