Jmfl-Policybazaar Ic 161121

16 November 2021
INDIA | INTERNET | COVERAGE INITIATION
PB Fintech (Policybazaar)
Insurance on a Platter
Insurance - a long-term Omni-channel distribution Initiate with a HOLD

penetration story essential with large and TP of INR 1,270
physical opportunity implying 6% upside
16 November 2021
INDIA | INTERNET | COVERAGE INITIATION
TABLE OF CONTENTS
Introduction 3
Key Charts 4
Investment Thesis 6
Addressable Market 12
Financial Analysis 15
Valuation Methodology 17
Key Risks 19
Company Overview 20
Learnings across the globe 25
Competitive Landscape 26
Key Medium to Long-term Industry Trends 28
Financial Tables 29
Policybazaar is the dominant market leader in a large and growing

industry with strong tailwinds. Along with the prevalent web portal, the
company also remains perfectly positioned to leverage its brand strength
and insurer network to take insurance distribution to every nook and
corner of India through the recently launched PoSP network. We believe
Policybazaar will be in the driving seat in enhancing insurance
penetration in India.
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16 November 2021
INDIA | INTERNET |COVERAGE INITIATION
PB Fintech (Policybazaar)
Insurance on a Platter
Insurance is a long-term penetration story with distribution playing a
Policybazaar is the dominant market leader in a large and key role: Even with INR 8.3tn in premium generated in FY21, India has
growing industry with strong tailwinds such as increasing digital one of the highest insurance ‘protection gap’ amongst global
penetration, rising disposable income and insurance awareness. economies. Policybazaar due to its monopolistic positioning and broad
The company garnered 93.4% market share in FY20 among insurer coverage is likely to be at the forefront of enhancing insurance
online insurance distributors and also remains ideally positioned penetration in the country. The company’s web portal will benefit from
improving tech penetration while the recently launched physical
to leverage its brand presence and insurer coverage to rapidly
distribution will take insurance products to peoples’ homes across the
penetrate physical insurance distribution. We postulate that the length and breadth of India. We forecast insurance business to deliver
company should continue deepening scale moats in light of Premium/Revenue CAGR of 31%/32% over FY21-31. While we expect
new-found competition emerging from insurers’ direct channels slight market share loss in online distribution due to insurers’
and cross-sell by fin-tech players (PhonePe, Paytm etc.). We also investment in direct channel and newer competition, this loss will be
expect Paisabazaar (credit marketplace) to grow synergistically, aptly compensated by the company’s growth in physical distribution
by leveraging the group’s digital fulfilment capabilities. We (11% premium contribution in FY31).
forecast Group Revenue to deliver FY21-31 CAGR of 31% led
Larger renewal base, tech investments and operating leverage to drive
by 31%/25% CAGR in Insurance Premium/Credit Disbursals. margin improvement: With incremental insurance premium generated
Our 12M target price for PB Fintech stands at INR 1,270 and we every month, Policybazaar is building out a larger renewal base that has
initiate HOLD on the stock. Though we see limited near-term higher contribution margins due to minimal CAC. Simultaneously, the
company’s investments into AI capabilities are expected to reduce
upside vs CMP post the strong listing, we reckon there is a likely
fulfilment costs by automating customer support and policy issuance.
path for PB Fintech to grow to a US$13.5bn (INR 2,260/share) These factors combined with operating leverage will drive operating
valuation over the next couple of years vs US$7.3bn currently, profitability by FY26.
provided a few incremental levers fall into place (unlikely in the
very near-term, in our view). The stock’s ability to generate Initiate with a HOLD and TP of INR 1,270 with significant upside risks in
further value here onwards would be premised upon: 1) Digital the medium-term: We value PB Fintech as of Mar’30 at 8x EV/Revenue
penetration surprising on the upside to 5.5% vs 4.5% assumed and 35x EV/EBITDA multiple to ideally factor-in long term growth as
well as dilute the impact of near-term one-offs. We then discount this
in our base case (China at 5.5% at present), 2) LIC, the
valuation to Dec’22 to derive our target price of INR 1,270 (5.6%
country’s largest insurer by miles, joining the platform, and 3)
upside from CMP). We initiate coverage with a HOLD rating solely due
Paisabazaar becoming a dominant player in the credit- to premium valuations with significant upside risks in our “Bull”
marketplaces space (See Exhibit 31). scenario that can drive share price to INR 2,200+ by Dec’24.
Recommendation and Price Target Financial Summary (INR mn)

