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What Should Investors Do After Policybazaar's 10% Drop Due to CEO Yashish Dahiya's Stake Sale Plan?

Shares of Policybazaar fell 10% in morning sessions on Tuesday to Rs 595 on the BSE after the company's CEO and Chairman Yashish Dahiya announced his intention to sell up to 3.77 million equity shares on the open market. Policybazaar is the parent company of Paisabazaar and Policybazaar. In a filing with the market, PB Fintech stated that it had received notification from Mr. Yashish Dahiya, the company's chairman and CEO, of his intention to sell up to 3,769,471 equity shares in bulk on the stock exchanges.

Yashish Dahiya owned a total of 19 million shares as of March 31, 2022 (4.23%); however, after exercising 5.5 million ESOPs in May 2022, his total shareholding rose to 24.52 million (5.45 percent). The revenues from the sale of the 3.77 million shares are suggested to be used to make the payment of current and future taxes because the ESOPs are subject to taxes on exercise in addition to the payment of capital gain tax on the selling of shares, the firm stated.

The company said that no other share sales are anticipated after these shares, at least not for a year.

In November 2021, PB Fintech released its Rs 5,710 crore initial public offering (IPO). Co-founders of the business and other shareholders had cut back on their investment in the public offering.

The price of the large-cap stock is below the moving averages of the past five, twenty, fifty, hundred, and two hundred days. In 2022, it dropped 36.3% and lost 8.62% in a single week.

On the BSE, a total of 1.51 lakh shares were exchanged for a value of Rs 9.15 crore. The company's market value decreased to Rs 27,214 crore.

On November 17, 2021, the stock reached a 52-week high of Rs 1,470, and on May 12, 2022, it reached a 52-week low of Rs 542.30.

The stock outperformed the market over the last six months, with a price decrease of 49% (or 50%) compared to a 4% decline in the S&P BSE Sensex. Since reaching an all-time high of Rs. 1,470 on November 17, 2021, the stock has fallen by 60%.

On November 15, 2021, PB Fintech made its stock market debut. Shares were sold by the corporation for Rs. 980 each.

Policybazaar reduced losses for the March quarter from Rs 643.8 crore in the fiscal fourth quarter to Rs 219.6 crore. In the final quarter of FY22, total income increased to Rs 591.16 crore from Rs 290.08 crore in a similar period of FY21 (FY21).

What Should Investors Do?

The leading online platform for insurance and financing products in India is PB Fintech Ltd., according to Santosh Meena, Head of Research at Swastika Investment Ltd. Following the CEO of the company's disclosure of a share sale, the stock fell as much as 10% on Tuesday. Since the stock was listed in November 2021, its price has dropped by roughly 70%. The issue was absurdly overpriced at the market to sales of 46.40x during its IPO, and despite the current adjustment, it is still pricey. The businessOperating in a very competitive market with few significant entry barriers, and despite a significant increase in revenues in FY22, the company is still losing money. Additionally, we think that the market is penalizing businesses that are expanding without demonstrating profitability, and we are dubious of businesses that rely on catchphrases like "underpenetrated in India" to paint a positive future image.

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