PB Fintech Ltd IPO- Only High-Risk Investors May Subscribe

PB Fintech is India’s leading online platform for insurance and lending products. The company provides convenient access to insurance, credit, and other financial products and aims to create awareness in India about the financial impact of death, disease, and damage. In 2008, PB Fintech launched Policybazaar aimed at catering to consumers who need more information, choice, and transparency in insurance policies. PB Fintech also launched Paisabazaar in 2014 intending to provide ease, convenience, and transparency in selecting a variety of personal loans and credit cards for the consumers.

The company offers wide choice, transparency and the ability for Consumers to research and access insurance and personal credit products offered by its Insurer and Lending Partners. Through its Consumer-centric approach, it has created strong brands in both Policybazaar and Paisabazaar which is recognised throughout India. The strength of its brands is also reflected in the fact that in Fiscal 2021, 83.0% of the policies sold on Policybazaar and 66.0% of loans originated on Paisabazaar were to Consumers who came to its platform directly or through direct online brand searches. Similarly, in the three months ended June 30, 2021, 82.1% of policies sold on Policybazaar and 54.3% of loans originated on Paisabazaar were to Consumers who came to its platform directly or through direct brand searches.

In Fiscal 2020, Policybazaar constituted 65.3% of all digital insurance sales in India by a number of policies sold (including online sales done directly by insurance companies and by insurance distributors). Paisabazaar was India’s largest consumer credit marketplace with a 53.7% market share based on disbursals in Fiscal 2021. The company provides its Insurer and Lending Partners with access to the large Consumer bases of both Policybazaar and Paisabazaar to enhance their sales.

The company have begun to expand in the Middle East with operations in Dubai, and the company plan to scale up its operations and brand presence in Dubai and in the broader Gulf Cooperation Council (“GCC”) region by investing in creating a strong brand, building a robust team to cater to the prospective consumers and in its operational capacity including through investments to develop technology and related infrastructure to service consumers in these geographies.

Key Risks

• The company operates in dynamic and competitive online fintech industries, which makes it difficult to predict its future prospects.
• Any harm to its brand, failure to maintain and enhance its brand recognition or reputation, or failure to do so in a cost-effective manner may materially and adversely affect its business and results of operations.
• The company depends on cooperation with its Insurer and Lending Partners.

Valuation

The company is still incurring losses and hence its IPO pricing P/E is non-ascertainable. In the absence of profit in tech platforms like Policy Bazar, they should be valued in the Market Cap/ Revenue and even on this count it is offered at 48x its FY21 Revenues which is expensive. Only high-risk investors may Subscribe to this issue.

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