Shares of PB Fintech swung 12% from the day’s high to trade 5% lower at Rs 1,115 on the BSE on Friday, a day after the stock plunged 36% in a single session, breaching multiple lower circuits. Nearly 16 lakh shares worth Rs 188 crore changed hands on the BSE during Friday’s session.
The massive bloodbath in the stock came after the Insurance Regulatory and Development Authority of India (IRDAI) proposed a ban on ‘dark patterns’ on insurance websites, including practices that require customers to share personal details before accessing product features and pricing information.
How to trade PB Fintech shares
“PB Fintech has witnessed a sharp breakdown with heavy volume, falling below the Rs 1,312–1,365 major support zone and all key EMAs,” Virat Jagad, Senior Technical Analyst at Bonanza, told ETMarkets.
“The RSI is near 23, showing strong bearish momentum. Avoid fresh buying; no recommendation to hold. Existing positions can be exited after the major support breakdown,” he added.
What are brokerages saying?
Jefferies has cut its target price for PB Fintech to Rs 1,540 from Rs 2,050, implying 28% upside from the current level, while retaining its Buy rating.
The brokerage said PB Fintech indicated that non-life NPV could fall to 33-40% of the original NPV if IRDA's proposed commission cuts in health and motor insurance are implemented. Life insurance NPV, however, is expected to remain broadly similar to current levels, supported by higher renewal commissions in term insurance.
Jefferies estimates that a 10% cut in new business commission rates could translate into a 10-12% decline in earnings. It said the proposed regulations could have a material adverse impact on near-term earnings if implemented, although the consultation paper could still change after feedback.
Jefferies has kept its earnings estimates unchanged but cut Policybazaar's valuation multiple by 30% to 18x FY30E EBITDA due to uncertainty around take rates.
The company could slow hiring and reduce marketing in the near term.
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Sudeep Shah of SBI Securities said PB Fintech witnessed a sharp decline of 36% on September 24, significantly distorting its chart structure. The stock has slipped well below its key moving averages, indicating a deterioration in the overall trend. The RSI has plunged to 26 from 61, signalling strong bearish momentum, while the MACD line has slipped below the zero line, further reinforcing the bearish bias.
“Given the sharp deterioration in technical indicators, it is advisable to avoid bottom fishing and wait for greater clarity on the stock's price action before considering fresh positions. The Rs 1,160–1,150 zone remains a crucial support area, as the stock witnessed a sharp rebound from this zone in May 2024. A decisive breach below this support zone could trigger a further extension of weakness in the stock,” he added.
Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