Current Reco HOLD Y/E March FY20A FY21A FY22E FY23E FY24E
Current Price Target (12M) 1,270 Net Sales 7,713 8,867 13,830 20,508 29,220
Upside (%) +6% Sales Growth (%) 56.7 15.0 56.0 48.3 42.5
EBITDA -3,199 -1,598 -6,432 -5,659 -3,458
EBITDA Margin (%) -41.5 -18.0 -46.5 -27.6 -11.8
Key Data POLICYBZ IN Adjusted Net Profit -3,040 -1,502 -5,821 -4,232 -2,057
Current Market Price INR1,202 Diluted EPS (INR) -8.68 -4.11 -13.35 -8.72 -4.24
Market cap (bn) INR540.4/US$7.3 Diluted EPS Growth (%) NA NA NA NA NA
Free Float 100% ROIC (%) -162.1 -96.0 -403.2 -247.6 -116.0
Shares in issue (mn) 449.5 ROE (%) -34.6 -9.2 -15.1 -7.3 -3.4
Diluted share (mn) 485.6 P/E (x) NA NA NA NA NA
3-mon avg daily val (mn) INR0.0/US$0.0 P/B (x) 33.3 22.0 8.8 9.2 8.8
52-week range 1,249/980 EV/EBITDA (x) NA NA NA NA NA
Sensex/Nifty 60,719/18,109 Dividend Yield (%) 0.0 0.0 0.0 0.0 0.0
INR/US$ 74.5 Source: Company data, JM Financial. Note: Valuations as of 15/Nov/2021
JM Financial Research is also available on: Bloomberg - JMFR <GO>, Thomson Publisher & Reuters, S&P Capital IQ,
FactSet & Visible Alpha
You can also access our portal: www.jmflresearch.com
Please see Appendix I at the end of this report for Important Disclosures and Disclaimers and Research Analyst Certification.
Sachin Dixit Swapnil Potdukhe

sachin.dixit@jmfl.com swapnil.potdukhe@jmfl.com
Tel: (91 86) 30513614 Tel: (91 22) 62241876

PB Fintech (Policybazaar) 16 November 2021
Key Charts
Exhibit 1. Insurance penetration in India across various segments
Life Insurance Health Insurance Motor Insurance
Lives covered/ Adults* Lives insured** /Total population Penetration excl. 2W^ (%)
92%
100% 95%
81%
28% 34%
India US India France India France

Source: BCG Report, JM Financial. Note: * indicates above 18 years of age. ** Lives covered= Individual + Group + Government. ^ Penetration basis total # of registered vehicles. Penetration= # vehicles insured/
insurable stock Figures for France–2017, India–2019.
Exhibit 2. Life insurer market share (based on new premium) Exhibit 3. Non-life insurers market share (based on premium)
Others
14.4% Life NBP (FY21) Non-Life (FY21)
New India
14.3%
ICICI Prudential
4.7%
United
Others 8.4%
42.8%
HDFC Standard
7.3%
National
7.1%
SBI Life
7.4%
ICICI Lombard
LIC 7.0%
66.2%
New-age HDFC Ergo Oriental Bajaj Allianz

1.5% 6.2% 6.3% 6.3%
Source: IRDA, JMFL Source: IRDA, JMFL. Note: New Age includes Go Digit and Acko.
Exhibit 4. Segment-wise addressable premium Exhibit 5. Segment-wise digitally addressable premium

(in INR bn) (in INR bn)
FY21 FY31
FY21 FY31
24,030 584
333
302
274
6,317
3,242 2,655 3,376

