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Policybazaar IPO Review & Details – Paisabazaar & PB FinTech Limited IPO Review By Assetyogi - YouTube
Channel: Asset Yogi
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Friends, Policy Bazaar is listing IPO.
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this is the largest online Marketplace for Insurance.
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Whenever we buy any insurance,
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be it car insurance or health insurance or life insurance,
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the first name that comes to our mind is the Policy Bazaar.
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But apart from this, there are other businesses too,
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we need to know about them when we talk about an IPO.
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Also in this video we are going to talk about its Shareholding pattern.
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What will be the Shareholding pattern of Pre Issue and Post Issue,
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Apart from this, whenever an IPO comes, we definitely talk about its valuation,
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that even if a company is doing good business,
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it is very important for us to know if it is not asking for too much money from us.
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So let's talk about its Financials and Valuation as well.
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Along with what are the strengths of the company, what are the weaknesses,
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IRDA had also imposed some fines on them.
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We will also talk about that,
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what kind of opportunities are there, what are the threads for this company.
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We are going to understand all the details of the IPO.
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Video will be interesting and in-depth, stay tuned
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Friends, the easiest way to apply for IPO is through Demat account.
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Because it goes online and we get to pay through UPI.
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And how to apply, I have done a detailed video for this, you can watch that too,
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And we have done a detailed video on how to open a Demat account,
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you will also find the link to open Demat account in the description below.
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And yes, it takes some time to open a Demat account,
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so you will be able to easily apply for the upcoming IPOs.
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That's why you must open a Demat account.
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first of all, let us understand the company and its business very well.
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The company is the largest Online Platform for Insurance and lending products.
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We know Policy bazaar by the name of Insurance,
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but it has another very big business.
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I will talk about it too,
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If we talk about Policy Bazaar, then they have 93.4% market share
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in online Insurance Distribution Space.
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That is, they are Market leader and by significant distance
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means that whoever is the other player or a competitor like Coverfox.
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they are very behind
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Executive 65.3% of All Digital Insurance Sales in India.
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Looks like a big number,
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Paisa Bazaar is also their business,
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whatever we were talking about their other business.
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They are also in the lending products.
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Paisa Bazaar is also a Market leader
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in their domain.
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It was launched in 2014,
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it has a 51.4% market share in the online Consumer Credit market place.
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That is, different types of credit cards, personal loans
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and also it has 51.4% market share in the online marketplace.
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Whatever business is in their parent company, the name of the parent company is PB Fintech.
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This name was changed, now we talk about the original name also.
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So these two businesses of PB Fintech are the market leaders.
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Talking about recent development, then they have just created a subsidiary of their own.
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By Docprime, where they have made a Health locker,
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that is, you can store all your medical data at one place.
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Then they also acquired Visit Health Pvt Ltd
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which basically connects Doctors, Counselors and coaches with Individuals.
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So they are basically creating an Ecosystem.
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such that people also take Health Insurance,
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so their main business is Insurance or the business of Paisa Bazaar.
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So, the rest of the businesses are building, they are building to feed them.
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Then along with this, they have also started some international expansion.
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they have partnered with AI Etihad Credit Bureau.
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So they are basically scaling up their Operation,
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And it's also investing in technology to invest in the Middle East.
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to expand.
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So it is a matter of company and its business
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now we also look at its Promoters and Shareholding pattern.
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the company was incorporated as Etech Aces Marketing & Consulting Private Limited in New Delhi
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on 4th June 2008.
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these people say we don't have any main Promoters.
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Although this company was started by Yashish Dahiya and Alok Bansal.
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But their shareholding is not much yet
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Yashish Dahiya holds up to 5% and Alok Bansal hold about 1.45%.
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So they say that most of the shareholding is with the public
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and they are including themselves in the public.
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Because in today's date the investors have their maximum shares.
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You can see that the biggest investor in Softbank Vision Fund.
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they hold about 9.45 percent and it is also Off Loading shares,
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i.e. they are selling almost half of their shares.
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So after the issue comes, Softbank will remain with around 4.39%.
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Along with Yashish Dahiya or Alok Bansal these people are also selling their little stake
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but 3.84% will remain with Yashish Dahiya.
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And Alok Bansal's will be around 1.30%.
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You can also see the rest of the investors who are offloading their shares.
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All these numbers of shares are Off loading.
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So basically the question arises here that whatever money will come in the company,
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How much money will go to the investors,
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That is, how much money will go out and how much money will remain in the company,
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I will talk about it soon,
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So this was broadly Shareholding pattern.
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Now let's take a quick look at their Financials.
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Talking about F. Y. 2019, there was some revenue of 528 crores here.
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Which increased to 855 core in F. Y. 2020
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jump of about 62%.
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F. Y. the revenue they earned in 2021 was 957 crores.
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F. Y. 2021 was a pandemic year
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i.e. in Covid year also their revenue has increased.
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Online businesses weren't that big of a hit.
