SoftBank cuts PB Fintech shares

SoftBank has continued its divestment strategy in Indian technology company PB Fintech, the firm behind Policybazaar, by selling an additional 2.5% of its stake in a block deal. The shares were sold at Rs 760.8 each, and the transaction involved buyers such as Goldman Sachs, Citigroup, and the Saudi Central Bank. This divestment, arranged by Kotak Mahindra Capital, resulted in SoftBank gaining Rs 869 crore.

This move aligns with SoftBank’s ongoing approach of reducing its holdings in Indian technology firms. It follows a previous sale in which SoftBank offloaded a 5.1% stake in PB Fintech for Rs 1,043 crore.

PB Fintech has maintained a strong financial performance throughout the year, significantly reducing its consolidated net loss and reporting a year-on-year revenue increase to Rs 666 crore. This robust financial performance has led to a notable surge in PB Fintech’s stock price, which has climbed by 71% in 2023. According to InvestingPro, PB Fintech is expected to achieve net income growth this year and has been a prominent player in the insurance industry, even though it hasn’t been profitable over the past twelve months.

Technical analysts have identified patterns like an Inverse Head and Shoulders and Triangle Pattern in PB Fintech’s stock chart. They have pinpointed Rs 720 as the demand zone for any potential correction and Rs 820 as the immediate resistance level.

However, it’s important to note that PB Fintech’s revenue growth has recently slowed down. Additionally, the company is trading at a high Price/Book multiple, which could suggest it is overvalued.

Despite the deceleration in revenue growth, PB Fintech’s stock price has experienced a significant upswing over the past six months. Moreover, analysts anticipate the company will turn profitable this year, which might justify the elevated Price/Book multiple. It’s worth considering that PB Fintech does not distribute dividends to shareholders, which may be a relevant factor for potential investors to weigh.