Policybazaar operator PB Fintech Ltd (PBFL) initial public offering (IPO) is the biggest and most talked about among the three IPOs that hit the primary market this week. Policybazaar IPO saw a subscription of 1.59 times on the second day of bidding. The maiden offer by PB Fintech Ltd received applications for 5,47,59,750 shares against 3,45,12,186 shares on offer, according to the data by the National Stock Exchange (NSE). The portion set aside for retail investors was booked 2.04 times. The qualified institutional buyers (QIBs) and the non-institutional investors (NIIs) had subscribed to the issue 2.08 times and 0.23 times respectively. The company has fixed a price band at Rs 940-980 per equity share. Investors can bid for a minimum of 15 equity shares and in multiples of 15 equity shares thereafter. The investors will have the last chance to invest in Policybazaar IPO on Wednesday, November 3.
Most of the analysts suggested a subscribe rating for Policybazaar IPO for the listing gains. However, some raised questions over the high valutions. Let’s take a look at the Policybazaar IPO and whether investors should give it a chance or not.
Policybazaar IPO Issue Price and Details
Policybazaar was India’s largest digital insurance marketplace among all online insurance distributors with 93.4 percent market share based on number of policies sold in FY20. The huge popularity of the e-insurance platform had prompted the operator to float an IPO, believed analysts. The company is planning to raise Rs 5,700 crore through its IPO that comprises a fresh issue of Rs 3,750 crore and an offer for sale of Rs 1,960 crore. The offer for sale consists of sale of Rs 1,875 crore worth of shares by investor SVF Python II (Cayman) and Rs 85 crore worth of shares cumulatively by Yashish Dahiya, Alok Bansal, founder United Trust, Shikha Dahiya and Rajendra Singh Kuhar. The price band for the offer has been fixed at Rs 940-980 per equity share. PB Fintech has already garnered Rs 2,569 crore from anchor investors on October 29, ahead of IPO.
Policybazaar IPO Valuation
On valuations, Motilal Oswal Retail Research said, “The issue is valued at 46.3x FY22 Mcap/Sales on a post issue and annualized basis, which seems expensive compared to global peers. However, the issue is likely to attract investors interest given its leadership position in both digital insurance or consumer credit marketplace and customer centric approach. Also losses are reducing at Policybazaar while Paisabazaar has turned profitable. In the current environment, market is liking such niche emerging platform stories, which is well placed to tap the high growth digital/online penetration in insurance/consumer credit market. Hence we recommend ‘Subscribe’ from Listing Gains perspective.”
Along with Policybazaar, PB Fintech is also behind the credit lending platform Paisabazaar. It was India’s largest digital consumer credit marketplace with a 53.7 percent market share, based on disbursals in FY21. The company provides convenient access to insurance, credit and other financial products and aim to create awareness amongst Indian households about the financial impact of death, disease and damage, PB Fintech said.
PB Fintech Financials
PB Fintech posted a consolidated loss of Rs 150.24 crore for the financial year FY21. The revenue from operations grew 15 per cent year-on-year to Rs 886.66 crore in the same period.
The shares of PB Fintech was trading at ₹150 in the grey market on Wednesday.
Should you Subscribe to Policybazaar IPO?
“Macros of the insurance sector are positive and so are the fundamentals of PBFL. The company with its dominant position in the digital insurance and credit market, is expected to benefit from the abundant business opportunities in both the markets. At higher price band of Rs. 980, PBFL is demanding an EV/TTM Sales multiple of 40.5x, which seems to be very stretched. Considering the above observations we assign “Subscribe for Long Term” rating for the issue,” said Choice Broking.