Investors gave a mixed response to the three companies that listed on the stock markets on Monday. While SJS Enterprises met with a tepid response, PB Fintech made a decent debut even as Sigachi Industries met with a spectacular response.
Shares of Policybazaar’s parent company, PB Fintech Ltd., listed at Rs 1150--a 17.34% premium over its issue price of Rs 980 a piece. The stock closed at Rs 1,202.30 on NSE.
The initial public offering (IPO) aiming to raise Rs 5,625 crore was subscribed 16.59 times during share sale 1-3 November. The IPO funds will be utilised for marketing expenditure, offline expansion, strategic investments, acquisitions and overseas expansion.
“The issue is valued at 46.3 times FY22 market cap and sales on a post issue and annualized basis, which seems expensive compared to global peers," said Sneha Poddar, analyst, Motilal Oswal Financial Services Ltd. However, she added that losses are reducing at Policybazaar while Paisabazaar has turned profitable. “In the current environment, market is liking such niche emerging platform stories, which is well placed to tap the high growth digital/online penetration in insurance/consumer credit market,” Poddar added.
Policybazaar – the flagship platform –is a digital insurance marketplace with a FY20 market share of 93.4%, based on the number of policies sold through online insurance distribution platforms. It has partnered with 48 insurers, and 51.1 million consumers have registered on its platform. It has sold 20.7 million on its platform and has 10 million unique transacting customers.
Paisabazaar is a digital consumer credit marketplace with a market share of 53.7% on the basis of FY21 disbursals. It is widely used to access credit scores, with 22.5 milllion consumers as of June. It has partnered with 56 lenders across banks.
“The IPO is valued at 22.1 times FY21 book value and 46 times on market cap to FY21 sales, which looks to be stretched. While there is no listed peer for the company, it is valued at a significant premium to other two unicorns listed recently, Zomato and CarTrade, despite PB Fintech is yet to turn profitable,” said Vikas Jain, analyst, Reliance Securities.
According to Jain, long-term prospects of the company look bright for the company as India’s insurance market is expected to clock 17.8% CAGR by FY30, with life, health, and other general insurance growing at 18.8%, 15.3%, and 13.5% CAGR respectively.
Meanwhile, shares of Sigachi Industries made a spectacular debut on Monday, listing at Rs 575 -- a 252.76% premium over its issue price of Rs 163. The stock closed at Rs 603.75, rising 270.39% over issue price, making it one of best listing gains since 2000.
The Rs 125.43 crore IPO was subscribed 101.91 times in the price band of Rs 161 to 163. The purpose of the issue is to fund capital expenditure for expansion of production capacity for microcrystalline cellulose at Dahej and Jhagadia, to manufacture Croscarmellose Sodium at Kurnool and for general corporate purposes.
Parth Nyati, Founder of Tradingo, said the issue was valued at 16 times FY21 with no listed peer. In long run, if the demand is sustained for microcrystalline cellulose (MCC) in India, the expansion program of the company post the IPO will provide earnings growth momentum.
Sigachi manufactures microcrystalline cellulose which is widely used as an excipient for finished dosages in the pharmaceutical industry. The inert non-reactive, free flowing and versatile nature of MCC has varied applications in the pharmaceutical, food, nutraceuticals and the cosmetic industries.
“At the upper end of the IPO price band, Sigachi Industries Ltd. is offered at price to earnings (PE) of 15.1 times its TTM earnings, with a market capitalization of Rs 5,011 million. Given that the company is one of the leading manufacturers of microcrystalline Cellulose in India with over 30 years of experience, Pan India and International market presence, experienced management team and investment led future growth with high RoNW of 32.12% in FY21 and reasonable valuation,” said Ronak Kotecha, analyst, AnandRathi.
Meanwhile, SJS Enterprises made a tepid stock market listing.