PB Fintech (PolicyBazaar / PaisaBazaar) IPO Review – Is it good or bad for investment?
PB Fintech IPO (PolicyBazaar / PaisaBazaar IPO) Details
Gurgaon based PB Fintech (Policy Bazaar / PaisaBazaar) is coming up with IPO that would open for subscription on 1st November 2021. PB Fintech Limited is India’s leading online platform for insurance and lending products. Company has generated strong revenue growth in the last 3 years. However, it incurred losses in the last 3 years. Should you invest in PB Fintech (PolicyBazaar / PaisaBazaar) IPO? What are the risk factors in this IPO? Let me do IPO review and indicate whether investors should buy or not.
About PB Fintech Limited
PB Fintech has built India’s largest online platform for insurance and lending products leveraging the power of technology, data and innovation.
Company provides convenient access to insurance, credit and other financial product’s and aim to create awareness amongst Indian households about the financial impact of death, disease and damage.
Company’s PolicyBazaar and PaisaBazaar platform offerings address the large and highly underpenetrated online insurance and lending markets.
Company launched PolicyBazaar in 2008 to respond to consumers need for more awareness, choice and transparency and create a consumer pull based neutral model of insurance distribution.
In 2020, PolicyBazaar was India’s largest digital insurance market place among all online insurance distributors with 93.4% market share based on number of policies sold.
In 2014, company has launched PaisaBazaar with a goal to transform how Indian’s access personal credit by accentuating ease, convenience and transparency in selecting a variety of personal loans and credit cards. PaisaBazaar was India’s largest digital consumer credit market place with a 53.7% market share in 2021. PaisaBazaar is also widely used to access credit scores, with approx. 22.5 Mn consumers cumulatively accessing their credit score through its platform by end of June-2021.
Company primarily generates revenues from:
1) PolicyBazaar business – Company receives insurance commission from insurance partners and additional services that they provide to insurance partners such as telemarketing and other services relating to sales and post sales services.
2) PaisaBazaar business – Company receives commission from its lending partners, credit advisory and related services that they provide to consumers and lending partners and marketing services that they provide to financial services partners etc.,
3) Online marketing, consulting and technology services to Insurer and lending partners.
PB Fintech (PolicyBazaar / PaisaBazaar) IPO details
|IPO Opening Date||01-Nov-21|
|IPO Closing Date||03-Nov-21|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 2 per equity share|
|IPO Price band||Rs 940 to Rs 980 per equity share|
|Lot Size||15 Shares|
|Min Order Quantity||15 Shares|
|Listing at||BSE and NSE|
|Issue Size||Total Size Rs 5,625 Crores
OFS: Rs 1,875 Crores
Fresh issue: Rs 3,750
|Book Running Lead Managers||Citigroup Capital, HDFC Bank, ICICI Securities, IIFL Securities, Jefferies India, Kotak Mahindra and Morgan Stanley|
What is PB Fintech competitive strengths?
1) Company provides a wide choice and transparency to customers to research and select insurance and personal credit products.
2) Company provides Proprietary Technology helps in superior data intelligence and customer service.
3) Company has collaborative partnership with various companies for insurance and lending products.
4) It has strong network effects for PolicyBazaar and PaisaBazaar platforms.
5) High renewal rates.
6) Capital efficient model with low operating costs.
7) It has experienced Founders and management.
What are the Objects of the Offer?
Here are the objects of the IPO offer.
1) Offer for Sale (OFS) Rs 1,875 Crores: PB Fintech (PolicyBazaar / PaisaBazaar) IPO Size is Rs 5,625 Crores and it contains OFS and fresh issue. Under OFS selling shareholders would sell the shares and company would not get any proceeds from the issue.
2) Fresh issue Rs 3,750 Crores: Company would use fresh proceeds for the following:
i) For enhancing visibility and awareness of company’s brands, including but not limited to “PolicyBazaar” and “PaisaBazaar” – Rs.15,000 million;
ii) New opportunities to expand company’s consumer base including offline presence – Rs.3,750 million;
iii) Funding strategic investments and acquisitions – Rs.6,000 million;
iv) Expanding presence outside India – Rs.3,750 million; and
v) General corporate purposes.
