Shares of India’s largest online platform for insurance and lending products surged nearly 5 percent to Rs.1,713.7 per share after CEO Yashish Dahiya sights plans to invest $100 million in an independent Health Maintenance Organisation.
Price Movement
In Monday’s trading session, the share price of PB Fintech Limited, popularly known as Policy Bazaar reached an intraday high of Rs.1,715.740 per share, marking a 4.7 percent increase from the previous close of Rs1,638.75 apiece. The share price has retreated since then and currently trading at Rs.1,672.70 per share.
What happened
On Monday, PB Fintech’s share price increased after management confirmed that the company will make a one-time non-recurring investment as a minority investor in the proposed healthcare venture.
Chairman and Group CEO Yashish Dahiya stated in an interview with CNBC TV18 that PB Fintech aims to acquire a 20-30 percent stake in the venture, with a potential investment of up to $100 million, pending board approval.
“This will be a one-time investment; we don’t plan to make recurring investments in the healthcare company,” Dahiya stated during the interview. He further mentioned that the new healthcare company intends to generate its resources for growth and may attract private equity investors and other financial institutions.
As for the reason behind the company’s decision to tap into the healthcare sector, Dahiya said, “A middle-class person can’t afford a bed for Rs.78,000 per night. We are looking to bridge the trust gap between hospitals and insurance companies.”
Reasons for Investment in Healthcare
Chairman Yashish Dahiya emphasized the need to bridge the trust gap between hospitals and insurance companies, as high healthcare costs deter middle-class individuals from seeking care.
By investing in healthcare, PB Fintech aims to create a transparent ecosystem that enhances customer experiences with claims and boosts health insurance penetration. This move represents a shift from an asset-light model to a more asset-heavy approach, offering new revenue opportunities despite potential risks.
Target Recommendation
Brokerage firm Bernstein has maintained its “outperform” rating on PB Fintech, establishing a price target of Rs.1,760 per share, with an upside potential of over 5 percent.
They noted that although investors are drawn to PB Fintech’s high growth and robust business model, some may perceive the company’s backward integration into healthcare as a significant departure from its capital-light approach, which seems to be impacting the stock negatively at present.
Financial Performance
In its recent financial update, PB Fintech Ltd. reported net sales of Rs.1,010 crore for Q1 FY25, representing a 52 percent increase from Rs.666 crore in the same quarter last year. The company’s net profit for the quarter was Rs.60 crore, up from a net loss of Rs.12 crore in Q1 FY24.
Company Overview
PB Fintech, also known as Policybazaar, is India’s largest online platform for insurance and lending products, offering services through its flagship brands like Policybazaar and Paisabazaar. The company leverages technology to provide consumers with easy access to a wide range of financial products, including insurance, loans, and credit solutions
Written by – Siddesh S Raskar
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