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PB Fintech share price rose nearly 4% on Friday, 25 September, recovering partially after the stock plunged almost 36% in the previous session. However, PB Fintech's share price today fell by over 6% today and has lost about 40% in two straight sessions.
The sharp sell-off followed the Insurance Regulatory and Development Authority of India’s (IRDAI) proposal for sweeping changes to insurance distribution, including tighter commission rules and a ban on certain “dark patterns” on insurance and distributor websites.
PB Fintech share price today opened at an intraday low of ₹1,131.05 apiece on the BSE, the stock touched an intraday high of ₹1,262 per share.
Sudeep Shah, Vice President – Technical and Derivatives Research at SBI Securities, said Policybazaar witnessed a sharp 36% decline on 24 September, significantly weakening its chart structure.
The stock has fallen well below its key moving averages, indicating a deterioration in the overall trend, Shah said. The RSI has plunged from 61 to 26, signalling strong bearish momentum, while the MACD has slipped below the zero line, further reinforcing the negative technical setup.
Given the sharp deterioration in technical indicators, Shah advised against bottom fishing and suggested waiting for greater clarity in the stock’s price action before considering fresh positions.
He identified the ₹1,150– ₹1,160 zone as a crucial support area, noting that the stock had rebounded sharply from this range in May 2024. A decisive break below this support zone could lead to a further extension of the stock’s weakness, Shah said.
Global brokerages have subsequently revised their views and price targets for the stock, citing potential changes to insurance distribution economics.
BofA Securities maintained a ‘Neutral’ rating on PB Fintech but cut its target price to ₹1,410 from ₹1,970.
The brokerage said distribution could become less attractive for larger agents, while PB Fintech is likely to remain focused on protecting its core position through capital allocation. BofA also reduced the valuation multiple assigned to the company’s core business and described the proposed reforms as directionally negative for the online insurance broking industry.
However, it said the impact on Policybazaar’s life and term insurance business could remain manageable. BofA also sees scope for Policybazaar to gain market share across categories and believes the risk of asymmetric commission cuts, which had been a key investor concern, is now behind the company.
The brokerage said Policybazaar could explore health insurance manufacturing, although this could have implications for valuation multiples. It also expects PB Health’s investments in hospitals could increase as the company seeks to build a stronger competitive edge.
Jefferies retained its ‘Buy’ rating on PB Fintech but lowered its target price to ₹1,540 from ₹2,050.
The brokerage expects the proposed framework to have a greater impact on the company’s non-life insurance net present value (NPV) than on its life insurance business. It expects management to focus on cost optimisation in the near term.
Jefferies estimates that a 10% reduction in new-business commission rates could translate into a 10–12% decline in earnings. However, it noted that the current proposal remains a consultation paper and may be modified based on stakeholder feedback.
Morgan Stanley highlighted a potentially sharper impact on PB Fintech’s health business, estimating that its health business NPV could decline 60–70% under the proposed framework, while life insurance NPV is expected to remain broadly stable.
The brokerage said the company is evaluating opportunities in insurance manufacturing, reinsurance broking and new products. It also highlighted the potential for MGA regulations to reward distributors based on quality.
Morgan Stanley expects lower insurance premiums to potentially support demand growth. It said PB Fintech has no plans for knee-jerk layoffs and sees scope for cost optimisation. However, it flagged risks to the top line of PB Partners POSP and said the company plans to reduce losses at Paisabazaar and its UAE operations.
HSBC downgraded PB Fintech to ‘Hold’ from its earlier stance and sharply reduced its target price to ₹1,150 from ₹2,100.
The brokerage said the proposed distribution reforms, particularly commission caps for insurers, could have a material impact on PB Fintech. HSBC cut its FY28 and FY29 earnings-per-share estimates by 56% and 17%, respectively, with the impact of lower take rates partly offset by expectations of somewhat higher growth and cost savings.
HSBC said regulatory clarity will be an important catalyst for the stock.
Motilal Oswal Financial Services (MOSL) retained a ‘Neutral’ rating with a target price of ₹1,150.
Following a discussion with the company on the proposed reforms, MOSL estimated that, if implemented in their current form, the changes could result in a potential 30% decline in FY28 core online insurance revenue.
Without factoring in expense reductions or additional revenue streams highlighted by the company, a 30% cut to FY28 core online insurance revenue could lead to a 46% reduction in earnings estimates, according to MOSL.
The brokerage said that under this scenario, the stock would trade at around 73 times earnings. If the company manages to reduce employee and advertising costs by 20% from current assumptions, MOSL estimates the earnings impact could be limited to around 30%, with the stock trading at approximately 57 times earnings.
MOSL expects the stock to remain under pressure until the final insurance distribution regulations are announced.
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.
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