Who is the promoter of PB Fintech Limited?
Company is a professionally managed company and does not have an identifiable promoter in terms of SEBI ICDR Regulations and the Companies Act, 2013.
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How is the company financial track record?
Here are the total assets, revenues and profits of the company in the last 3 years.
|Financial Year ending / Period ending (Amt in Mns)|
|Particulars||FY19||FY20||FY21||Qtr ending 30-Jun-21|
|Profit After Tax||-3,468.1||-3,040.3||-1,502.4||-1,108.4|
Why to invest in PB Fintech (PolicyBazaar / PaisaBazaar) IPO?
Here are the positive factors in this company.
1) PB Fintech is one of the India’s leading online platforms for insurance and lending products. PolicyBazaar and PaisaBazaar are famous platform brands that provides these services in India.
2) Its platforms like PolicyBazaar and PaisaBazaar offers collaborative partnership with various insurance companies and financial institutions respectively. Moreover, company has high renewal rates.
2) Company has generated strong revenue growth in the last 3 years. Its revenues increased from Rs 528.8 Crore in FY19 to Rs 957.4 Crores in FY21.
Risk Factors in PB Fintech (PolicyBazaar / PaisaBazaar) IPO
1) Company has been incurring losses in the last 3 years. Its Q1 FY22 losses have further increased (FY21 – Losses of 15.6% Vs Q1 FY22 Losses of 42.9%)
2) Company has a history of losses and company anticipate increased expenses in the future too.
3) Covid-19 pandemic or similar public health threat, could adversely affect company business.
4) Company operates in dynamic and competitive online fintech industries which makes it difficult to predict its future prospects.
5) Company depends on insurance and credit products based on the needs of consumer. Company can lose business if they cannot continue to attract customers.
6) Company intends to invest part of IPO proceeds for brand building for both PolicyBazaar and PaisaBazaar. Benefits out of such expenditure or investment cannot be ascertained at this stage.
7) These is increased awareness these days either through social media forums (e.g., FB forums like Asan Ideas For Wealth) or through honest and unbiased opinion websites. These can make consumers to directly purchase the insurance policies / credit products instead of middle men which can dent company business.
8) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.
PB Fintech (PolicyBazaar / PaisaBazaar) IPO dates for subscription, Allotment and Listing
|Finalization of Allotment||10-Nov-21|
|Initiation of Refunds||11-Nov-21|
|Credit to Demat Account||12-Nov-21|
|IPO Shares Listing Date||15-Nov-21|
Is PB Fintech (PolicyBazaar / PaisaBazaar) IPO Price is underpriced or overpriced?
PB Fintech Limited share price band is Rs 940 to Rs 980 per share.
We cannot compute P/E of this company as it is incurring losses in the last 3 years.
What is PB Fintech (PolicyBazaar / PaisaBazaar) IPO Grey Market Premium?
GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about IPO price as it is unorganized market.
PB Fintech (PolicyBazaar / PaisaBazaar) IPO GMP today is at Rs 130 + / – 5.
PB Fintech IPO (PolicyBazaar and PaisaBazaar) – Review and Conclusion
Is it good or bad to invest in PB Fintech (PolicyBazaar / PaisaBazaar) IPO?
PB Fintech offers wide choice and transparency to its customers for insurance and credit products through its platforms PolicyBazaar and PaisaBazaar. High renewal rates indicate the trust in such platforms.
Company’s revenues have grown significantly in the last 3 years. However, company has been incurring losses in the last 3 years. Further company states such expenditure can increase further. This means more losses are on way.
Since it is incurring losses, we cannot ascertain whether the issue price is underpriced or overpriced.
There is lot of craze about the brands and I am sure this would get oversubscribed too.
However, to be honest, I would like to stay away from company that is incurring losses and where I do not know whether the IPO price is underpriced or overpriced.
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