Shares of PB Fintech, the parent company of Policybazaar have not made any money for its investors since listing last year on November 15. The stock has lost more than half of its investor wealth, down 55 percent from its issue price of ₹980. It is currently trading at ₹442, which is very close to its lowest level ( ₹433) since listing.
An investment of ₹15,000 in its IPO would have been reduced to ₹6,750 currently.
Meanwhile, the stock has tanked nearly 70 percent from its all-time high of ₹1,470 on November 17, 2021.
The scrip has been continuously falling for the past 7 sessions and had cracked 11 percent in this period. Just in October so far, the stock has declined nearly 8 percent, following a 6 percent fall in September.
August and March were the only 2 months, since its listing which gave positive returns, up 7.5 percent and 5 percent, respectively.
Since listing in November 2021, it has given double-digit negative returns in 5 months. It has tanked the most in December 2021, down 22 percent followed by July 2022, down 18 percent. It also fell 16 percent each in January and February 2022 and another 14 percent in June 2022. In 2022 YTD, the stock lost 54 percent.
However, despite this weak performance, brokerages seem to remain bullish on the stock. Brokerage house JM Financial expects this stock to turn multibagger in the next 1 year. It has a potential upside of ₹910 for the stock, implying a potential upside of 105 percent.
According to JM Financial, around 28 million shares are opening up next month, along with 4 million shares that were already unlocked for AIF/foreign venture capital investors.
"The float for PB Fintech is expected to go up significantly. With such significant supply opening up, even a small segment of investors deciding to sell in open markets can cause abrupt movement in share price," the brokerage said.
Just for a high-level comparison, Zomato shares declined by 20 percent plus when Uber and Tiger Global sold stakes until the company reported picture-perfect results that brought back the buyers to absorb the sales, JM Financial added.
It further noted that the current valuation could be attractive for the pre-IPO investors to continue holding but they could still liquidate for different reasons.
It believes that any dip due to an open market sale by any of the pre-IPO investors should be viewed as an accumulation opportunity. It added that considering the current industry positioning and a clear path to profitability guidance provided by the management, such high discounting certainly seems brutal.
IIFL Securities is also bullish on the stock with a 12-month target price of ₹650, implying an upside of 47 percent.
"We expect PB Fintech to increase its contribution margin to 41 percent (23.3 percent in FY22) and EBITDA margin to 15 percent by FY26, driven by strong operating leverage, higher employee productivity, sharp drop in ESOP costs and improved profitability of new initiatives, including the point of sale person (PoSP) channel," IIFL said.
PB Fintech Limited operates an online platform for insurance and lending products in India. It operates in two segments, Insurance Web Aggregator/Insurance Broker Services and Other Services. The company offers Policybazaar, an online platform to buy and sell insurance products, such as health, term, motor, and travel insurance products; savings and investment products; and B2B offerings for consumers and insurance partners. It also provides Paisabazaar, an independent digital lending platform that enables consumers to compare, choose, and apply for personal credit products.
In the June quarter (Q1FY23), PB Fintech’s consolidated loss widened to ₹204 crore from ₹111 crore, due to higher employee and advertising and promotion expenses. However, its revenue from operations, more-than-doubled to ₹505 crore from ₹238 crore. The company’s core business (Insurance and Paisabazzar) operating revenue also rose 59 percent year-on-year (YoY) at ₹371 crore.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
