PB Fintech Drops 3% Despite Policybazaar Parent's Entry into Healthcare

Shares of PB Fintech were down by more than 3%, September 26, after a report that the parent company of the firm, Policybazaar, is looking at an entry in the healthcare domain. The company is reportedly at an advanced stage planning its new business model, according to the reports, and may formally declare it soon.

In response, PB Fintech said in an exchange filing, "We believe more people will take health insurance if the claims processes become faster and smoother. Alignment of interest between insurers and hospitals will make the claim filing experience better for customers, which we believe will increase the adoption of insurance.".

Shares of PB Fintech fell 7.21% to a low of ₹1,598.55 on the NSE at 10:30 AM IST. While this was happening, the BSE Sensex however edged higher by a minuscule 0.15% at 85,293.55.

During its recent analyst call, PB Fintech CEO and Chairman Yashish Dahiya stated that it has been investigating new opportunities in this area, but is not at a stage to arrive at a conclusion on the same. "We will promptly inform the exchanges in case of any decision," the company observed in a regulatory filing.

According to media reports, this would, therefore, be a strategic shift by PB Fintech as it expands on its products portfolio beyond insurance and financial services to include healthcare. Reports indicate that the company had partnered with several insurers for launching such products, especially the ones regarding telemedicine.

PB Fintech reported net profit of ₹60 crore during the first quarter that ended on June 30, 2024. That's a dramatic turn of events from ₹11.9 crore net loss in fiscal 2023 for the same quarter. Total insurance premiums stood at ₹4,871 crore. Health and life insurance sales had seen a 78% spike to ₹4,360 crore. Revenues were up by 52% to ₹1,010 crore against ₹666 crore in Q1 FY24.

Adjusted EBITDA margin also improved significantly to 12% in Q1 FY25 from -31% in Q1 FY24. Credit business was slower with loan disbursals at ₹3,140 crores compared with ₹3,542 crores in the previous year. Credit card issuances were 1.3 lakh units, down from 1.4 lakh units during the same period last year.

The stock of PB Fintech has surged more than 100% in the year to date, thereby doubling investors' capital more than twice over. The stock has gained 130% over the last 12 months, beating the Nifty by a whopping 30%. September 25 closed PB Fintech shares 5.8% lower at ₹1,732 on the NSE.

Brokerage firm, Bernstein, has kept an "outperform" rating on PB Fintech with a target of ₹1,720. The brokerage said in an investor note that investors are banking on PB Fintech for its high growth potential, strong business model, and cash generation. But the forward explorations by the company on backward integration might actually be seen as a significant shift from the traditional capital-light model, which could be the reason behind the recent stock performance. At the same time, the investment amount is also uncertain although Bernstein believes that such an amount could be covered using the cash reserve of $650 million.

Out of 19 analysts who follow PB Fintech, eight have given the shares a "buy" rating, seven recommend "hold," and four suggest "sell."

PB Fintech is the largest Indian online marketplace for insurance, lending, and other financial products through its flagship brands PolicyBazaar and PaisaBazaar. It provides a variety of insurance and credit solutions to its customers.