Shares of PB Fintech (PolicyBazaar) rose more than 5% on August 25 after the company made a significant investment in subsidiaries and opened a new subsidiary in Abu Dhabi.

The stock was trading at Rs 537.70 at 9.20 am. The company said in an exchange notice on August 24 that its board of directors had considered and approved the formation of a downgraded wholly-owned subsidiary, PB Fintech FZ-LLC, in Abu Dhabi.

The new subsidiary aims to expand the group’s technology hub in the UAE and provide end-to-end solutions. “Through this technology hub, we will make it easier for insurers to integrate with our policiBaazar business, delivering direct benefits to our core business,” said PB Fintech.

PB Fintech will also acquire YKNP Marketing Management, a Dubai-based marketing management company, through PB Fintech FZ-LLC. It will acquire a 45% to 51% stake in the target company for $4 million.

PB Fintech added: “Through this partnership, we will have access to banks in the UAE, where we can start finding customers using the YKNP protocol and field strength.”

Another subsidiary of PB Fintech, PaisaBazaar, will receive Rs 250 crore and will issue shares to the parent company for this. The parent company will also inject Rs 650 crore into PolicyBazaar in the current financial year.

ICICI Securities has a Buy rating on PB Fintech with a price target of Rs 700 as It sees an improvement in the earnings timeline.

“Key projections are 32% compound annual growth rate (CAGR) in premiums in the core insurance business and 27% disbursement CAGR in money market between FY22 and FY26. The core business contribution is expected to clock 22% CAGR between FY22 and FY26,” said Ansuman Dev, an analyst at ICICI Securities.

“Core business contribution margin is expected to increase from 39% in FY22 to 42% in FY26. We model new ventures (PB partner, corporate and international) separately, contributing 8% to our valuation.”