43 35
637 678 673 18 8
Life Health Motor Other Life Health Motor Other
Source: Company, JM Financial Source: Company, JM Financial

Exhibit 6. Illustrative Unit Economics for new policies

Life Health Motor
Premium INR 20,000 INR 12,000 INR 8,000
Policybazaar Commission 8,000 3,600 1,760
Call Centre Cost 650 500 150
Digital Marketing Expense 4,400 1,800 375
Payment Gateway Charges 132 79 53
Contribution Profit 2,818 1,221 1,182
Contribution Margin 35.2% 33.9% 67.2%
Source: JM Financial. Note: In case of renewals, while the commissions can decline by 10-20%, digital marketing expenses decline by 80-
90% and hence contribution margins can go as high as 80-90%.
Exhibit 7. Valuation Maths for Policybazaar

Revenue EBITDA Average
Policybazaar Metric (INR bn) - FY31 132.5 32.7
Target 12-month forward multiple 8.0x 35.0x
Enterprise value (INR bn) - FY30 1,060 1,144 1,102
Discount rate 11.0% 11.0% 11.0%
Period to discount (in Yrs) 7.25 7.25 7.25
Discounted Enterprise value (INR bn) - Sep'22 498 537 517
Net Debt (INR bn) - Sep'22 -54.0 -54.0 -54.0
Market value (INR bn) - Sep'22 552 591 571
Diluted equity shares (mn) 449.5 449.5 449.5
1-year forward target price (INR per share) 1,270
Upside from CMP +5.6%
Source: JM Financial
Exhibit 8. Competitive Landscape – Policybazaar is larger than the remaining four players combined
Distribution Insurer Partners Premium Online Traffic
Online PoSP # FY21 (INR Mn) Monthly Visits % Free Visits
Policybazaar 51 47,013 10mn 85%
Turtlemint X 40 ~8,000 500k 99%
InsuranceDekho 45 ~5,000 900k 98%
Renewbuy 35 ~7,000 210k 97%
Coverfox 32 ~2,000 1.4m 98%
Source: Company websites, Policybazaar DRHP, Similarweb and JM Financial.

Investment Thesis
1. Indian insurance continues to be a long-term penetration story
2. Online share to grow but physical format to present a larger opportunity
3. Policybazaar to continue dominating online insurance distribution despite
the recent delisting of some larger insurers
4. Foray into physical business to empower newer attractive avenues
5. Operating leverage, larger renewal base and tech investments to enable
improved margins and profitability
6. Paisabazaar is a synergistic business catering to the massive credit market
1. Indian insurance continues to be a long-term penetration story
In FY2020, Indian insurance industry accounted for INR 7.6tn in terms of total premium. India
has one of the highest insurance ‘protection gap’ amongst global economies. The insurance
density is also one of the lowest (Life at USD 58 and Non-life at USD 19 compared with the
global average of USD 379 and USD 439, respectively). India is among the lowest countries
globally in terms of sum assured as % of GDP in 2021. Moreover, penetration is particularly
low in the non-life segment at 1%, whereas the global average is 2.8% of GDP.
Limited information and understanding of insurance products are the two major reasons for
the under-penetration in India. With increasing income per capita, awareness of insurance
products in light of the devastating COVID pandemic and favourable government policies,
insurance penetration is expected to increase in India gradually. We estimate the total
insurance premium in the country to grow at 15.2% FY21-31 CAGR to reach INR 33.5tn by
FY2031 with significant headroom available for a decadal growth opportunity. While life
insurance will still continue to account for ~72% of the market, we expect Health and Others
(including travel, home, fire etc.) to grow at a relatively faster rate.
Exhibit 9. Insurance: Country-wise Penetration/Development
Source: Swiss Re Institute. Note: Bubble size indicates insurance market size in the country

