Policybazaar Plunges 10% on CEO Yashish Dahiya’s Stake Sale Plan; What Should Investors Do?

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Policybazaar Shares: PB Fintech, the parent company of Policybazaar & Paisabazaar, tanked 10 per cent in morning trades to Rs 595 on the BSE in Tuesday’s intra-day after Yashish Dahiya, chairman executive and CEO of the company revealed his plan to sell up to 3.77 million equity shares through an open market. “The Company has received an intimation from Mr. Yashish Dahiya, Chairman and CEO of the Company, for an intention to sell up to 3,769,471 equity shares via bulk deals on the stock exchanges,” PB Fintech said in an exchange filing.

As of March 31, 2022, the aggregate shareholding of Yashish Dahiya stood at 19 million (4.23 per cent) and post-exercise of 5.5 million ESOPs during May 2022 his aggregate shareholding increased to 24.52 million (5.45 per cent). As the ESOPs are subject to payment of taxes on exercise in addition to the payment of capital gain tax on the sale of shares, the proceeds from the sale of the 3.77 million shares are proposed to be used to make the payment of current and future taxes, the company said.

There is no further sale of shares planned beyond these shares, at least for 1 year, the company added.

PB Fintech came out with its Rs 5,710-crore initial public offering (IPO) in November 2021. The company’s co-founders and other shareholders had reduced their stake in the public issue.

The large-cap stock is trading lower than 5-day, 20-day, 50 day, 100-day and 200-day moving averages. It has fallen 36.3 per cent in 2022 and lost 8.62 per cent in a week.

Total 1.51 lakh shares changed hands amounting to a turnover of Rs 9.15 crore on BSE. The market cap of the firm fell to Rs 27,214 crore.

The stock hit a 52-week high of Rs 1,470 on November 17, 2021 and a 52-week low of Rs 542.30 on May 12,2022.

In the past six months, the stock has underperformed the market with its stock price halved or down 49 per cent as compared to 4 per cent decline in the S&P BSE Sensex. The stock has corrected 60 per cent from its all-time high of Rs 1,470 hit on November 17, 2021.

PB Fintech had made its stock market debut on November 15, 2021. The company had issued shares at Rs 980 per share.

For the March quarter, Policybazaar narrowed losses to Rs 219.6 crore in the fiscal fourth quarter, from Rs 643.8 crore in the year-ago period. Total income rose to Rs 591.16 crore in the last quarter of FY22, from Rs 290.08 crore in the corresponding period of the previous fiscal year (FY21).

What Should Investors Do?

Santosh Meena, Head of Research, Swastika Investmart Ltd., said: “PB Fintech Ltd. is India’s leading online platform for insurance and lending products. The stock tanked as much as 10 per cent on Tuesday after the announcement of a stake sale by the CEO of the company. The stock got listed in November 2021 and has seen almost a 70 per cent fall since its listing. The issue was exorbitantly priced at market to sales of 46.40x during its IPO, and it remains expensive despite the recent correction. The company operates in a very competitive space as there aren’t any significant barriers to entry, plus the company is still a loss-making one despite the significant rise in revenues in FY22. Further, we believe that the current market conditions are punishing companies that are growing without showing profitability and are skeptical of companies that are relying on buzzwords like ‘underpenetrated in India’ to show a rosy future picture.”

The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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