Bernstein Cautions On PB Fintech’s Healthcare Foray, Caps Downside At $100 Mn

PB Fintech Allots Around 27 Lakh Equity Shares Under ESOP Plan

SUMMARY

Shares of PB Fintech slipped to INR 1628.3 apiece on the BSE today, down 1.5% from the previous close

The decline in the stock’s price came after brokerage Bernstein expressed caution about the company’s plans to venture into the healthcare sector

Bernstein expects a downside of as much as $100 Mn on the stock’s price if PB Fintech’s healthcare foray does not pan out as planned

Brokerage firm Bernstein expressed caution over the plans of insurtech major Policybazaar’s parent PB Fintech to venture into the healthcare sector. However, it has capped the downside at $100 Mn if the foray doesn’t go as expected.

Last month, PB Fintech Group chairman and CEO Yashish Dahiya told CNBC-TV18 that the company is considering making a one-time investment of $100 Mn for a 30% stake in a new healthcare venture.

However, analysts at Bernstein said that the foray in the healthcare sector would be a sharp departure from the company’s current asset-light model to a more asset-heavy space, Moneycontrol reported.

Shares of PB Fintech have been under pressure since it was reported that the company was considering venturing into the healthcare sector. On September 26, the stock plunged as much as 10.3% during the intraday trading session following reports about its healthcare foray.

The stock has ended in the red in 10 out of the last 12 trading sessions.

Despite the volatility, Bernstein maintained its ‘outperform’ rating, saying the healthcare foray could further strengthen PB Fintech’s position on the Indian health insurance map.

The brokerage has set a price target of INR 1,720 apiece, implying an upside potential of 4% from the stock’s previous close, as per the report.

In an interview last month, PB Fintech cofounder and CFO Alok Bansal addressed concerns around the company’s business model remaining asset-light. While the insurance aggregator is committed to improving healthcare experiences, it does not plan on buying physical assets like hospitals, Bansal reportedly said.

Taking comfort in this, brokerage Jefferies, earlier this month, reaffirmed its ‘buy’ call on PB Fintech at a price target of INR 1,800 apiece. This would imply an upside of about 9% from the stock’s last close.

PB Fintech posted a consolidated net profit of INR 59.98 Cr in the June quarter (Q1) of the financial year 2024-25 (FY25) as against a loss of INR 11.9 Cr in the year-ago quarter. The turnaround came largely on the back of robust growth across business segments.

Shares of PB Fintech were trading 0.7% lower at INR 1,642.65 on the BSE at 02:45 PM on Thursday.