Exhibit 10. Insurance penetration across various segments
Life Insurance Health Insurance Motor Insurance
Lives covered/ Adults* Lives insured** /Total population Penetration excl. 2W^ (%)
92%
100% 95%
81%
28% 34%
India US India France India France
Source: BCG Report, JM Financial. Note: * indicates above 18 years of age. ** Lives covered= Individual + Group + Government. ^ Penetration basis total # of registered vehicles. Penetration= # vehicles insured/
insurable stock Figures for France–2017, India–2019.
Exhibit 11. Product share in the insurance market (Premium, FY20) Exhibit 12. Product-wise growth over the last five years in India
Personal Travel Others Growth CAGR (Past 5 Years)
Accident 0.1% 8.2%
0.7% 21% 20%
19%
Health
7.4%
Life - NBP
33.8%
15%
Motor
9.0%
10%
10%
8%
Life - Renewal Others Health Personal Life - NBP Travel Motor Life -
40.9% Accident Renewal
Source: IRDA, JMFL Source: IRDA, JMFL. Note: We have used FY15-FY20 CAGR for Life – Renewal, Health, Personal
Accident, Travel and others, CAGR is calculated over FY16-FY21 for Life-NBP and Travel
2. Digital channel to grow but physical channel will be too big to ignore
Most insurance companies across the globe (including in India) depend on distribution
channels to sell insurance policies. Traditional distribution models include retail agents,
corporate brokers, bancassurance and in-house sales force. All the traditional models are
opaque for the consumer as well as the insurer and leave significant control with the
distribution channels. Over the past few years, insurance providers in India have started to
beef up their digital platforms to drive traffic to the portals and sell insurance directly.
However, the total online channel (including direct and web aggregators) still accounts for
<1.5% of total insurance premium in FY21. The primary reasons for such low online
penetration in insurance sector have been 1) Insurance continues to be a push product that is
not “bought”, it is rather “sold” and 2) larger ticket insurance products (life and health) are
too complicated for a customer to purchase online. We expect online share as % of total
premium to grow from 1.0% in FY20 to 4.5% in FY31 with Indian population gaining
comfort with transacting online and policy terms and conditions becoming standardised.
However, we expect life insurance to still have only 2.4% online penetration while general
insurance online penetration is expected to reach 9.8%.

Exhibit 13. In volume terms, online policy sales now account for Exhibit 14. Similarly, the online channel’s share in total health
3%+ of total motor insurance policy sales insurance sales (volumes) has improved over FY16-FY20
Traditional - Direct Web aggregator
Online insurance sales (mn) Total motor policies sold (mn)
89
84
78
2.5%
1.0%
1.3%
0.2% 0.4%
2.3% 2.4%
2.0% 2.0% 1.9%
1.2 1.95 2.85
FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20

Source: Media Report, JM Financial Source: IRDA, JM Financial
Offline, most insurance companies target the metro and tier-1 city population, where it is
easier to convince to buy insurance products. A media article indicates that for the private
sector in general insurance, 96% of the insurance branches of companies are in larger cities
despite a sizeable chunk of the population living in smaller cities. Even when it comes to
brokers (typically the largest channel for general insurance distribution), 85% have offices in
just 7 states. This presents a large opportunity for new-age insurance brokers such as
Policybazaar that have a leaner cost structure and can amortise these costs by selling
products of multiple insurers.
Exhibit 15. Channel-wise distribution (FY20)

Channel Life - NBP Motor Health
Brokers 1.2% 31.4% 23.0%
Corporate Agents 16.4% 10.9% 11.0%
Individual Agents 29.4% 40.3% 1.0%
Direct - Online 0.51% 29.0%

6.6%
Direct - Offline 52.4% 34.0%
Web Aggregators 0.08% NA 1.0%
Others 0.1% 10.7% 1.0%

Source: IRDA, JM Financial
In Oct’15, IRDA allowed insurers and insurance intermediaries (brokers and corporate agents
but not web aggregators) to utilise the services of point of sales persons (PoSPs), ie agents,
with an aim to boost insurance penetration and density in India. PoSPs are individuals who
have reached minimum specified qualifications and completed mandatory trainings to be able
to sell an insurance policy. Insurers and intermediaries share a significant portion of premium
commissions generated with the PoSP agents in order to encourage them to increase their
sales volumes. One of the major advantages of distributing insurance policies through the
PoSP network is that companies can operate in an asset-light mode (limited number of
physical offices and sales based variable cost structure) even in under-penetrated semi-urban
and rural regions. Consequently, several digital-first intermediaries have off late transformed
their business model to omni-channel by building a PoSP agent network of their own.

