Policybazaar IPO subscribed 54% on Day 1

New Delhi: The Rs 5,625 crore IPO of PB Fintech, the parent company of Policybazaar and Paisabazaar, received 54 per cent subscription to its issue on Day 1 of the bidding process.

According to the data from National Stock Exchange (NSE), investors bid for 1,85,59,800 equity shares till 5:00 pm on the first day, against a total issue size of 3,45,12,186 equity shares.

The company is selling its share in the range of Rs 940-980 apiece. Its grey market premium has halved to Rs 150 from Rs 320 earlier after the beatdown in the secondary market.


PB Fintech is India’s largest online platform for insurance (PolicyBazaar) and lending (Paisabazaar). It provides access to insurance, credit and other financial products.

Analysts are positive on the company's growth prospects but given the asking valuations, some of them have advised a subscribe to the issue for the long-term gains only.

"With strong brand equity, PB Fintech commands a stellar 93.4 per cent market share in its digital insurance market place Policy Bazaar and a 51.4 per cent in its digital consumer credit market place Paisabazaar. The company has delivered a notable 34 per cent CAGR in its revenues and although it has expanded its contribution margin considerably from 8.6 per cent to 39.8 per cent over FY19 to FY21, it remains Ebitda negative," said Yesha Shah, Head of Equity Research, Samco Securities.

Considering the intensifying competition in the sector and certain larger players delisting their products from the platform, the key challenge for the company lies in shielding its market share and consistently scaling its revenue, the analyst said.

"Speaking about the valuation, the company is seeking a market cap of around 2.5 times of its last funding round in March 2021. While the Insurance brokers license and the minimal online insurance penetration in India provide the company massive long term opportunities to grow, the current valuation seems pretty expensive. Hence, only investors with a longer time horizon, a larger risk tolerance and the patience to wait for the company's return ratios to improve should subscribe," Shah said.

Brokerage KRChoksey said it likes the company’s focus on growth, willingness to do more experiments while focus-ing on core business, international expansion and inorganic growth plans.

It noted that Policybazaar has, over the years, raised $400 million and it has 60-65 per cent cash on books, which
will help in expansion and consumer acquisition. "Considering multiple growth drivers and leadership position of Policybazaar in the digital ecosystem, investors should look to invest in the IPO for listing as well for long term gains," it said..

PB Fintech mopped up Rs 2,569.37 crore from 155 anchor investors on Friday, a day ahead of the IPO opening. The company finalised the allocation of 2.62 crore equity shares to anchor investors at a price of Rs 980 per share.

Amarjeet Maurya, AVP- Mid Caps, Angel One said the company provides convenient access to insurance, credit, and other financial products and aims to create awareness in India about the financial impact of death, disease, and damage.

"In terms of valuations, the post-issue FY2021 EV/Sales works out 47.6x, which is high, considering its historic performance in terms of bottom line," Maurya added, who has recommended a 'neutral' rating to the issue.