Shares of Policybazaar parent PB Fintech tanked over 12 per cent on Tuesday afternoon after the company announced that its Chairman and CEO Yashish Dahiya intends to sell up to 37,69,471 equity shares via bulk deals on the stock exchanges.

PB Fintech closed at ₹582.80 on the BSE, down ₹75.55 or 11.48 per cent. It had opened at ₹648.00 against the previous close of ₹658.35. The company’s shares slipped further to ₹557.00 during the day. It closed at ₹580.25 on the NSE, down ₹78.50 (11.92 per cent). 

The company had informed the exchanges on Monday that the aggregate shareholding of Dahiya after the initial public offer (IPO) was 1,72,38,878 (3.84 per cent) and the number of ESOPs vested and due for immediate exercise was 1,06,57,500. 

Of these outstanding stock options, he exercised 1,05,09,601 shares during February 2022 and May 2022.

Vested ESOPs

The remaining 1,47,899 vested ESOPs will be exercised within the next few days, the company said in a statement. 

An additional 71,96,604 stock options were granted on October 5, 2021, which will get vested and exercisable over five years from the grant date, the company added.

The aggregate shareholding of Dahiya as on March 31, 2022, was 1,90,08,349 (4.23 per cent) and post the exercise of 55,09,601 ESOPs during May 2022 his aggregate shareholding increased to 2,45,17,950 (5.45 per cent). 

“As the ESOPs are subject to payment of taxes on exercise, in addition to the payment of capital gain tax on the sale of shares, the proceeds from the sale of the 37,69,471 shares are proposed to be used to make the payment of current and future taxes,” it said.

The aggregate shareholding of Dahiya will increase to 2,80,92,982 (5.98  per cent) on a fully-diluted basis post the proposed sale, the company said.

There was no plan to sell further for another year at least, it said.

Listing was at a premium

Santosh Meena, Head of Research, Swastika Investmart Ltd, said, “PB Fintech Ltd is India’s leading online platform for insurance and lending products. The stock got listed in November 2021 and has seen almost a 70 per cent fall since its listing.”

The stock had listed at over 17 per cent premium  at ₹1,150 on both the BSE and NSE.

“The issue was exorbitantly priced at market to sales of 46.40x during its IPO, and it remains expensive despite the recent correction. The company operates in a very competitive space, as there aren’t any significant barriers to entry, plus the company is still a loss-making one despite the significant rise in revenues in FY22. Further, we believe that the current market conditions are punishing companies that are growing without showing profitability and are sceptical of companies that are relying on buzzwords like ‘underpenetrated in India‘ to show a rosy future picture,” Meena added.

Further, it needs to be noted that as per details in the filing pertaining to the stake sale, the shares that are getting offloaded represent around 15 per cent of Dahiya’s stake in the company. Thus, this represents offloading of a significant chunk of his stake in the company.

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