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Play on digital distribution in insurance market…

PB Fintech is the leading online platform for insurance & lending products thereby providing access to insurance, credit and other financial products. It is India’s largest online platform for insurance (PolicyBazaar) and lending (Paisabazaar) products leveraging the power of technology, data and innovation.  PolicyBazaar was India's largest digital insurance marketplace with a 93.4% market share  Paisabazaar was India's largest digital consumer credit marketplace with a 53.7% market share

Key triggers/Highlights:

* In FY20, India had a | 7.6 lakh crore insurance industry, measured in terms of total premium and is expected to grow at a 17.8% CAGR to | 39 lakh crore by FY30

* As compared with global peers, India has a highly underpenetrated insurance market. India was among the lowest in the world in terms of sum assured as percentage of GDP at ~25% in FY21

* The penetration of non-life insurance in India, in terms of gross direct premium as percentage of GDP, has come close to being~1% of GDP, which is considerably low compared to 6.5% in the US and 2.1% in China

* Total 72.3% of population in India are uninsured compared to 10.9% in the US and 35% in China

* In 2018, India’s health expenditure was among the lowest globally at | 5500 (US$73) per capita, compared with | 83300 (US$1,111) per capita in US and | 37600 (US$501) per capita in China

* India’s consumer lending market is expected to witness 9% CAGR, reaching | 78.1 lakh crore in outstanding balance by FY30 from | 36 lakh crore at the end of FY21

What should investors do? PB Fintech is the leading online platform for insurance & lending products with insurance under penetration & increasing digitalization as main drivers ahead. At the upper end of the price band, it is valued at 39x P/S on Q1FY22 (annualised)

* We assign UNRATED rating to the IPO

Key risk & concerns

* Potential of new entrants may increase competition

* Decline in fee rates may affect business adversely

* Failure of insurers & lending partners to offer products may affect business

Company Background

PB Fintech is the leading online platform for insurance and lending products, providing access to insurance, credit and other financial products. In 2008, PB Fintech launched PolicyBazaar aimed at catering to consumers who need more information, choice and transparency in insurance policies. PolicyBazaar is an online platform for consumers and insurer partners to buy and sell insurance products. According to Frost & Sullivan, PolicyBazaar was India's largest digital insurance marketplace with a 93.4% market share based on the number of policies sold in FY20. As of September 30, 2021, 48 insurer partners offered over 390 term, health, motor, home, and travel insurance products on the policy bazaar platform. PolicyBazaar offers its users i) pre-purchase research, ii) purchase, including application, inspection, medical check-up, and payment; and iii) post-purchase policy management, including claims facilitation, renewals, cancellations, and refunds

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