PB Fintech: Why this stock is down 10 since GST 2.0; what's ahead?
JM Financial said while the correction on PB Fintech was overdue, considering the rich valuations, it does not expect any material impact to PB Fintech’s medium to long-term prospects.
- Sep 29, 2025,
- Updated Sep 29, 2025 11:26 AM IST
Indian insurance companies were recently in news amid changes to GST rules, potential launch of Bima Sugam and supposed regulatory pressure on distributor commissions. The resulting uncertainty has resulted in PB Fintech, the operator of Policybazaar and Paisabazaar, correcting 10 per cent since September 4, the date of GST 2.0 announcement.
JM Financial said while the correction on PB Fintech was overdue, considering the rich valuations, it does not expect any material impact to PB Fintech’s medium to long-term prospects. In fact, the brokerage believes that the exemption of GST on all individual life and health policies should be directionally positive for the sector.
"While a platform being pushed by the regulator itself could be termed a long-term risk, we still believe most of the issues raised in our earlier note still remain unresolved. With risk-reward becoming relatively favourable, we change our rating from ‘Sell’, as per our previous rating system, to ‘Reduce’ in the new rating system with a Sep’26 target of Rs 1,610," JM said.
Since the GST rate has been reduced to zero in all individual life and health policies (and reinsurance thereof), focus has shifted to ITC absorption. As the zero GST regime also comes with no ITC benefit, insurers would see a hit to their profitability assuming everything else remains the same.
The hit, JM said, would likely vary depending on the mix of individual policies for each insurer and we expect it to be passed on the customers themselves.
"As per our customer checks, it might have already started to happen. However, we would not rule out a nearterm dilution in commission rates as insurers and distributors share the burden of ITC," JM said.
The brokerage said Bima Sugam still has questions to answer when it comes to execution. It noted that the Bima Sugam India Federation (BSIF) has been formed as a “not for profit company” to establish a Digital Public Infrastructure (DPI) in the form of an electronic insurance marketplace. The idea is to democratise insurance by integrating insurers, consumers, intermediaries as well as insurance agents on the interoperable platform with open standards.
The use cases involve purchase, sale, servicing, claims settlement and grievance redressal.
"While the proposition seems benevolent, substantial execution risks remain as demonstrated by 2.5+ years of delay from its initial launch date. While the portal is finally live, insurance marketplace is still expected to ‘come soon’. Furthermore, clarity is needed with regards to funding customer acquisition investments as well as customer support function as a large majority of health and life insurance still comes via the assisted channel," JM said.
It noted that Policybazaar invested Rs 1,500 crore across digital marketing and customer support functions in FY25.
"With the stock going through a time-correction since we downgraded to Sell last September, we now find marginally improved risk-reward. Hence, we upgrade the rating to Reduce as per our new rating system, still remaining cognisant of a tougher demand environment and regulatory tail risks," it said.
Indian insurance companies were recently in news amid changes to GST rules, potential launch of Bima Sugam and supposed regulatory pressure on distributor commissions. The resulting uncertainty has resulted in PB Fintech, the operator of Policybazaar and Paisabazaar, correcting 10 per cent since September 4, the date of GST 2.0 announcement.
JM Financial said while the correction on PB Fintech was overdue, considering the rich valuations, it does not expect any material impact to PB Fintech’s medium to long-term prospects. In fact, the brokerage believes that the exemption of GST on all individual life and health policies should be directionally positive for the sector.
"While a platform being pushed by the regulator itself could be termed a long-term risk, we still believe most of the issues raised in our earlier note still remain unresolved. With risk-reward becoming relatively favourable, we change our rating from ‘Sell’, as per our previous rating system, to ‘Reduce’ in the new rating system with a Sep’26 target of Rs 1,610," JM said.
Since the GST rate has been reduced to zero in all individual life and health policies (and reinsurance thereof), focus has shifted to ITC absorption. As the zero GST regime also comes with no ITC benefit, insurers would see a hit to their profitability assuming everything else remains the same.
The hit, JM said, would likely vary depending on the mix of individual policies for each insurer and we expect it to be passed on the customers themselves.
"As per our customer checks, it might have already started to happen. However, we would not rule out a nearterm dilution in commission rates as insurers and distributors share the burden of ITC," JM said.
The brokerage said Bima Sugam still has questions to answer when it comes to execution. It noted that the Bima Sugam India Federation (BSIF) has been formed as a “not for profit company” to establish a Digital Public Infrastructure (DPI) in the form of an electronic insurance marketplace. The idea is to democratise insurance by integrating insurers, consumers, intermediaries as well as insurance agents on the interoperable platform with open standards.
The use cases involve purchase, sale, servicing, claims settlement and grievance redressal.
"While the proposition seems benevolent, substantial execution risks remain as demonstrated by 2.5+ years of delay from its initial launch date. While the portal is finally live, insurance marketplace is still expected to ‘come soon’. Furthermore, clarity is needed with regards to funding customer acquisition investments as well as customer support function as a large majority of health and life insurance still comes via the assisted channel," JM said.
It noted that Policybazaar invested Rs 1,500 crore across digital marketing and customer support functions in FY25.
"With the stock going through a time-correction since we downgraded to Sell last September, we now find marginally improved risk-reward. Hence, we upgrade the rating to Reduce as per our new rating system, still remaining cognisant of a tougher demand environment and regulatory tail risks," it said.