PB Fintech stock tanks 7% after Morgan Stanley downgrade to 'underweight' forecasting 25% downside

Shares of the Policybazaar parent have already skyrocketed nearly 120 percent in the past year.

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Shares of PB Fintech tanked 7 percent on January 13 after global brokerage firm Morgan Stanley has downgraded the stock to an 'underweight' call as against the previous 'equal-weight' rating. The brokerage cites lower-than-expected profit emergence and high stock valuations as the triggers behind the downgrade.

Accordingly, Morgan Stanley assigned a price target of Rs 1,400 for the stock which translates into a downside potential of nearly 25 percent from Friday's closing price. Shares of the Policybazaar parent have already skyrocketed nearly 120 percent in the past year.

However, it has fallen a victim to profit booking in recent times, falling 12 percent in the last one month. At 09.21 am, shares of PB Fintech were trading at Rs 1,769.95 on the NSE.

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The firm noted the divergent stock outperformance, which according to Morgan Stanley, has factored in strong new business premium growth of over 60 percent in H1 of FY25 for the company. Moving on however, Morgan Stanley expects PB Fintech's stock to de-rate as core new business performance moderates in FY26.

Earlier this month, shares of PB Fintech had hit a record high after the company set up a new subsidiary--PB Health Services to foray into healthcare services. PB Fintech’s group chairman and CEO Yashish Dahiya said earlier that the company would make a one-time investment of $100 million to acquire a 30 percent stake in its healthcare subsidiary.

Dahiya, while speaking to NDTV Profit, stated that that PB Fintech will be a minority stakeholder in PB Health Services. “It (PB Health) is not a PB Fintech venture. PB Fintech is just an investor in that venture. It's, at best, a minority investor,” he said.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.