Policybazaar Shares Slump Nearly 7% To Hit Record Low At INR 373.1

Shares of PB Fintech, the parent entity of insurtech startup Policybazaar, fell as much as about 7% on Friday (October 21) to hit their record low levels at INR 373.1 on the BSE after falling for two straight sessions.

The Insurance Regulatory and Development Authority of India’s (IRDAI’s) decision to launch Bima Sugam, a one-stop portal for sales and claims for life and non-life insurance products, can hit Policybazaar, an analyst told Inc42.

Besides, the lack of clarity about the startup’s core business operations and outlook is also having an adverse impact on the shares, the analyst said.

It is pertinent to note that the mandatory lock-in period for Poicybazaar’s pre-IPO investors will expire next month, and the current sell-off could be partially driven by the same.

Policybazaar made its debut on the Indian stock market in November last year, and its shares have fallen as much as 67% in a year’s span. 

Amid the global economic slowdown and negative market sentiment, analysts see very low chances of any immediate rebound in Policybazaar shares. However, it is not the only new-age tech stock to be under pressure as a majority of these startups are currently trading nearly 40%-60% lower than their listing price.

Besides Policybazaar, shares of Nykaa and Delhivery also hit their respective record low levels this week. It must be noted that the IPO lock-in period expiry is impending for all of these tech stocks in the coming months.

Besides, business-specific events are also responsible for the volatility in these startups’ stock prices. Proxy advisory company Stakeholders Empowerment Services (SES) raised concerns over PB Fintech’s merger with MakeSense Technologies and ESOP deals last month.

Policybazaar reported an 84% increase in its net loss to INR 204.33 Cr in Q1 FY23. Its operating revenue surged 112% YoY to INR 505.18 Cr in the quarter. Some analysts are now sceptical if the startup would be able to report improvement in Q2 results as the quarter is generally not great for the insurance segment.

In a recent research note, brokerage JM Financial estimated that Policybazaar’s loss would narrow in Q2 FY23 both on a yearly and sequential basis. The brokerage expects the company to report a loss of INR 184 Cr with a consolidated total revenue of INR 531.8 Cr.

Meanwhile, brokerage Morgan Stanley also cut its price target on Policybazaar recently to INR 620 from INR 840, implying an upside of 61% to the stock’s last close on Friday.

It also cut headline revenue forecasts on Policybazaar by 8%-28% between fiscal year 2023 and 2027.

Shares of Policybazaar ended 4.15% lower at INR 384.35 on the BSE on Friday.