Tag: fintech

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Editorial

Policybazaar IPO: All You Need to Know

With Diwali just around the corner, multiple companies are lining up to launch their IPOs. PB Fintech Ltd., the parent company of online platforms Policybazaar and Paisabazaar, has launched its IPO today— Nov 1. The issue is the biggest and most popular among the three IPOs hitting the primary market today. Let us take a closer look into the company and learn more about its IPO.

Company Profile – PB Fintech Limited

PB Fintech Ltd (PBFL) operates the largest online platform for insurance and lending products in India. The company provides easy access to insurance and credit (loan) products among Indian households. Through a consumer-centric approach, PBFL enables research-based purchases of insurance and lending products in a transparent manner. It also allows insurers and lending partners to design customised products for customers by leveraging PBFL’s extensive data analytics capabilities.

Policybazaar  

PBFL’s flagship platform, Policybazaar, allows users to compare and buy insurance plans. It is India’s largest digital insurance marketplace with a 93.4% market share based on the total number of policies sold (as of FY20). In the previous financial year (FY21), the platform constituted 65.3% of all digital insurance sales in India based on the number of policies sold. Policybazaar had over 12.65 crore visits in FY21 and 2.7 crore visits in Q1 FY22. 

Currently, 48 insurer partners offer 390 term, health, motor, home, and travel insurance products on the platform. The company’s technology solutions are focused on automation and self-service-driven consumer experiences. Policybazaar receives a percentage of commission from its insurer partners. Moreover, it also generates income from telemarketing, sales and post-sales, account management, and premium-collection services.

Policybazaar is registered with and regulated by the Insurance Regulatory and Development Authority of India (IRDAI) as a direct (life and general) insurance broker.

Paisabazaar

PB Fintech facilitates borrowing through its Paisabazaar platform. It has partnered with 54 large banks, non-bank, and fintech lenders to offer personal loans, business loans, home loans, credit cards, and loans against property. Paisabazaar receives a commission from the lending partners listed on its platform. It also obtains revenue from credit advisory and related services that are offered to consumers and lenders. As of FY21, Paisabazaar is the largest digital consumer credit marketplace in India, with a market share of 53.7%. The platform is also widely used to access credit scores.

Additionally, PB Fintech generates revenue from online marketing, consulting, and technology services to insurers and lending partners.

About the IPO

PB Fintech’s public issue opens on November 1 and closes on November 3. The company has fixed Rs 940-980 per share as the price band for the IPO. 

The fresh issue of shares (of the face value of Rs 2 each) aggregates to Rs 3,750 crore. The offer for sale (OFS) from existing shareholders aggregates to Rs 1,875 crore. Individual investors can bid for a minimum of 15 equity shares (1 lot) and in multiples of 15 shares thereafter. You will need a minimum of Rs 14,700 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 195 equity shares (13 lots). 

PBFL will utilise the net proceeds from the IPO for the following purposes:

  • An amount of Rs 1,500 crore towards enhancing visibility and awareness of the company’s brands, including Policybazaar and Paisabazaar.
  • Rs 375 crore for new opportunities to expand growth initiatives and increase the company’s consumer base.
  • Funding strategic investment and acquisitions – Rs 600 crore
  • Expanding its presence outside India – Rs 375 crore
  • General corporate purposes

Financial Performance

PB Fintech has posted negative earnings till date. However, we can see that its losses are decreasing over the past few years. The company posted a net loss of Rs 150.24 crore for the financial year 2020-21, which is lower compared to a loss of Rs 304.03 crore seen in FY20. Meanwhile, revenue from operations rose 11.9% YoY to Rs 957.41 crore in FY21. The expenditure on advertising and promotional activities is high. The company may continue to incur losses in the future as they are focusing extensively on the growth of their business.

PBFL has posted negative cash flows from operating, investing, and financing activities over the past few years. Cash outflows over extended periods could affect the company’s ability to undertake its day-to-day operations and implement growth strategies.

Risk Factors

  • PBFL has a history of losses and anticipates increased expenses in the future.
  • The company may be unable to retain existing customers or attract new customers if the insurers or lending partners fail to offer insurance or credit products in sync with the evolving needs of consumers.
  • The failure to maintain and enhance PB Fintech’s brand recognition or reputation could adversely affect its business and financial performance. 
  • The company operates in the dynamic and highly competitive fintech landscape, which makes it difficult to predict future prospects.
  • PBFL may not be able to ensure the accuracy of product information and the effectiveness of its recommendation of insurance products on its platform.
  • The insurance broking business is subject to strict laws and regulations. The inability to comply with such norms could severely harm its overall operations.

IPO Details in a Nutshell

The book-running lead managers to the public issue are Citigroup Global Markets India, HDFC Bank, ICICI Securities, IIFL Securities, Jefferies India, and Morgan Stanley India. PB Fintech Ltd had filed draft papers for its IPO in November 2020. You can read it here.