Exhibit 16. Maximum permitted commission rates for insurance intermediaries/agents
40%
35%
IRDA also allows payment of up to

30% of commissions or remuneration
as rewards to insurance agents and
insurance intermediaries selling non-
15% 15% life policies under certain conditions
10%
7.5%
2.5%
Life - NBP Life - NBP Motor - Health - Life - Renewal Life - Renewal Motor -
(Individual term) (Individual non- Comprehensive Individual (Individual term) (Individual non- Standalone TP
term >12 Yrs.) term)
Source: Media Reports, Reliance General Insurance DRHP, JM Financial
3. Policybazaar to continue dominating online insurance distribution, undeterred

by the recent delisting of some larger insurers
In FY20, Policybazaar accounted for 49% market share of total online insurance premium
and 65% of all digital insurance policies sold, with the company working with 48 insurer
partners, as of September 2021. Among online insurance distributors, the company garnered
93.4% market share in FY20, demonstrating the dominance of the platform. As of March
2021, over 48 million consumers have registered on Policybazaar platform and have
purchased over 19 million policies since inception. In FY21 and Q1FY22, 83.0% and 82.1%
of the premium was sourced from consumers coming to the platform organically. As
demonstrated by these numbers, Policybazaar has become the go-to platform for online
insurance buyers in the country with very strong domain authority on search results. This
strength in domain authority enables Policybazaar to rank higher among Google search
results and hence garner attention organically from a higher portion of online insurance
buyers, bringing down their cost of customer acquisition.
Exhibit 17. Policybazaar market share of digital premium to stabilise at 43% in FY31
(in INR bn) FY20 FY21 FY22E FY23E FY24E FY25E FY26E FY27E FY28E FY29E FY30E FY31E
Total Insurance Premium 7,618 8,304 9,546 11,037 12,742 14,683 16,887 19,390 22,231 25,460 29,129 33,303
Change – YoY 12.4% 9.0% 15.0% 15.6% 15.4% 15.2% 15.0% 14.8% 14.7% 14.5% 14.4% 14.3%
Total Digital Market Size 76 103 155 228 319 425 546 688 853 1,051 1,257 1,493
% Digital Share 1.0% 1.2% 1.6% 2.1% 2.5% 2.9% 3.2% 3.5% 3.8% 4.1% 4.3% 4.5%
% Policybazaar Share 49.3% 45.5% 46.0% 45.5% 45.0% 44.5% 44.0% 43.8% 43.5% 43.3% 43.1% 43.0%
Policybazaar Online Premium 37. 6 47.0 71.3 103.7 143.4 189.1 240.1 301.1 371.0 454.4 541.7 641.8
Change - YoY 62.3% 25.1% 51.7% 45.4% 38.3% 31.9% 27.0% 25.4% 23.2% 22.5% 19.2% 18.5%
Source: Company, JM Financial
While Policybazaar continues to grow from strength to strength, the recent media coverage
on the larger insurers – LIC, ICICI Lombard and HDFC Ergo – seems to suggest a worrying
trend. LIC has never been present on the broker portals as the company focuses on
complicated investment-related products that are best sold its dedicated agent network.
However, LIC continues to lose market share in life insurance segment and we believe that
the company’s impending IPO and enhanced investor scrutiny has the potential to push the
company towards being present where the customers are likely to be present – online and
PoSP network. ICICI Lombard delisted from web portals while deciding to focus on its own
direct online channel as the company did not want to be competing on pricing with other
insurers listed on these web portals. While that seems to be a fair policy, we believe
Policybazaar’s foray into the PoSP network can enable it provide customised support to the
insurance buyers and discuss non-pricing related features with the buyers as well and that
aspect could be attractive to ICICI Lombard. Similar reasons could apply to HDFC Ergo as
well. Moreover, insurance companies’ web portals are unlikely to be able to acquire
customers as cheaply as Policybazaar and these companies would also need to invest on
seamless customer journey including record-keeping, customer education, payments etc.

