scorecardPolicybazaar IPO ⁠— the grey market is paying ₹150 a share extra to buy the shares before the IPO
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Policybazaar IPO ⁠— the grey market is paying ₹150 a share extra to buy the shares before the IPO

Policybazaar IPO ⁠— the grey market is paying ₹150 a share extra to buy the shares before the IPO
Business4 min read
Canva/BI India
  • PB Fintech will offer its shares within a price range of ₹940-₹980 per share.
  • The company intends to raise ₹5,709 crore with this public issue, at a valuation of $6 billion.
  • PolicyBazaar will use this funding to make strategic investments and acquisitions.
PB Fintech, the parent company of insurance selling platform PolicyBazaar and lending platform PaisaBazaar, will open its initial public offering (IPO) today at ₹940-₹980 per share.

Those who would like to subscribe to this IPO must apply in lot sizes of 15 shares. The cost of each lot would therefore be ₹14,700 at ₹980 a share. The grey market ⁠— shares being bought and sold outside the exchanges before the IPO ⁠— are available at a premium of ₹150 a share, which could reflect in the price when the stock lists for trade on November 1.

The company is seeking a valuation of $6 billion via this public issue ⁠and the money raised from it will be used for strategic investments, acquisitions and expansion in international markets. PB Fintech — which was reportedly valued at $2.4 billion in March 2021 when it raised $45 million from Cyrus Poonawalla Group and others — reported revenue of ₹957 crore as its losses cut down to ₹150 crore.

According to Rajiv Kapoor, vice president at Trustline Securities — which has given a neutral rating to PolicyBazaar’s IPO — the $6 billion valuation is high considering the company’s historical financial performance.

“Considering the company’s overall business model and higher valuation, we recommend a NEUTRAL rating on the issue,” Kapoor added. But, there are others who think it’s a good investment even at this price.

Policybazaar IPO ⁠— the grey market is paying ₹150 a share extra to buy the shares before the IPO
BI india

PB Fintech’s market share is one key factor playing in favor of PolicyBazaar, PaisaBazaar

Looking past PB Fintech’s valuation, several others believe that PolicyBazaar and PaisaBazaar are operating in an underpenetrated segment of India’s digital ecosystem, which will give these companies a sort of edge.

Jyoti Roy, DVP- Equity Strategist at Angel One Ltd, said,“The company is best placed to leverage its tech-driven business vertical to benefit from this above growth. This IPO can be subscribed for the listing gains.”

KR Choksey echoed this in its latest report as well. The report highlighted that PolicyBazaar had 93.4% market share in India's digital insurance marketplace in the financial year 2020. This number was based on the number of policies sold.

ALSO WATCH: True North's Haresh Chawla talk about portfolio company PolicyBazaar

Meanwhile, Paisabazaar had a 51.4% share in India’s digital consumer credit marketplace based on disbursals in FY2020.

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KR ChokseySubscribe, for listing gains as well as long term gains.
Choice BrokingSubscribe for long term
AngelOneSubscribe for listing gains
Trustline SecuritiesNeutral

The stock brokerage firm has highlighted that PB Fintech’s leadership in the digital marketplace, strong ability to attract customers and operation in an underpenetrated space will be acting in favour of the company. Besides this, the company’s ability to retain customers and strong relationships between insurers as well as lending partners are a big plus too.

In terms of challenges, KR Choksey, believes that the customer’s changing needs can lead to a loss of customers in the future. “If a company's insurer and lending Partners fail to offer insurance and credit products catering to the evolving needs of consumers, the company may not be able to retain existing Consumers or attract new consumers to its online platforms,” the report read.

PB Fintech’s promoters and cofounders Yashish Dahiya and Alok Bansal have cut their offer for sale by 85-90% because of increased interest in technology IPO, according to the company’s red herring prospectus (RHP).

Earlier, chief executive officer (CEO) Dahiya was planning to sell shares worth ₹250 crore but it was later reduced to ₹30 crore. Chief financial officer (CFO) Bansal, on the other hand, has reduced his offer for sale from ₹95 crore to ₹ 12.7 crore. The difference has been highlighted in the company’s draft red herring prospectus (DRHP) as well as RHP.