Shares of PB Fintech Ltd, the parent company of Policybazaar and Paisabazaar, fell sharply in Thursday's trade after the Insurance Regulatory and Development Authority of India (Irdai) released its consultation paper on commissions, Expenses of Management (EoM) and distribution reforms.
The stock declined as much as 28 per cent to hit a day's low of Rs 1,360.80 on BSE. The proposed changes could have a bearing on the commission structure for insurance distributors across products.
Emkay Global said the proposed reforms seek to address concerns around mis-selling and make insurance more affordable. However, it said the proposed reduction in distribution commissions could affect the economics of insurance distribution.
"The intent behind the proposed reform could be noble, to address the root cause behind mis-selling and also to make insurance more affordable. However, the drastic cut in distribution commission would also make insurance distribution an unviable business and an unattractive vocation. And this could severely backfire, hurting the regulator's growth agenda and 'Insurance for All by 2047'," the brokerage said.
Kranthi Bathini, Equity Strategist at WealthMills Securities, said the proposed Irdai norms on commissions could be negative for companies such as PB Fintech. He added that investors with a medium- to short-term view should consider selling on rise.
According to AR Ramachandran, Sebi-registered research analyst at Tips2trades, "PB Fintech's stock is bearish on daily charts with strong resistance at Rs 1,590. A daily close below support of Rs 1,350 could trigger a fall towards Rs 1,278 in the near term."
Ravi Singh, Chief Research Officer at Master Capital Services, suggested that the counter is appearing weak on charts and could slip towards Rs 1,250 level in the near term. He added that resistance is seen near Rs 1,420 on the higher end.
The sharp decline in PB Fintech came amid weakness across several insurance stocks. Shares of Max Financial Services Ltd, ICICI Prudential Life Insurance Company Ltd, HDFC Life Insurance Company Ltd, SBI Life Insurance Company Ltd and Star Health and Allied Insurance Company Ltd were also trading lower during the session.
Separately, PB Fintech recently clarified that reports suggesting that Yashish Dahiya, Chairman, Executive Director and Group Chief Executive Officer, intended to resign or step down from his position were "false and baseless".
"The Company categorically denies this speculation and confirms that it is false and baseless. Mr. Dahiya continues to serve as the Chairman, Executive Director and Group Chief Executive Officer of the Company. He has expressly confirmed that he has no intention of resigning, stepping down or relinquishing his responsibilities and will continue to lead the Company in his present capacity," the company stated.