PB Fintech, the operator of Policybazaar and Paisabazaar, made a decent debut on 15 November 2021 with its stock listing at a premium of 17.35%. The stock opened on the BSE at Rs. 1,150. The online insurance and lending products distributor’s IPO has seen a subscription of 16.58 times and received bids worth Rs. 56,093.64 cr.
While the qualified institutional buyers subscribed to the IPO 24.89 times and non-institutional investors 7.82 times, the retail investors subscribed 3.31 times. PB Fintech garnered Rs. 5,625 cr. via the public issue. The IPO consisted of fresh issuance of shares worth Rs. 3,750 cr. and an offer for sale (OFS) of Rs. 1,960 cr.
The company looks to utilise the proceeds to enhance its visibility and awareness of its brands including Paisabazaar and Policybazaar. In addition, it also wants to fund strategic investments and acquisitions, expand its consumer base including offline presence, and enhance its presence overseas with the proceeds.
Policybazaar is India’s largest digital insurance marketplace, commanding a 93.4% market share based on the number of policies sold in FY 2020. The company transacted 65.3% of digital insurance sales by volume in India in FY 2020. On 10 June 2021, it turned into a direct insurance broker from a web aggregator.
Analysts had a positive outlook on the IPO, given Policybazaar’s leadership position in the digital ecosystem and multiple growth drivers. The company’s growth plans, experiments and focus on core business, inorganic growth, and overseas expansion were other factors why analysts had given a subscribe rate for listing and long term gains.
At the upper price band of Rs. 980, PB Fintech is demanding an expensive valuation of 43x FY 2022 sales, but analysts had suggested subscribing to the IPO given its huge potential in the long term despite limited listing gains.
For FY 2021, PB Fintech had posted a consolidated loss of Rs. 150.24 cr, much lower compared to a loss of Rs. 304.03 cr of FY 2020. Besides, revenue from operations had increased to Rs. 886.66 cr in FY 2021, registering a 15% y-o-y growth.
In the quarter ended June 2021, its loss stood at Rs. 110.84 cr., up from a loss of Rs 59.75 cr. in the same period last year. Further, revenue grew by 35.8% to Rs. 237.73 cr from Rs 175.02 cr. y-o-y.
Although the company is loss-making, insurance penetration is low in India, let alone online presence. This gives immense scope of growth for such online brokers and aggregators.