Home / Markets / Ipo /  Policybazaar IPO: A long-term bet on the insurance sector?

The initial public offering (IPO) of PB Fintech, the parent company of online insurance aggregator and fintech platform Policybazaar, will open for subscription on Monday, November 1 and the public issue will conclude on November 3. The price band has been fixed at 940-980 a share for its initial share sale.

The 5,710-crore IPO comprises a fresh issue of 3,750 crore worth of equity shares and an offer for sale of about 1,960 crore by existing shareholders.

"Speaking about the valuation, the company is seeking a market cap of around 2.5 times of its last funding round in March’21. While the Insurance brokers license and the minimal online insurance penetration in India provide the company massive long term opportunities to grow, the current valuation seems pretty expensive. Hence, only investors with a longer time horizon, a larger risk tolerance and the patience to wait for the company's return ratios to improve should subscribe," said Yesha Shah, Head of Equity Research, Samco Securities.

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 terms of valuations, the post-issue FY2021 EV/Sales works out 47.6x to (at the upper end of the issue price band), which is high considering ’s historical financial performance (making continuous losses on bottom-line front). Considering the company's overall business model and higher valuation, we recommend a NEUTRAL rating on the issue," said Amarjeet Maurya - AVP - Mid Caps, Angel One.

Considering the intensifying competition in the sector and certain larger players delisting their products from the platform, the key challenge for the company lies in shielding its market share and consistently scaling its revenue, added Shah.

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