PB Fintech Receives Jefferies' Approval on $100 Million Healthcare Investment

Shares in PB Fintech, the owner of Policybazaar, surged on October 1 after brokerage firm Jefferies put a 'buy' rating with a target price at ₹1,800 a share, following a reported clarification by the management regarding its proposal to invest $100 million for acquiring a 20-35% stake in this new healthcare venture.

According to Jefferies, the financial liability will, however, be limited to this initial investment by the new entity, which is likely to be self-sustaining, having its own resources. It is likely that the details coupled with board approval for the investment may come through in the quarters ahead.

Shares of PB Fintech traded 0.1% higher at ₹1,625.85 on the NSE as of 9:18 am IST. Analysts believe that this clarifies relief that was needed over the expected strain on PB Fintech's balance sheet and reiterates that the company won't be asset-heavy.

Bernstein, meanwhile, had an 'outperform' rating on PB Fintech with a price target of ₹1,760. This was because investors believed that the company presented a robust growth along with the overall business fundamentals. However, some investors were worried about the fact that the company planned to venture into the healthcare sector. For this reason, market participants have criticized the move by a few as it seems a departure from the asset-light business model.

The planned health venture would be based on a Health Maintenance Organisation (HMO) model, to bridge the gap between hospitals, insurers, and patients, said Yashish Dahiya, chairman and group CEO of PB Fintech.

The demand for healthcare in India is not the issue-it is free for all. The model targets middle-class consumers-they cannot afford the high room rates of ₹78,000 per night," said Dahiya.

Also read PB Fintech Drops 3% Despite Policybazaar Parent's Entry into Healthcarey

PB Fintech will invest upto ₹750 crores, or $100 million for a 20-30% stake in health company pending board approval. The company clarified that this will be one-time investment with no further funding in store. According to Dahiya, the new health venture will generate its own resources for expansion and may attract investments from private equity and other financial institutes.

Alok Bansal, Co-founder and Executive Vice Chairman of PB Fintech, as quoted in a recent CNBC-TV18 interview, noted that while the asset side of healthcare-the hospital and infrastructure-will take care of itself somewhat, the O&M part will directly be impacting the customer's experience is where the company will focus.

Shares of PB Fintech closed almost 2% lower at ₹1,608.45 on the NSE in the previous trading session. The stock has rallied 100% during the calendar year while returns of the Nifty are merely at 18%. The share price of PB Fintech has rallied more than double in the last one year; up 111% while Nifty has gone up 26% in the same period.

PB Fintech Limited is an Indian company dealing in online marketing and consulting services. The company operates through two primary business segments: insurance services, which carries all the activities of insurance brokerage, and other services, including online marketing, consulting, and support.

The platforms operated by these companies include Policybazaar, which helps consumers and insurers connect to purchase core insurance products, and Paisabazaar, a digital lending platform helping consumers compare and apply for credit products. These platforms cover an extensive cross-section of consumers with differing levels of credit profiles, employment types, and incomes.