PB Fintech IPO (Policybazaar IPO) envisages to raise Rs. 5,710cr in the price band is Rs. 940 – 980 per share. PB Fintech IPO consists of a fresh issue of Rs 3,750 crore, and an offer for sale of Rs 1,959.7 crore by investor SVF Python II (Cayman) and some other selling shareholders. The other shareholders will sell shares amounting to Rs 392.50 crore, of which Yashish Dahiya, chairman and CEO will sell Rs 250 crore worth of shares.The company operates online insurance marketplace “Policybazaar” and credit comparison portal “Paisabazaar”.
Related Posts:
PB Fintech IPO Details:
| Issue Opens: Monday, Ist Nov 2021 |
| Issue closes : Wednesday, 3rd Nov’2021 |
| Issue size: ₹ 5,709 – 5,710 Cr |
| Price band: ₹ 940 – 980 |
| Bid Lot: 15 Shares and in multiple thereof |
| QIB: 75% of the issue |
| NII : 15% of the issue ; Rs. 856.46 crore |
| Retail : 10% of issue; Rs. 570.97 cr, 58,26,239 shares |
| Applications needed for Ix Reail : 3.9 Lacs |
ANCHOR ISSUE:
PB Fintech has mopped up Rs 2,569 crore through allocation to anchor investors. Out of this 33.5 per cent of the total allocation to anchor investors was made to 18 domestic mutual funds through a total 69 mutual fund schemes. Eleven insurance companies (9 life insurance companies and 2 health insurance companies) invested in the anchor book. Top insurers who got sizeable allocation in the anchor round include Bajaj Allianz, HDFC Life Insurance Company, ICICI Prudential Life Insurance, SBI Life Insurance, Bharti AXA Life Insurance, Kotak Mahindra Life Insurance , CARE Health Insurance and Max Bupa Health Insurance, Max Life Insurance, TATA AIA Life Insurance and Edelweiss Tokio Life Insurance.
About PB Fintech Ltd
- PB Fintech Ltd is India’s largest online platform for insurance and lending products and operates through two brands Policybazaar and Paisabazaar.
- Company’s platforms provide convenient access to insurance, credit, and other financial products and aims to create general awareness in India on financial impact of unforeseen events.
- PB Fintech launched Policybazaar in 2008 to cater those who need more information, choice, and transparency in insurance policies.
- Policybazaar is an online platform which consumers and insurer partners use to buy and sell insurance products.
- On this platform 51 insurer partners offered over 340 term, health, motor, home, and travel insurance products.
- Policybazaar offers its users with i) brosing differenet products and pre purchase survey or research, ii) actual purchase of policy, inspection, medical check-up including payment iii) post-purchase policy management which also covers claims facilitation, renewals, cancellations, refunds etc.
- The company’s launched Paisabazaar in 2014.
- It was intended to provide convenience and transparency in selecting a variety of personal loans and credit cards.
- PB Fintech has partnered with 54 large banks, NBFCs, and fintech lenders offering a wide choice of products to consumers across personal or business loans, credit cards, home loans, and loans against property.
- The company’s technology solutions are focused on automation with self-service-driven consumer experiences requiring minimal human intervention
Fino Payments Bank IPO: Financials
| Particulars / (₹ In Cr) | Jun 21 (3m) | Jun 20 (3m) | 2021 | 2020 | 2019 |
| Sales | 237.73 | 175.02 | 886.66 | 771.3 | 492.25 |
| OPM % | -49.79 | -33.96 | -18.02 | -41.47 | -68.28 |
| OP | -118.36 | -59.43 | -159.76 | -319.89 | -336.09 |
| Other Income | 20.44 | 16.25 | 70.75 | 84.27 | 36.56 |
| PBDIT | -97.91 | -43.18 | -89.01 | -235.63 | -299.53 |
| Interest | 2.89 | 3.19 | 11.52 | 11.92 | 7.48 |
| PBDT | -100.8 | -46.37 | -100.54 | -247.55 | -307.01 |
| PAT | -110.84 | -59.75 | -150.24 | -304.03 | -346.81 |
| EPS (Rs)* | -9.9 | -5.3 | -3.3 | -6.8 | -7.7 |
| FV | 2 | ||||
| Equity Post IPO | 89.9 | ||||
| IPO Price | 980 | ||||
| Market Cap in Rs. cr | 44051 | ||||
| Market Cap / Sales | 49.7 |
Salient Points
- Company has an asset-light capital strategy. Further they do not underwrite any insurance or retain any credit risk on their books.
- Policybazaar is registered with and regulated by IRDAI as a direct (life and general) insurance broker.
- Paisabazaar had a 51.4% market share, based on disbursals in Fiscal 2020.
- Company plans international expansions and has begun operations in Dubai, and plans to scale up in the broader Gulf Cooperation Council region.
- One of its subsidiaries, Docprime has recently launched Docprime Health Locker, a health locker integrated with Govternments’s Ayushman Bharat Digital Mission
Cons
- Can get affected by unfavorable government policies and regulations.
- Lower commission from business partners
- Competition from other players.
- The company’s bottom-line remains in red due to high operating expenses.
- Business model can be be replicated by others.
PB Fintech IPO: Assessment
- There is considerably low insurance penetration in the country.
- In terms of total premium across life and non-life insurance, the market for insurance products in India is estimated at Rs. 7.6trillion (USD 102bn) in FY20 and is expected to grow at a 17.8% CAGR.
- Going forward, share of online insurance is expected to improve significantly due to rapid digital adoption.
- Both Policybazaar and Paisabazaar platform offerings address the large and highly underpenetrated online insurance and lending markets in the country.
- PB Fintech revenue grew at a 34% CAGR between FY19-21 to Rs. 887 cr, with Q1FY22 revenue also up 36% YoY to Rs. 238 cr.
- PB Fintech allotted shares to Falcon Edge Capital at Rs 366 per share in Feb 2021. This was for a 2.82% stake in the company. Now charging a considerably higher rate in IPO reflects poorly on the company’ ethics.
- The company which may continue to make loss for quite some time in future.
- Recently a leading private sector general insurers HDFC Ergo delisted its products from web aggregators including PolicyBazaar. Already private sector general insurer ICICI Lombard and public sector giantt Life Insurance Corporation of India are not present on PolicyBazaar.
- There is an unpleasant event related to unlisted shares of PolicyBazaar. Shares of PB Fintech traded in the unlisted market in the range of Rs 2,000-2,300, just few weeks before the IPO and many investors bought these shares.
- On the post issue BV of Rs 126.2 , PB Fintech is offered at price to book value multiple of 7.8 times.
- PB Fintech is demanding mcap of Rs 44051 crore and IPO is made at 43 times post-IPO EV/TTM sales for period ended June 2021 and 49 times of its FY21 year end numbers. This which appears to be quite expensive even as there are no comparable listed peers in the country.
- Overall this IPO is risky as markets have been showing selling pressure and many IPOs are lined up.
- GMP for the PB Fintech IPO (PolicyBazaar IPO) was last reported at Rs. 90-100.
- I may skip the PB Fintech IPO. May apply at the last minute if there is good QIB response but not with much expectations. The factor that favors the IPO is that share of online policies and credit is likely to see significant growth in coming years. My feeling is that this is already factored in the IPO price.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.