A long-term bet on the insurance sector?

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

The ??The 5,710 crore IPO includes a new issue of ??3,750 crore of shares and an offer to sell approximately ??1,960 crore by existing shareholders.

“Speaking of valuation, the company is looking for a market capitalization of around 2.5 times that of its last fundraiser in March 21. While the license of insurance brokers and minimal online insurance penetration in India offer the company huge opportunities for long-term growth, the current valuation seems quite expensive, therefore, only investors with a longer time horizon, greater risk tolerance and the patience to wait for Improving company performance ratios should underwrite, ”said Yesha Shah, head of equity research, Samco Securities.

PB Fintech is India’s leading online platform for insurance and loan products. The company provides convenient access to insurance, credit and other financial products and aims to raise awareness in India about the financial impact of death, illness and damage.

“In terms of valuations, the post-issue EV / Sales for fiscal 2021 is 47.6x (at the high end of the issue price range), which is high considering the ‘historical financial performance (resulting in continued losses on the bottom line front) Considering the company’s overall business model and higher valuation, we recommend a NEUTRAL rating for the issue,’ a said Amarjeet Maurya – AVP – Mid Caps, Angel One.

Considering the intensification of competition in the industry and some larger players withdrawing their products from the platform, the main challenge for the company is to protect its market share and constantly increase its revenue, has added Shah.

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