Policybazaar debuts at 17% premium over issue price

The stock listed at Rs 1,150, a 17 per cent premium over to its issue price of Rs 980 per share on the BSE.

PB Fintech, the parent company of Policybazaar, made a good stock market debut, with shares listed at Rs 1,150, a 17 per cent premium over its issue price of Rs 980 per share on the BSE. Post listing, the stock moved higher to Rs 1,194.95, a 22 per cent premium to its issue price.

At 10:02 am; PB Fintech was trading at Rs 1,185, up 3 per cent from its opening level on the BSE. In comparison, the S&P BSE Sensex was up 0.40 per cent at 60,928. Around 468,000 equity shares changed hands at the counter on the NSE and BSE.

The Initial Public Offering (IPO) of PB Fintech had received a good response with the issue subscribed nearly 16.59 times. The institutional portion was subscribed 24.89 times; the wealthy investor portion by 7.82 times and the retail investor portion 3.31 times, data shows. The IPO consisted of a fresh issue to raise Rs 3,750 crore and an offer for sale of shares worth Rs 1,960 crore by existing shareholders.

The company aims to utilize Rs 1,500 crore from the net proceeds of the issue for enhancing visibility and awareness of brands, including but not limited to 'Policybazaar' and 'Paisabazaar'. The company wants to utilize Rs 375 crore for pursuing new opportunities to expand its consumer base including offline presence, Rs 600 crore for strategic investments and acquisitions and Rs 375 crore for expanding presence outside India. In addition, the company expects to receive the benefits of listing of the equity shares on the stock exchanges.

Policybazaar – the flagship platform –is India’s largest digital insurance marketplace, market share as of FY20 was 93.4 per cent, based on the number of policies sold through online insurance distribution platforms. It has partnered with 48 insurers, and has 51.1 million registered consumers on its platform. It has sold 20.7 million policies on its platform and has 10 million unique transacting customers.

The IPO was valued at 46.3x FY22 Mcap/Sales on a post issue and annualized basis, which seems expensive compared to global peers, Motilal Oswal Securities had said in an IPO note.

However, the issue is likely to attract investor’s interest given its leadership position in both digital insurance/consumer credit marketplace and customer centric approach. Also losses are reducing at Policybazaar while Paisabazaar has turned profitable. In the current environment, market likes such niche emerging platform stories, which is well placed to tap the high growth digital/online penetration in insurance/consumer credit market, the brokerage firm said and had recommended to subscribe from listing gains perspective.