Paisalo Digital Shares Jump After SBI Life Stake Purchase

Shares of Paisalo Digital Ltd. hit a record high after SBI Life Insurance Co. acquired a stake in the non-bank lender.

SBI Life has acquired 38 lakh shares, or 9% of the total equity, of Paisalo for a cash consideration of Rs 186.2 crore, the insurer informed the bourses after market hours on Thursday. To be sure, Indian markets were closed on Friday on account of Christmas holiday.

“This is basically to tap the digital user as most of the insurance policies are sold online and this is a very strong business-to-consumer player,” Avinash Gorakshakar of Profitmart Securities told BloombergQuint over the phone. SBI Life, he said, may look to increase its stake further in the non-bank lender and that the current acquisition is only an entry point. “The effect of this acquisition will be felt only over the next one-two years. I don’t think it will add any incremental business or earnings impact in the near term.”

Besides, data available on the exchanges showed that Elara India Opportunities Fund acquired a 2.6% stake in Paisalo Digital at Rs 490 apiece on Thursday.

Shares of Paisalo Digital rose as much as 20%—the most on record—to Rs 625.55 apiece.

Shares of SBI Life Insurance, too, gained as much as 3.6% to Rs 905 apiece — the highest in nearly five months. Of the 36 analysts tracking SBI Life Insurance, 34 have a ‘buy’ rating and two suggest a ‘hold’. The average of Bloomberg consensus 12-month target prices implies an upside of 12.7%.