POLICYBZR

’s Growth Visibility Turns Cloudy Amid Regulatory Uncertainty

’s stock has slipped nearly 8% over the last two sessions as the Insurance Amendment Bill 2025 adds a fresh layer of uncertainty, just when the company was recovering from GST‑related disruptions. With potential commission cuts from insurers and the possibility of IRDAI capping commission expenses, earnings visibility for FY26–27 has turned fluid. Policybazaar, which drives the bulk of PB Fintech’s revenue, is now exposed to both regulatory and structural risks. Since 22 September, insurance premium collection has been exempt from GST. As a result, insurers can no longer claim input tax credit on GST paid for broker commissions, increasing their cost burden. Some insurers may respond by trimming commissions, and any such impact will likely show up in Q3 or Q4 FY26. The Insurance Amendment Bill empowers IRDAI to cap commission expenses. A key concern is the regulator’s stance on front‑loaded commissions, where agents earn disproportionately high first‑year payouts. If IRDAI pushes for more even commission distribution, ***** Fintech’s primary revenue driver—could see meaningful pressure. In Q2FY26, ***** contributed 89% of core online revenue (₹852 crore), growing 37% YoY, while ***** declined 22%. The take rate held steady at 16%. If FY26 premium collection reaches ₹22,000 crore but the commission rate drops by 100 bps, revenue could fall by ₹220 crore, directly impacting EBITDA. If IRDAI cuts commissions, insurers are unlikely to retain the savings; they would likely pass them on as lower premiums, which could lift PB Fintech’s commission revenue through higher premium volumes. But near‑term earnings remain exposed to a potential double hit from GST and regulation. PB Fintech trades at a PEG ratio of 1.6x (FY27 estimates), higher than Paytm’s 1.3x, despite rising regulatory uncertainty. With earnings forecasts at risk, the valuation appears stretched.