The initial public offering (IPO) of PB Fintech, which operates Policybazaar and Paisabazaar, opened for subscription on Monday, and will close on Wednesday.
The IPO comprises a fresh issue of shares worth Rs 3,750 crore, along with an offer for sale (OFS) of shares worth Rs 1,959.72 crore by existing promoters and shareholders.
Through the IPO, the company will raise an amount of around Rs 5,826 crore. The price band of the IPO is set at Rs 940-980 per share.
PB Fintech founders Yashish Dahiya and Alok Bansal will sell fewer number of shares through the OFS than they had decided earlier in the IPO, as per reports.
PB Fintech has garnered a little over Rs 2,569 crore from anchor investors ahead of its IPO.
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Shares of PB Fintech are likely to make their debut on the bourses on November 15.
Here's what brokerages and experts have to say about the IPO:
Choice Equity Broking:
Macros of the insurance sector are positive and so are the fundamentals of PB Fintech, according to Choice Equity Broking. The company with its dominant position in the digital insurance and credit market, is expected to benefit from the abundant business opportunities in both markets. At the higher price band of Rs 980, the company is demanding an enterprise value to sales multiple of 40.5 times which appears to be very stretched. With this, Choice Equity Broking has assigned “Subscribe for Long Term” rating for the issue.
With strong brand equity, PB Fintech commands a stellar 93.4 percent market share in its digital insurance marketplace Policybazaar and a 51.4 percent in its digital consumer credit marketplace Paisabazaar. The company has delivered a notable 34 percent CAGR in its revenues and although it has expanded its contribution margin considerably from 8.6 percent to 39.8 percent 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. Speaking about the valuation, the company is seeking a market cap of around 2.5 times of its last funding round in March’21. 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," said Shah.
First Published: IST