Ahead of the IPO, PBFL was able to raise Rs 2,569 crore from anchor investors. The marquee investors include Fidelity, BlackRock, Dragoneer Group, HDFC Life, Bajaj Allianz Life, etc.

Conclusion

PB Fintech’s Policybazaar and Paisabazaar platforms address the highly underpenetrated online insurance and lending markets in India. The company has an asset-light capital strategy and does not underwrite any insurance or retain any credit risk on its books. As per a report from consulting firm Frost & Sullivan, the Indian insurance market is expected to grow at a CAGR of 17.8% to reach Rs 39 lakh crore by FY30. Despite heavy competition, PB Fintech could benefit from the growth in this sector, provided that they improve their offerings. Their focus on increasing consumer reach and boosting digital & technological infrastructure entails strong long-term growth prospects. They plan to expand and replicate platforms for small and medium enterprises (SMEs) and corporate clients.

Due to oversubscription and a favourable grey market premium (GMP), investors of the IPO could receive good listing gains. PBFL’s shares are available at a GMP of Rs ~150 in the grey market today. As always, do consider the risks associated with the company and come to your own conclusion.

What are your views on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

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Editorial

Intellect Design Arena – Company Analysis

Technology has an immense role to play in every field. The use of technology in every field is growing and the financial sector is no different. When you combine finance and technology, you give birth to fintech. Over the years, we have heard that fintech is the future and the financial sector won’t be able to move efficiently ahead without the aid of technology. Today, we discuss one such Indian Fintech company listed in the stock market.

Profile – Intellect Design Arena 

Intellect Design Arena Limited is engaged in providing various financial technology services that help banks to lead businesses on the road to growth and prosperity. They provide their services to banking, insurance and other financial institutes. They are available in various domains which are:

  • Corporate Banking
  • Retail Banking
  • Treasury & Capital Markets
  • Insurance
  • e-Governance Solutions

Whether it’s banks or NBFCs, mutual fund houses or brokerage houses, Intellect Design serves them all. They have more than 240 customers spread across 91 countries. They decrease the complexity of customer data, enable digital transformation and facilitate agility in configuring products so that they can be launched quickly. Over the last five years, revenue has surged at a yearly rate of 16.83% which is way ahead of 9.73% which is the industry average.

Financial Performance

Being a fintech company, you would expect it to perform better every year. Why? Because with each passing year, our use of technology is increasing in every sector of our life. Intellect Design’s revenue has been on a constant rise since 2015. They reported net revenue of Rs 636.28 crore in FY15 and. In less than five years, this revenue became more than its double as revenue worth Rs 1515.24 crore was recorded in FY19. 

For the first time in these many years, their revenue failed to get past the previous years’ mark, In FY20, Intellect declared total revenue of Rs 1,385.10 crore. This can be attributed to the rising case of Covid-19 globally. Even if they failed to beat their previous mark, the fall in the revenue wasn’t steep. This shows the strength of fintech companies. 

The company’s EBITDA (Earnings before interest, tax, depreciation and amortization) surged by more than 10X times from FY17 to FY19. The EBITDA value for FY20 fell to 113.68 crore from Rs 197.79 crore in the previous year. This was because of the steep increase in their operation cost last year. The company also incurred high charges of depreciation and amortization. 

Even after such good performance in pre-Covid times, Intellect Design failed to increase its market share substantially. Yes, their market share has increased from 3.44% to just 4.66% in the last half-decade. This shows that the company has failed to present itself as a powerful player. At the same time, we cannot just solely attribute it to the company. Fintech is a sector that has a lot of competition. Due to high and fierce competition, one would expect the company to grow slowly but be always on the right track.

Stock Performance

Weekly Chart of Intellect Design

Before the Covid pandemic, the stock used to take a massive resistance around Rs 300. A not-so-great financial performance in FY20 was received negatively by the investors and the stock fell. In March 2020, just like many other stocks, Intellect Design also touched its all-time low of Rs 43.80. On 1st April 2021, it touched its all-time high of Rs 773.80. That means in just over a year time frame, it has given whopping returns of more than 1500%! How great is that?!

There will be very few retail shareholders who have collected this stock at the low and still holding it, but if any of you have generated some profits in this stock, do let us know in the comments section. The chart displayed above also shows how tremendous gains this stock has given since the turn of the new year. Not only the share prices have risen massively but also with great volumes. The confidence of foreign institutions has also grown in this stock. They had a stake of 20.82% in December 2019 but it increased steadily to 24.11% by December 2020.

Conclusion

One of the reasons why Intellect is different from other fintech companies is due to its adoption of the “design thinking” approach. Design Thinking helps them by forcing a new and unique way of thinking. As their brainstorm methods are different to others, they engineer solutions that drive unprecedented value for their customers. Their office theme is very different to any other office. The way they set their meeting, their discussions are way different and unique. Their distinctive workplace pushes them to create solutions that can give rise to a joyous collaborative experience.

