Policybazaar shares climb 5% in early trade; here’s why

Shares of PB Fintech, which operates online insurance broker Policybazaar and loan marketplace Paisabazaar surged 5% in early trade today after Hedge fund WF Asian Smaller Companies Fund bought 67.75 lakh shares via open market transactions. The shares bought are 1.5 percent of total paid-up equity.   

PB Fintech stock surged 5.09% to an intraday high of Rs 454.35 against the previous close of Rs  432.20 on BSE. Earlier, the stock opened with a gain of 2.97% at Rs 445.05 today. In the last two sessions, the stock has surged over 10% . 

The large-cap stock is trading higher than 5 day and 20 day moving averages but lower than 50 day, 100 day and 200 day moving averages. It has fallen 53.47 per cent in 2022 and lost 64.91 per cent in a year. Total 1.43 lakh shares changed hands amounting to a turnover of Rs 6.33 crore on BSE. The market cap of the firm rose to Rs 19,865 crore. 

The stock hit a 52-week high of Rs 1,338.95 on November 25, 2021 and a 52-week low of Rs 356.20 on November 17, 2022.

WF Asian Smaller Companies Fund bought 34.21 lakh shares of Policybazaar on NSE and 33.53 lakh shares on BSE, at an average price of Rs 400 per share. The transaction was worth Rs 271 crore.  

JM Financial is bullish on PB Fintech and assigned a target of Rs 910.  JM Financial said PB Fintech is probably the one where management has been most outspoken about their adjusted EBITDA breakeven anticipated in Q4FY23. As of Q2FY23, the company already has adjusted EBITDA level profitability in its core online insurance business with Paisabazaar expected to become profitable in Q4FY23. 

The company has already demonstrated a favourable trend with adjusted Ebitda margin reaching minus 9 per cent in Q2FY23. It expects PB Fintech to achieve profitability in Q4FY23 as Q4 is seasonally a very strong quarter for insurance. "However, we are expecting losses again in H1FY24 with large enough profits in H2FY24," it said. 

Policybazaar reported a narrowing of consolidated losses at Rs 186.64 crore for September 2022 quarter compared with Rs 204.33 crore in June quarter and Rs 204.44 crore in the year-ago quarter.  Revenue for the quarter more than doubled (105 per cent YoY) to Rs 573.47 crore from Rs 279.58 crore in the corresponding quarter last year. 

Meanwhile, Sensex slipped 69 points or 0.11 per cent 62,203 and Nifty fell 18 points or 0.10 per cent to 18,466 in early trade today. 

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