PB Fintech shares crashed another 8% on Thursday, October 1, reaching ₹980 and falling back to levels last seen in February 2024, as market concerns over proposed insurance commission rule changes continued to weigh on the stock. According to Live Mint, the stock extended its losing streak to six straight sessions, taking the cumulative decline to 48% - marking its biggest sustained sell-off since its listing in November 2021 and bringing the stock back to its IPO price. During the intraday session, the stock briefly fell below its issue price before staging a mild recovery, as the sell-off following proposed IRDAI regulatory curbs on insurance distribution continues. The stock hit its 52-week low of ₹965 on October 1, having now tanked over 50% from its 52-week high of ₹1,963.00 hit in December last year. The proposed IRDAI reforms could weigh on insurance stocks by pressuring the economics of distribution, with the selloff translating to an m-cap loss of ₹42,000 crore over the six-day period. PB Fintech shares are now down 48% from their record high of ₹2,254.95 and have fallen below their 2021 IPO issue price of ₹980 per share. The stock had made a record high of ₹2,254.95 on January 6, 2025, before consolidating around the ₹1,800 to ₹1,900 level, with the recent decline representing a 48% plunge in just six trading sessions.
The crash has resulted in a cumulative notional loss of around ₹11,726 crore for mutual fund houses, based on the stock's closing price on Thursday. According to Live Mint, at the end of the June quarter, 37 mutual funds collectively owned a 28.32% stake in the company, almost double the 15.86% stake they held during the same period last year, according to Trendlyne data. Some of the key mutual funds holding stakes include HDFC Mutual Fund with a 4.87% stake; Mirae Asset Large & Midcap Fund, which owns 3.45%; and Tata Digital India Fund, which held a 1.82% stake in the company at the end of Q1. Apart from mutual funds, the bruising sell-off has also weighed on retail and FII portfolios, with the two investor categories collectively holding 37.3% and 22.1% stakes, respectively, in the company, according to Trendlyne shareholding data. The losses have put the stock on course for its biggest annual decline since 2022, when it plunged 53%.
PB Fintech CEO Yashish Dahiya has confirmed that the company may have hired just 2,000 people in H1 FY27, significantly lower than the previously planned 6,000 employees. According to recent reports, the regulator's proposed commission changes have fundamentally altered how valuable each customer is, prompting the company to reassess its growth strategy. Dahiya's assessment is stark: general insurance revenue could fall to one-third to 40% of current levels, representing a 60-67% cut, not the initially projected 30-40% impact. Life insurance looks less affected, with analysts putting core online insurance revenue down around 30% in FY28 if rules go through as drafted. The CEO stated that hiring will be slow, while marketing, sales and support could see budget cuts, as the company adapts to the new regulatory environment that threatens the high-margin renewal economics that justified the stock's previous valuation. Management believes cost rationalization opportunities exist in digital marketing spend and brand advertising, while the company operates on a combined operating ratio model where pricing adjustments could drive volume expansion through higher consumer demand.
After the draft IRDAI paper, a slew of brokerages have cut their price targets on PB Fintech. According to Live Mint, global brokerage firm Jefferies has trimmed its target price by 25% to ₹1,540, while Bernstein slashed its target by 53% to ₹1,085 from ₹2,310, just days after retaining its earlier target. Bernstein said lower general insurance take rates under the proposed framework may be insufficient to cover PB Fintech's current costs. HSBC also lowered its price target to ₹1,150 from ₹2,100 while retaining its 'Hold' rating. Domestic brokerage firm Motilal Oswal Financial Services cut its target valuation by 37% to ₹1,150, citing a de-rating in the valuation multiple, while retaining its 'Neutral' rating. Bernstein has drastically cut PB Fintech's target price by 53% to ₹1,085 from ₹2,310, implying no upside from current market levels while retaining its Outperform rating. The brokerage expects sharp cost controls in the core business from FY28 and values the stock at around 25 times its FY30 EPS. Jefferies has also reduced its target price for PB Fintech to ₹1,540 from ₹2,050, while retaining its Buy rating, with the brokerage expecting a 10% reduction in new-business commission rates could result in a 10-12% decline in earnings. Morgan Stanley has estimated that PB Fintech's health business NPV could decline 60-70% under the proposed framework, while life insurance NPV is expected to remain broadly stable.
PB Fintech's five-year share-price trajectory will depend heavily on the final IRDAI regulations and how effectively management adapts to the proposed commission changes. According to Equitymaster.com, the proposed commission caps could pressure Policybazaar's general-insurance economics, but management may choose to cushion the impact through tighter cost controls, slower hiring, and more selective marketing, while targeting higher volumes as lower distribution costs potentially support insurance demand. The company is also exploring new products, with management indicating this could be a transition period, with a focus on restoring earnings growth thereafter. PB Fintech currently trades at a PE of 71.2, which is not cheap compared to the BSE 100 average PE of 20.5, while the Nifty trades at a PE of 19.6. Management has outlined that if general insurance gets compressed by 60%, total revenue would be compressed by 30%, but volume expansion through price reductions could offset some of this impact. The regulatory framework going forward remains the biggest factor determining where the stock could be in the next five years, with nobody having clarity on the definite proposals that would become law, making it difficult to make specific predictions about the company's future performance.
