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Policybazaar IPO to open today: Should you subscribe to the issue?

Policybazaar IPO to open today: Should you subscribe to the issue?

The firm has fixed a price band of Rs 940-Rs 980 per share for its share sale.

PB Fintech Ltd, the parent firm of Policybazaar had received Sebi's nod for the IPO on October 19. PB Fintech Ltd, the parent firm of Policybazaar had received Sebi's nod for the IPO on October 19.

The initial public offer (IPO) of  online insurance platform Policybazaar will open for subscription today. The IPO will conclude on November 3. The firm has fixed a price band of Rs 940-Rs 980 per share for its Rs 5,710-crore share sale.

The IPO comprises a fresh issue of Rs 3,750 crore worth of equity shares and an offer for sale of Rs 2,267.50 crore by existing shareholders, according to Policybazaar IPO's draft red herring prospectus (DRHP).

Allotment of shares is likely to be done on November 10 and the firm will make its market debut on November 15.

Lot size of the IPO is 15 shares for which one will have to spend Rs 14,700. One can apply for a maximum of 13 lots or 195 shares for which Rs 1,91,100 will have to be spent.

PB Fintech Ltd, the parent firm of Policybazaar had received Sebi's nod for the IPO on October 19.

As part of the offer for sale (OFS), SVF Python II (Cayman) will sell shares worth Rs 1,875 crore, Yashish Dahiya will sell shares worth Rs 250 crore and some other selling shareholders will also offer shares.

The company on Friday said it garnered a little over Rs 2,569 crore from anchor investors ahead of its IPO.

155 anchor investors including leading insurance firms such as HDFC Life, ICICI Prudential, Bajaj Allianz Life, SBI General Insurance, and Max Life Insurance put in bids for the allocated slot.

PB Fintech, which filed draft papers with Sebi in August, obtained the regulator's nod to float the IPO on October 19.  

Proceeds of the share sale will be used towards enhancing visibility and awareness of the company's brands, to look for new opportunities to expand growth initiatives to increase the consumer base including offline presence.

Also, the proceeds from the IPO will be used for funding strategic investments and acquisitions, expanding presence outside India and general corporate purpose.

Kotak Mahindra Capital Company,Morgan Stanley India Company, Citigroup Global Markets India, ICICI Securities, HDFC Bank Ltd, IIFL Securities and Jefferies India are the book running lead managers to the issue.

Amarjeet Maurya - AVP - Mid Caps, Angel One said, "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 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."

Choice Broking is positive on the IPO for long term.

"Macros of the insurance sector are positive and so are the fundamentals of PBFL. The company with its dominant position in the digital insurance and credit market, is expected to benefit from the abundant business opportunities in both the markets. At higher price band of Rs. 980, PBFL is demanding an EV/TTM Sales multiple of 40.5x, which seems to be very stretched. Considering the above observations, we assign "Subscribe for Long Term" rating for the issue," said Choice Broking.

Published on: Nov 01, 2021, 9:48 AM IST
Posted by: Aseem Thapliyal, Nov 01, 2021, 9:42 AM IST