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And if we talk about the latest quarter i.e. June 30, 2021,
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then the revenue of 258 crores has already been done.
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This means that if we extrapolate it,
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if we apply revenue for the whole year, then it will make a revenue of more than thousand crores,
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it seems like a possibility.
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by F. Y. 2022.
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So it means that now their revenue is growing well after the Pandemic year.
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if we talk about their Profitability number then this company is a loss-making company.
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this also becomes a weakness for them.
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Loss of 346 crores was done in 2019.
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But if we see a pattern here, then their losses are getting reduced
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300 crores then150 crores.
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Now but again within 2021, their loss has increased,
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So see, there is an option for any startup,
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if it focuses on profitability, then the growth gets neglected a bit.
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So now this Policy Bazaar seems to be focusing more on growth,
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it is focusing on acquiring more and more customers.
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If you look at all the expenses in detail,
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you will realize that within the advertising and marketing expenses,
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they have spent a lot of money on it, many expenses have increased in them.
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It's all about their broad Financials.
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Now let us check their Valuation.
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If we look according to price to book value then f.y. 20 that if we talk
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then their price to book value is seen as 17.98
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and according to 2021 it is seen as 19.14.
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it's definitely on higher side,
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Price to Earnings, we can't see now because so far the company is at loss.
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This means even in this case, both these approaches are not right for valuation.
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As we also saw in the case of Nykaa.
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We cannot compare all these startups with their price to Earning or price to Book Value.
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Because their combined focus is now shifting towards growth not profitability.
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Here the revenue to multiple approach will be better for us,
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as we did in the case of Nykaa, we follow the same approach here,
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their market cap to revenue within fy21 i.e. according
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to the last funding they raised, they raised around 18.80.
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they are asking from us now is the market cap to revenue,
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they are asking about 42.66
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i.e. almost it's 2 times.
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So they are asking a little more valuation from the public.
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they are asking for more valuation for today's date from us than the investors,
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so this is clearly visible to us here.
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But let's talk about how it can grow
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How big is the opportunity for whether this premium is justified or not
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If we talk about India's Insurance market,
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then India's insurance market will grow very fast in the coming one year,
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around CAGR of 17.8%, that is, it will grow year by year about 18 percent.
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So this seems to be a very big number.
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Life insurance will also have a lot of growth,
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then we have health insurance, motor insurance,
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this is the only three insurances in which there is going to be more growth.
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Then if we look at Sum Assured as of GDP,
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if you compare with other countries, you can see how much insurance penetration
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is in Singapore, US etc.
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As Percentage of GDP is a very high number,
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If we see this number of India then only 25% is seen,
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then it means there is Low Penetration.
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If we talk about Mortality Protection Gap too.
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in today's date,
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how much is the Gap, how much insurance we should have,
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and how much we actually have, that is also a very big number,
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that is, the gap is a very big number, for India it is about 83%.
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Now if we look in the developed countries, then this gap is very less,
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so if we talk about per Capita healthcare expenditure,
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then India is the lowest among the world.
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This number is very less in the whole world if we talk about India.
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And most people in India see this, about 63% of us
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have to pay out of pocket
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i.e. we pay less than insurance and mostly we do out-of-pocket expenses
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whenever we have a health requirement.
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On the other hand, if we talk about developed countries,
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then out-of-pocket expenses are very less, people in USA.
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But more and more depend on Insurance.
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So this gap is very big,
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There is a huge gap in life insurance.
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Health insurance also has a lot gap,
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Personal loan if we talk about, which is their Paisa Bazaar business.
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Even there, they can see good growth
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because even here we are seeing a very healthy rate of 17.8% and 14.2% year on year.
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Then look at credit card growth,
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It is going to be very fast now 45% in the coming 3-4 years and after that 18% on year,
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So all these businesses seem like, where there is a lot of potential for growth.
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If we do SWOT analysis of their Strengths, Weaknesses, Opportunities and Threats if we understand
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So if we talk strengths first then this is the market leader in Insure Tech.
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In online insurance, we have seen that its market share is very high,
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the distance is also very high compared to the nearest competitors.
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Strong and Well Known Brand
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You want to buy insurance online, every person in today's date, compare,
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with Policy Bazaar and after comparing, there is a tendency to buy insurance from there itself.
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Then there is proprietary technology, it is a tech-focused company,
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if there is so much consumer data, then they can definitely give very good suggestions.
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They have the data of all the vehicles, which health insurance you had bought,
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who had bought life insurance in the past, that is why they can also approach you.
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That's why there is a high network effect,
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see where more and more consumers go, there brands go more.
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Then where many brands are there, they go more consumer,
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so because of this, there is a spiral effect.
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We call this the network effect.
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There is an effect in today's date which we get to see in the Policy Bazaar.
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it's an Asset Light Business Model
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they are not providing Insurance by themselves, so they do not have any risk,
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then the company has a high return on capital employed.
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In this also I will tell you a little important 1-2 data.
