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PB Fintech IPO review (May apply)

Review By Dilip Davda on October 27, 2021

•    PBFL has two verticals of online business i.e. Policybazaar and Paisabazaar.
•    With its novel technology-based initiatives, it has created a niche place.
•    Till date the company has been posting negative earnings.
•    Based on finance and other parameters, the issue is exorbitantly priced. 
•    Risk seeker/cash surplus investors may consider parking of funds for the long term.

PREFACE: The company has reduced the Offer for Sale (OFS) size from Rs. 2267.50 cr. to Rs. 1959.72 cr. but the RHP and ad campaign from the company missed the finer points on this. The company is still incurring losses and hence its IPO pricing P/E is non-ascertainable. Its EV at Rs. 44K plus crore points at much higher valuations.

P B Fintech Ltd. (PBFL) has built India's largest online platform for insurance and lending products leveraging the power of technology, data and innovation, according to Frost & Sullivan. It provides convenient access to insurance, credit and other financial products and aims to create awareness amongst Indian households about the financial impact of death, disease and damage. Through a consumer-centric approach, PBFL seeks to enable online research-based purchases of insurance and lending products and increase transparency, which enables consumers to make informed choices. It also facilitates Insurer and Lending Partners in the financial services industry to innovate and design customised products for Consumers leveraging PBFL's extensive data insights and data analytics capabilities.

The company launched Policybazaar, a flagship platform, in 2008 to respond to Consumers' need for more awareness, choice and transparency and create a consumer-pull based, provider-neutral model for insurance distribution. In Fiscal 2020, Policybazaar was India's largest digital insurance marketplace among all online insurance distributors with a 93.4% market share based on the number of policies sold. For this purpose, the number of policies sold by all online insurance distribution platforms as per IRDAI has been used to derive the market share. Furthermore, in Fiscal 2020, Policybazaar constituted 65.3% of all digital insurance sales in India by the number of policies sold (including online sales done directly by insurance companies and by insurance distributors). For this purpose, the number of policies sold online directly by insurance companies and by insurance distributors has been estimated to derive the market share. 

In 2014, it launched Paisabazaar with the goal to transform how Indians access personal credit by accentuating ease, convenience and transparency in selecting a variety of personal loans and credit cards. According to Frost & Sullivan, Paisabazaar was India's largest digital consumer credit marketplace with a 53.7% market share, based on disbursals in Fiscal 2021. Paisabazaar is also widely used to access credit scores, with approximately 22.5 million Consumers cumulatively having accessed their credit score through its platform as of June 30, 2021. As of September 30, 2021, 48 Insurer Partners have offered over 390 term, health, motor, home and travel insurance products on the Policybazaar platform, representing a substantial portion of all licensed insurance companies in India.

PBFL's Policybazaar and Paisabazaar platform offerings address the large and highly underpenetrated online insurance and lending markets. It has an asset-light capital strategy and does not underwrite any insurance or retain any credit risk on its books. Policybazaar is registered with and regulated by IRDAI as a direct (life and general) insurance broker. It primarily generates revenues from the following sources: (i) for Policybazaar business, from insurance commission that it receives from Insurer Partners, and additional services that PBFL provides to Insurer Partners such as telemarketing and other services relating to sales and post-sales services, account management, premium collection and various other services, (ii) for Paisabazaar business, from the commission that it receives from Lending Partners, credit advisory and related services that it provide to Consumers or Lending Partners, and marketing services that it provides to financial services partners and other third parties, and (iii) from providing online marketing, consulting and technology services to Insurer and Lending Partners.

One of its subsidiaries, Docprime, recently launched Docprime Health Locker, a health locker integrated with Ayushman Bharat Digital Mission (ABDM), an initiative of the Ministry of Health and Family Welfare, Government of India. With the Docprime Health Locker, users can create digital health IDs for themselves and their family members, and create their ABDM integrated health locker where they can securely store and manage all their health records electronically as well as share them with their doctors, with the user's consent. It also enables users to fetch and store their COVID-19 vaccination certificates.

