PB Fintech block deal: Tencent may sell 2.1% stake in Policybazaar parent for Rs 1,610 crore

Shares of PB Fintech Ltd, the parent entity of Policybazaar, are in focus on Thursday morning amid a report suggesting shareholder Tencent Cloud Europe is looking to offload 2.1 per cent stake in the company for Rs 1,610 crore. Nearly 97 lakh shares may change hands, CNBC-TV18 said while suggesting the floor price for the transaction at Rs 1,660.20 apiece, which is at a 4.5 per cent discount to Wednesday's closing price.

The deal is said to be subject to a 60-day lock-in period for the seller, it quoted sources as saying. Tencent Cloud Europe had in May 2023 sold 94,16,250 PB Fintech shares on BSE at around Rs 596.66 apiece. On Wednesday, the stock closed at Rs 1,737.10 per share, down 2.09 per cent.

At the end of June quarter, Tencent Cloud Europe was left with 1,94,48,750 shares, owning 4.26 per cent stake in PB Fintech.

In its June quarter results, PB Fintech reported 46.1 per cent YoY jump in core online premiums, which lifted core platform business insurance revenue by 40.1 per cent YoY. New initiatives’ premium growth was stronger at 2.3 times YoY. Adjusted Ebitda margin rose 144 bps YoY to 4.9 per cent for the quarter. Adjusted profit at Rs 43.40 crore was above estimates.

"We are increasing revenue estimates, but lowering margin expectations, which changes our FY25E/26E adj. Ebitda by (1.4) per cent/1.6 per cent. We are reducing our cost of equity assumption to 13.5 per cent and rolling over the valuation to Sep-26E, yielding an increased DCF-based target price of Rs 1,370 (earlier INR1,160). Valuations continue to be steep at FY26E/27E EV/Ebitda of 106.7x/56.1x; retain ‘REDUCE’," Nuvama id earlier this month.