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They've raised $400 Million so far.
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So far, out of all the funding, they have spent only $ 150 million.
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There are about 250 million dollars lying in his bank account.
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This means that they have built two businesses with only $ 150 million.
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i.e. Policy Bazaar and Paisa Bazaar.
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That is, about 70 to 75 million dollars each.
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they have spent this much money in the time.
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Meaning their return on capital employed is quite good.
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If by investing so much money, in today's date, they have made a company of about 6 billion dollars.
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So the return looks pretty good by definition.
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So it's definitely a strength.
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Then it is a less risky business, so they are not taking this risk by themselves
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because they themselves are not underwriting in any way.
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They do not have any credit risk of their own, they are aggregating
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and bringing other people's products to their marketplace
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So it's a very big strength to them,
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If we talk about Weakness, then we have already talked about the History of Losses.
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The company is not profitable yet
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Although they did breakeven in 2018.
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But after that it has slipped again,
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the losses have just started to come back from them 2019 Onwards.
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Fines by IRDA.
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IRDA has also imposed fines some two-three times in the past.
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I remember an incident where these two had been fined for the
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manner in which they were advertising and messaging.
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So there are incidents where it became their weakness.
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Then if we talk about Opportunity,
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it is Low Insurance Penetration in India, so we have already seen a lot of data.
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Scope of Growth Insurance Products in India is huge.
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Expand and replicate platform for SME and corporate clients
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the way they have penetrated so much for retail.
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Same things they can do for SMEs and Corporate Clients too.
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Invest in creating own products
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Own product i.e. can also bring own insurance products if they want.
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In fact I will talk to you why I am saying this,
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as we saw in the case of Amazon and Nykaa.
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They are also bringing their own products because the distribution channel is their own.
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But why should they do this, I will talk to you about it soon.
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they can also do International Expansion.
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Like now they going to Dubai going in UAE
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Similarly they can go to different Countries also.
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Here we now talk about their threats.
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So here is the first important point which I wanted to talk to you
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some insurance companies have started ditching Web aggregators
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It has been removed from web aggregators
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As LIC, you will never see their more products online.
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ICICI Lombard all products are not online.
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HDFC ERGO has also pulled its online presence
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i.e., it is trying to make its own presence by moving away from the Web aggregates.
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So many of these companies are trying to create their own distribution channel.
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Doesn't want to depend on web aggregates.
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So if the market starts changing in this way,
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then in such a case, Policy Bazaar may have to think of bringing their product as well
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which I was talking to you in the case of Opportunity.
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So this is becoming a big threat in today's date
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it can turn a lot into Opportunity.
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Stringent laws and regulations.
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Here now look, they had been fined in past,
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it means here laws and regulations are very strict.
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And when a company becomes so big, it also comes in the eyes of many people,
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your every little thing are seen in close detail.
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Increasing Competition.
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Now a lot of people have started coming in the online space,
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Coverfox and some other players like digital.in.
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There are other players who are entering new in this market.
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And if a big business house suddenly thinks that we have to come,
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then it can also come down with a lot of capital.
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Now let us see their IPO details.
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The price of IPO has been kept from 940 to 980 rupees.
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And we always talk that we should apply on cut off price our chances increase to get IPO.
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And I have done a video about how to apply, Demat account etc.
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You will find all these links in the description below.
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this is a Book built Issue.
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Issue size is around Rs 5625 crore.
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and higher price i.e. according to the band price of 980.
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There is a fresh issue in which 3750 crores.
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and offer for sale is 1875 crores.
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That is, by taking 1,875 crores, investors will be out.
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And out of the total size of the issue, the fresh issue is 3,750 crores,
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this money will come in the company, which they will use the money for expansion.
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The post issue market cap i.e. the value of the company is being applied around 44,051 crores.
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That is, about 6 billion dollars.
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The lot size has been kept as 15 Shares i.e. we have to buy minimum 15 shares,
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if we want to apply in IPO then.
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The minimum investment according to 15 lots is around ₹ 14700.
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The maximum investment is 195 lots for a retail investor
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i.e. we have to invest around Rs 119,100.
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If we talk about their timeline, then the offer is opening on 1st November.
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Will close on 3rd November
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And the company will be listed on November 15 when we will be able to trade its shares.
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So this was our quick analysis about Policy Bazaar,
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what do you think about this IPO, tell me in the comment section below.
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Are you applying in this or not, what are your reasons,
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And if you like this video and this analysis
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please like and share with your friends family members.
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Maybe they are also thinking of applying for this IPO.
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I'm sure this analysis will help them.
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If you have any suggestion related to this video related to this channel
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then you can share it in the comment section below.
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In fact, I read all the comments as soon as the video is published for 1 hour.
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And if you have not subscribed your channel yet
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then subscribe from below
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and also press the bell icon on your phone.
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So that you will get notification of latest finance videos.
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So see you in the next informative video
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till then keep Learning, keep earning and be happy as always.
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