To part finance its needs for enhancing visibility and brand awareness (Rs. 1500 cr.), new opportunity for offline presence initiative (Rs. 375 cr.), strategic investment and acquisitions (Rs. 600 cr.), expanding its presence outside India (Rs. 375 cr.) and general corporate purpose, PBFL is coming out with a maiden combo IPO of fresh equity issue of Rs. 2 each worth Rs. 3750 cr. and an offer for sale (OFS) of Rs. 1959.72 cr. making the overall size of the issue for Rs. 5709.72 cr. (approx 58262445 shares). The company has fixed a price band of Rs. 940 to Rs. 980 per share and will be issuing 38265300 fresh equity shares and OFS for 19997145 equity shares (at the upper price band). The issue opens for subscription on November 01, 2021, and will close on November 03, 2021. Minimum application is to be made for 15 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 12.96% of the post issue paid-up capital of the company. 

The joint Book Running Lead Managers to this issue are Kotak Mahindra Capital Co. Ltd., Morgan Stanley India Co. Pvt. Ltd., Citigroup Global Markets India Pvt. Ltd., ICICI Securities Ltd., HDFC Bank Ltd., IIFL Securities Ltd. and Jefferies India Pvt. Ltd. Link Intime India Pvt. Ltd. is the registrar to the issue. 

Having issued initial equity at par, PBFL has raised further equity in the price range of Rs. 3347.28 to Rs. 91269.00 between September 2008 and June 2021, (based on FV of Rs. 2 per share). It has also issued bonus shares in the ratio of 499 for 1in June 2021. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 20.08, Rs. 88.16, Rs. 91.35, Rs. 130.08, Rs. 159.31 and Rs. 289.95 per share.

Post issue PBFL's current paid-up equity capital of Rs. 82.25 cr. will stand enhanced to Rs. 89.90 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 44051 cr. 

On the financial performance front, for the last three fiscals, on a consolidated basis, PBFL has posted total income/net profit (Loss) of Rs. 528.81 cr. / Rs. - (346.81) cr. (FY19), Rs. 855.56 cr. / Rs. - (304.03) cr. (FY20) and Rs. 957.41 cr. / Rs. - (150.24) cr. (FY21). For the first three months of FY 22 ended on June 30, 2021, it has posted a loss of Rs. - (110.84) cr. on a total income of Rs. 258.17 cr. Thus it has been posting negative earnings for all these years. 

For the last three fiscals, on a consolidated basis, PBFL has posted a negative EPS of Rs. - (6.95) and a negative RoNW of - (23.57%). The issue is priced at a P/BV of 19.14 based on its NAV of Rs. 51.19 as of June 30, 2021, and at a P/BV of 7.73 based on its post-issue NAV of Rs. 126.86 (at the upper cap).

Due to negative earnings, its P/E for IPO pricing cannot be ascertained. 

As per offer documents, PFBL has no listed peers to compare with.  

The company has not declared any dividend for the last three fiscals until the filing of this RHP. It will adopt a prudent dividend policy post listing based on its financial performance and future prospects. 

The seven BRLMs associated with this issue have handled 51 issues in the last three years, out of which 18 issues closed below their offer price on the listing date.

Conclusion / Investment Strategy

Though the company is in operation for over a decade, it has not yet broken the ice to turn green. Based on all parameters, the issue is exorbitantly priced. No doubt recent madness for Unicorn and Tech IPOs following Zomato is still continuing and accepting fancy pricing of loss-making companies. Though the company has bright prospects going forward, its issue pricing discounts all near term positives. Hence, risk seeker/cash surplus investors may consider investment for the long term, others may avoid it.

Review By Dilip Davda on October 27, 2021

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

PolicyBazaar IPO FAQs

  1. 1. Why PolicyBazaar IPO?

    The initial public offer (IPO) of PB Fintech Limited offers an early investment opportunity in PB Fintech Limited. A stock market investor can buy PolicyBazaar IPO shares by applying in IPO before PB Fintech Limited shares get listed at the stock exchanges. An investor could invest in PolicyBazaar IPO for short term listing gain or a long term.

  2. 3. PolicyBazaar IPO what should investors do?

    PolicyBazaar IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the PolicyBazaar IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  3. 4. Is PolicyBazaar IPO good?

    Our recommendation for PolicyBazaar IPO is to subscribe for long term.

  4. 5. Is PolicyBazaar IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the PolicyBazaar IPO.

  5. 6. When will PolicyBazaar IPO allotment status?

    The PolicyBazaar IPO allotment status will be available on or around November 10, 2021. The allotted shares will be credited in demat account by November 12, 2021. Visit PolicyBazaar IPO allotment status to check.

  6. 7. When will PolicyBazaar IPO list?

    The PolicyBazaar IPO will list on Monday, November 15, 2021, at BSE, NSE.