Shares of PB Fintech (PolicyBazaar) rose over five percent on August 25 after the company made a slew of investments in subsidiaries and incorporated a new subsidiary in Abu Dhabi.
The stock traded at Rs 537.70 at 9.20 am. The company in an exchange notification on August 24 said its board has considered and approved the incorporation of a stepdown wholly owned subsidiary called PB Fintech FZ-LLC in Abu Dhabi.
The new subsidiary aims to extend group technology hubs in the UAE and provide end to end solutions. “Through this technology hub, we will make it easier for insurers to integrate with our policibaazar.ae business, bringing in direct benefit to our core business,” PB Fintech said.
PB Fintech will also acquire a Dubai-based marketing management company YKNP Marketing Management through PB Fintech FZ-LLC. It will buy 45 to 51 percent in the target firm for $4 million.
"With this partnership, we will get access to banks of UAE where we can start sourcing customers leveraging the YKNP agreement and field force,” PB Fintech added.
Paisabazaar, another subsidiary of PB Fintech, will receive Rs 250 crore for which it will issue shares to the parent. The parent will also infuse Rs 650 crore in PolicyBazaar during the current financial year.
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ICICI Securities has a buy rating with a target price of Rs 700 on PB Fintech as it sees the profitability timeline improving.
“The key assumptions are 32 percent compound annual growth rate (CAGR) in premiums of core insurance business and 27 percent disbursement CAGR in Paisabazaar between FY22 and FY26. The contribution from core businesses is expected to clock 22 percent CAGR between FY22 and FY26,” said Ansuman Deb, an analyst at ICICI Securities.
“The contribution margin in core business is expected to increase from 39 percent in FY22 to 42 percent in FY26. We model new initiatives (PB Partner, corporate and international) separately and they contribute eight percent to our valuation.”
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