The financial sector of every country in the world has to be supported by technology. Fintech is already a huge part of today’s world and its influence will only grow in the future. Thus, the business prospects of the company look robust. Can they continue their excellent performance? The results of the fourth quarter and hence, the whole year will be out soon as well. Will their numbers improve when compared to the last year? Or the pandemic will take a toll on their balance sheet as well? We will find answers to these questions very soon. What is your opinion on this company? Do tell us via the comments section on the marketfeed application!

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Market News Top 10 News

Govt to Sell Entire 26.12% Stake in Tata Communications – Top Indian Market News

Govt to sell entire 26.12% stake in Tata Communications

The Indian government will sell its entire 26.12% shareholding in Tata Communications Limited (TCL). It will sell up to 4.59 crore equity shares (forming 16.12% shareholding) of TCL through an offer for sale (OFS) via stock exchanges. The remaining 10% stake will be sold to Tata Son’s investment arm Panatone Finvest Ltd. Tata Sons currently owns 14.1% of TCL, while Panatone Finvest has a 34.8% stake in the company.

Read more here.

SpiceJet introduces 66 new flights in domestic network

SpiceJet Limited has announced 66 new domestic flights to meet the increasing demand for air travel from smaller cities. This includes five additional non-stop flights from Pune to Darbhanga, Durgapur, Gwalior, Jabalpur, and Varanasi. Kolkata–Darbhanga, Chennai–Jharsuguda, and Nashik-Kolkata flights are among others that will be launched on March 28, 2021. The airline will press its Boeing 737 and Bombardier Q400 aircraft into service on these new routes.

Read more here.

Dilip Buildcon gets provisional completion certificate for road project in Maharashtra

Dilip Buildcon Limited has received a provisional completion certificate from the National Highways Authority of India (NHAI) for a road project in Maharashtra. The project involved four/six-laning of the Karodi-Telwadi section of NH 211 in Maharashtra under NHDP Phase IV-B on an engineering, procurement, and construction (EPC) mode. The company is entitled to receive a bonus of Rs 5.08 crore for completing the project 30 days before the scheduled completion date.

Read more here.

Finance Ministry to infuse Rs 14,500 crore in banks under PCA soon: Report

As per reports from multiple sources, the Finance Ministry is likely to infuse Rs 14,500 crore into banks that are under RBI’s Prompt Corrective Action (PCA) framework in the next few days. This will help improve the financial health of stressed public sector banks (PSBs) in the country. Indian Overseas Bank, Central Bank of India, and UCO Bank are currently under the PCA framework. Earlier this week, IDBI Bank was removed from this framework.

Read more here.

Indian Railway’s freight loading for FY21 surpasses that of last financial year

Indian Railways has surpassed freight loading figures of the previous financial year (FY 2019-20) despite challenges faced due to the Covid-19 pandemic. As per government data, Railways achieved a cumulative freight loading of 1145.68 million tonnes (MT) as of March 11, 2021. The figure stood at 1145.61 MT during the same period last year. The loading of iron and steel, cement, and other goods has increased.

Read more here.

Bitcoin surges past $60,000 to hit a record high

Bitcoin has crossed the $60,000-mark to hit a new record high on Saturday. The cryptocurrency is benefitting from optimism in financial markets after US President Joe Biden signed the $1.9 trillion Covid-19 relief package. Bitcoin has surged around 1,000% over the past year and has a market value of $1.12 trillion.

Read more here.

IIFL Finance to close bond issue early on March 18

IIFL Finance Limited said that its bond issue will close on March 18 following better than expected response from investors. The issue of unsecured redeemable non-convertible debentures (NCDs) was scheduled to close on March 23. The NCDs, which offer up to 10.03% yield, have already been subscribed for Rs 468 crore. IIFL Finance is a non-banking financial company backed by the UK-based CDC Group.

Read more here.

India’s FinTech industry valuation estimated at $150-160 billion by 2025: FICCI-BGG report

According to a report from Boston Consulting Group (BCG) and FICCI, India’s financial technology (FinTech) companies are likely to become three times more valuable in the next five years. The report states that the FinTech sector will reach a valuation of $150-160 billion (~Rs 10.9 lakh crore- Rs 11.6 lakh crore) by 2025. India’s dynamic FinTech industry has over 2,100 companies, of which 67% have been set up over the last 5 years alone.

Read more here.

India imposes anti-dumping duty on Chinese antibacterial drug

The Indian government has imposed anti-dumping duty in the range of $0.91-$3.27 per kilogram on the Chinese antibacterial drug- Ciprofloxacin. The Directorate General of Trade Remedies (DGTR) had recommended imposing the duty after it found that the drug was being exported to India at a cheaper rate, which resulted in dumping. The anti-dumping duty has been imposed for a period of five years. This will help protect the domestic pharma industry.