PB Fintech shares fall 4.5% after 36% crash; brokerages see 46% earnings risk

Shares of PB Fintech, the parent company of Policybazaar, fell 4.51% to ₹1,152.70 in today's trading session, after a brief recovery in early trade. The stock touched a low of ₹1,115, after opening at ₹1,160 and briefly rising to ₹1,261.70. This comes a day after the stock plunged 36% in its biggest single day fall since listing.

The sell-off followed the Insurance Regulatory and Development Authority of India’s (IRDAI) proposed changes to insurance distribution commissions and expense limits. The draft rules could change how insurers pay distributors, putting pressure on the revenue of online platforms such as Policybazaar.

IRDAI’s proposed commission changes put PB Fintech’s revenue at risk

The proposed rules could mean lower commissions for insurance distributors, including Policybazaar, which earns revenue by selling policies through its online platform.

The changes include tighter commission limits and revisions to expense rules, which could affect companies that rely heavily on insurance sales, particularly in health and motor insurance. The proposals are still at the consultation stage, and the final rules could differ from the draft framework.

Motilal Oswal sees 30% revenue hit, 46% earnings risk

Motilal Oswal Financial Services estimates that the proposed rules could cut PB Fintech’s core online insurance revenue by around 30% in FY28. If the company cannot make up for the loss through cost cuts or other income, its earnings could fall by 46%.

The brokerage estimates that the value of PB Fintech’s general insurance business could fall by 60-65% under the proposed framework. Since general and life insurance contribute roughly equally to its core online insurance revenue, the impact could translate into a 30% decline in revenue.

“If we cut our FY28 core online insurance revenue estimates by 30%, without factoring in any adjustments to expenses or additional revenue streams highlighted by the company, our earnings estimates would decline by 46%,” Motilal Oswal said.

The brokerage added that a 20% reduction in employee and advertising costs could limit the earnings decline to around 30%.

PB Fintech is also looking at ways to reduce costs and earn more from other businesses. The company has indicated potential cost savings of 10-15% and is exploring opportunities in reinsurance broking, services and potentially manufacturing insurance products. Motilal Oswal expects the stock to remain under pressure until the final regulations are announced.

Virat Jagad, a senior technical research analyst at Bonanza says that the stock has witnessed a sharp breakdown with heavy volume, falling below the ₹1,312–1,365 major support zone and all key EMAs. "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 said.