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So, what caused this wild swing in a stock that has been one of the star performers?
Unlike many other tech stocks, shares of PB Fintech, parent of online insurance and lending marketplaces PolicyBazaar and Paisabazaar, performed very well over the last one year, buoyed by financial profits and overall growth of the business. Consider this: about a year ago, the stock was trading around Rs 760. It rose more than 150% since then when it hit a 52-week high of Rs 1,966 last week.
Understanding the stock movement:
There was selling pressure on the stock after a CNBC-TV18 news report said the Gurgaon-based company could get into the healthcare business with its own hospital chain.Late evening on Wednesday, PB Fintech issued a clarification to the stock exchanges saying it is evaluating some opportunities in the healthcare space but nothing has been finalised.
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Industry insiders pointed out that investors were spooked at the fact that the fintech which runs an insurance and credit marketplace wants to get into the healthcare business which is fragmented, has high operational costs and faces extreme competition. Interestingly, in January this year, the reverse happened when the insurance regulator granted a health insurance licence to Devi Shetty’s Narayana Health. Shetty runs the Narayana group of hospitals.
Adding context:
PolicyBazaar, the insurance marketplace run by PB Fintech, has been highlighting the need for greater health insurance penetration in the country.
In its June quarter earnings call on August 7, Yashish Dahiya, chief executive officer of PB Fintech, had said there is a need for the healthcare industry to calculate how much value the healthcare service provider, the health insurance industry and the insurance distributor adds to the life of a customer.
“Those are the kind of issues people like me really get paid to think about. And that’s what we have been spending time on. We have had some good discussions. It’s too premature to kind of get into what and how yet, our effort is to make the life of the consumer much easier,” Dahiya had said then.
Company Statement:
In its clarification on Wednesday, PB Fintech said it believed the number of people buying health insurance would increase if claims were quicker and the experience smoother. “It would be much better if interests were aligned between insurers and hospitals to give customers amazing claims experience and we believe that would grow insurance penetration,” it said.
But the company clarified that such conversations are yet to mature.
Growing health business:
In its June quarter results, PB Fintech said its health and life insurance premium collection grew 78% year on year. Its overall insurance premium collection grew to Rs 4,871 crore. PB Fintech reported a profit after tax of Rs 60 crore and total revenue of Rs 1,010 crore
The advantage with life and health products is that they are sticky, consumers tend to be associated with these products for the lifetime and PolicyBazaar gets a loyal customer base. Also, the company positions itself as selling these products which help keep Indians safe.
Citing market data, PB Fintech said 66% of Indians incur healthcare expenses from their pockets.
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