PolicyBazaar's Parent Company Makes Decent Debut. Stock Lists with 17% Premium

PB Fintech, the operator of insurance platform Policybazaar and financial services portal PaisaBazaar, made a decent debut on the bourses today.

The company's shares began trading at Rs 1,150 per share, up Rs 170 apiece or 17.4% from the upper end of the initial public offering (IPO) price band of Rs 980 per share.

The price trend was largely in line with the expectations of market analysts and the grey market trend.

Post listing, Policybazaar had a market capitalisation of Rs 516.9 bn.

Besides PB Fintech, two other public issues which listed on the stock exchanges today were Sigachi Industries and S.J.S Enterprises.

Sigachi Industries started off trade with a stellar premium of 252.8% on the bourses. The stock opened at Rs 575 on the BSE, against issue price of Rs 163.

On the other hand, S.J.S Enterprises made weak stock market debut as it opened for trading at Rs 540 per share compared with its issue price of Rs 542 per share.

PB Fintech received decent response from investors

The initial share sale of online insurance and lending products distributor saw a good over subscription of 16.58 times during 1-3 November, garnering bids worth Rs 560.9 bn.

The portion set aside for qualified institutional buyers (QIBs) was subscribed 24.89 times, and that for non-institutional investors saw 7.82 times subscription.

Retail investors also supported the offer with their portion being subscribed 3.31 times.

PB Fintech mopped up Rs 56.3 bn through its public issue.

Motive behind the public offer

The company plans to utilise Rs 15 bn of the raised amount for enhancing visibility and awareness of company brands including PolicyBazaar and PaisaBazaar.

It plans to use Rs 3.8 bn towards new growth initiatives to increase customer base including its offline presence.

Meanwhile, Rs 6 bn will be utilised for funding strategic investments and acquisitions. An additional Rs 3.8 bn will be dedicated towards expanding its presence outside the country.

Company's financial track record

The company has incurred restated losses of Rs 1.4 bn, Rs 2.9 bn, and Rs 3.5 bn in fiscals 2021, 2020, and 2019, respectively.

In the quarter ended June 2021, loss stood at Rs 1.1 bn, increasing from loss of Rs 597.5 m in June 2020 quarter. Revenue in the same period grew by 35.8% to Rs 2.4 bn from Rs 1.8 bn year on year (YoY).

Key Parameters

(Rs bn)	FY19	FY20	FY21
Revenues	4.9	7.7	8.9
Revenue Growth (%)		57%	16%
Expenses	8.7	11.5	11
Net Profit/Loss	-3.5	-2.9	-1.4

Data Source: Company's RHP

The company expects costs to increase over time and losses will continue given the investments expected towards their growing business.

In the draft red herring prospectus (DRHP), the company said,

• We have expended and expect to continue to expend substantial financial and other resources on, among others, developing a physical channel and investing behind experiments.
  
  These efforts may be more costly than we expect and may not result in increased revenue or growth in our business.
  
  Any failure to increase our revenue sufficiently to keep pace with our investments and other expenses could prevent us from achieving or increasing profitability or positive cash flow on a consistent basis.
  
  If we are unable to successfully address these risks and challenges or if we are unable to generate adequate revenue growth and manage our expenses and cash flows, we may continue to incur significant losses in the future and our business, cash flows, financial condition and results of operations could be adversely affected.

Insurance aggregator's presence in India

Policybazaar, which started out as a comparison website that generated leads for insurance companies, has evolved into a platform that allows users to search, buy, renew, and lodge claims.

After receiving an insurance broking licence, the company has expanded its offline presence for distribution.

Offline - The company has already set up 15 physical offices as of 15 July 2021 and seeks to develop up to 200 physical retail outlets by the end of Fiscal 2024.

These outlets will serve as experience centres for consumers and provide them with the comfort of a local physical presence to help resolve any queries or service requests. They will now also be able to provide on-ground claims support to existing and new consumers.

Online - PB Fintech claims that it has built India's largest online platform for insurance and lending products by leveraging the power of technology, data, and innovation.

According to Frost & Sullivan, in fiscal 2020, PolicyBazaar was India's largest digital insurance marketplace with a 93.4% market share based on the number of policies sold.

Furthermore, in fiscal 2020, 65.3% of all digital insurance sales in India by volume was transacted through PolicyBazaar.

The SoftBank-backed startup raised around Rs 25.7 bn from 155 anchor investors prior to the public offer.

About PB Fintech

PB Fintech is India's leading online platform for insurance and lending products.

The company provides access to insurance, credit, and other financial products. It aims to create awareness in India about the financial impact of death, disease, and damage.

In 2008, PB Fintech launched Policybazaar aimed at catering to consumers who need more information, choice, and transparency in insurance policies.

Policybazaar is an online platform for consumers and insurer partners to buy and sell insurance products. 51 insurer partners offered over 340 term, health, motor, home, and travel insurance products on the policy bazaar platform as of March 2021.

Policybazaar offers its users with pre-purchase research, purchase, including application, inspection, medical check-up, and payment & post-purchase policy management, including claims facilitation, renewals, cancellations, and refunds.

The company's technology solutions are focused on automation and self-service-driven consumer experiences requiring minimal human intervention.

PB Fintech also launched PaisaBazaar in 2014 intending to provide ease, convenience, and transparency in selecting a variety of personal loans and credit cards for the consumers.

The company has partnered with 54 large banks, NBFCs, and fintech lenders offering a wide choice of products to consumers across personal credit categories, including personal loans, business loans, credit cards, home loans, and loans against property.

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