ICICI Securities gives a ‘buy’ call on PolicyBazaar and PaisaBazaar — know the target price

• Brokerage house ICICI Securities has issued a buy call for the shares of PB Fintech.
• The target price continues to be lower than the price at which PB Fintech’s shares were allotted in the IPO.
• PB Fintech’s shares have dropped nearly 431% since its listing in November last year.

Brokerage house ICICI Securities on Monday issued a buy call for the shares of PB Fintech, the parent company of PolicyBazaar and PaisaBazaar, with a target price of ₹940.

“PB Fintech is well placed to benefit from the rising insurance penetration in India, especially through digital distribution. High growth, operating leverage, strong balance sheet and established brand recall among the Indian populace are its key business moats. This should help the company generate strong free cash flows as we expect its cost-to-income ratio to plateau ahead,” the brokerage house said.

PB Fintech (formerly known as EtechAces Marketing and Consulting) was founded by the Indian Institute of Technology (IIT) Delhi and Indian Institute of Management (IIM) Ahmedabad alumni Yashish Dahiya, Alok Bansal and Avaneesh Nirjar in 2008.

PB Fintech went public in November 2021, a few days before digital payments giant Paytm. The company listed on the stock exchange at a premium of 17%, at ₹1200, over the issue price of ₹980. The company’s market cap reached $7.3 billion on the day of listing.

However, the company’s shares have largely been on a downward trajectory since then. PB Fintech’s shares have dropped nearly 431% since its listing and were trading at ₹771.9 at 2:15 p.m. on Monday.

PolicyBazaar, an online platform for users to purchase insurance policies, is one of the largest subsidiaries of PB Fintech. The insurance company owns 93.4% market share in India, in terms of the number of policies sold online. Six in 10 instance sales in India in FY20 happened through PolicyBazaar, the report added.

ICICI Securities highlighted that the prime growth driver for PB Fintech would be the increasing premium income expected in online insurance. PolicyBazaar’s addressable market has largely been individual life insurance, retail health, and motor insurance.

Other subsidiaries of PB Fintech include online lending platform PaisaBazaar (launched in 2014) and healthtech venture DocPrime (launched in 2018), which lets visitors book consultations with doctors or schedule a range of medical tests.

PaisaBazaar was India’s largest digital consumer credit marketplace with a 51.4% market share, based on disbursals. Other major players in the digital consumer credit marketplace include BankBazaar and CreditMantri, according to ICICI Securities.

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