Stories
PB Fintech Shares Plunge 36% Amid Regulatory Fears; Company's Origin Story Revealed
- •PB Fintech shares plummeted 36% on Thursday, wiping out over Rs 31,000 crore from its market capitalization, with a further 3.88% drop on Friday.
- •The company, parent of Policybazaar, was founded by Yashish Dahiya in 2008 after his father suffered significant losses due to insurance fraud, inspiring a mission for transparency.
- •Policybazaar, launched in 2008, aimed to simplify insurance comparison; Paisabazaar was added in 2014 for loans and credit cards.
- •The sharp decline is attributed to proposed IRDAI regulations to reduce Expense of Management (EoM) and cap commissions on insurance products.
- •Brokerage houses like HSBC and Motilal Oswal have downgraded the stock and cut target prices, citing potential significant impact on earnings due to new regulations.
Key Questions Answered
PB Fintech shares faced heavy selling pressure primarily due to proposed regulatory changes by IRDAI, which include reducing the Expense of Management (EoM) and capping commissions on insurance products sold via open-architecture channels.
In 2008, Yashish Dahiya's father suffered millions of rupees in losses after being defrauded by an insurance agent. This experience made Dahiya realize how difficult insurance terms are for common people, prompting him to co-found Policybazaar with Alok Bansal and Avaneesh Nirjar to make insurance buying transparent.
HSBC downgraded PB Fintech to a 'Hold' rating and slashed its target price from Rs 2,100 to Rs 1,150. Meanwhile, Motilal Oswal maintained a 'Neutral' rating with a target price of Rs 1,150, estimating a significant potential reduction in the company's core online insurance revenue.