Additionally, value seeking consumers will always prefer to visit intermediaries such as
Policybazaar prior to finalising the purchase in order to compare pricing and coverage and
hence drive higher traffic. Finally, we do not believe this trend to snowball into a higher
number of insurers leaving the platform as most other insurers do not have web portals that
garner a large enough funnel of consumers and investing in incremental traffic will not be
cost-effective for them.
In conclusion, while we do expect the insurers to invest on strengthening their online portals
to get higher business via direct channel, resulting in Policybazaar’ market share of online
premiums declining to 43% by FY2031, Policybazaar will still continue to be maintain a
dominant, monopolistic position in online insurance distribution.
4. Foray into physical business to empower newer attractive avenues

With the direct insurance broker license procured, Policybazaar is now looking to launch an
aggressive foray into physical insurance distribution by onboarding a nationwide PoSP
network. This new license is likely to open up multiple attractive business avenues for the
company that span across topline growth and margin accretion.
 Access to offline customers: Policybazaar can now use the nationwide PoSP network
to sell insurance to customers that are expected to continue sticking to offline
format in the near to medium-term. This significantly enhances the serviceable
market available to Policybazaar.
 Commissions on Life Insurance Renewals: While web aggregators are not allowed
to get commissions on renewals of life insurance policies, direct insurance brokers
are able to get renewal commissions too.
 Corporate and Group Insurance: As a direct insurance broker, Policybazaar can also
serve corporate and group insurance customers while it was earlier restricted to only
catering to individual customers. The company can now provide fire insurance,
marine insurance etc. to small and medium companies, thereby increasing its
customer base with higher premium products. Simultaneously, the company can
now sell group health insurance (an INR 277bn opportunity) that was earlier
restricted.
 Claims Support: Policybazaar can also provide claim support services to their
customers and hence have significantly higher customer engagement and touch-
points. This can enable the company to improve its renewal rates as more touch-
points can amplify customer stickiness. Higher renewal rates can boost margins as
customer acquisition cost (CAC) is zero.
Exhibit 18. Key Dos and Don’ts for Online Intermediaries

Process Brokers Web Aggregators Corporate Agents
New business underwriting allowed? X X X
Limit on number of insurer tie-ups? No limit No limit Max 3 each in Life, Health and General
Can intermediary offer rebate/discount/commission share? X X X
Online aggregation and comparison of policies allowed?   
Remuneration for Lead generation and Product display? X  X
Online policy distribution purchases allowed?   
Off-line policy distribution purchases allowed?  X X
Offline PoSP network allowed?  X 
Policy renewal allowed?   
Policy renewal commission allowed? Allowed for both life and non-life Allowed only for non-life Allowed for both life and non-life
Claims management/settlement services mandatory?  X 
Can offer any other product other than insurance products on platform? X X 
Source: IRDA, Media Reports, JM Financial

5. Operating leverage, larger renewal base and tech investments to enable

improved margins and profitability
While Policybazaar is a clear market leader in insurance distribution, the company still has
significant headroom to grow with low insurance penetration in India. While we expect
insurance industry (in terms of premium) to grow at 15% FY21-31 CAGR, Policybazaar’s
insurance premium will deliver 31% CAGR during the same period. This growth will enable
the company to amortise its fixed costs such as corporate employees, advertising, technology
and other miscellaneous expenses over a larger revenue base, driving significant operating
leverage.
With Policybazaar adding newer customers buying first-time insurance through the platform,
the company continues to build an ever increasing renewal base, particularly in health and
life segments. As these policies have significantly higher renewal rates due to high switching
costs, Policybazaar can generate annual business at zero CAC and hence benefit from margin
improvement.
Exhibit 19. Illustrative Unit Economics

Life Health Motor
Premium INR 20,000 INR 12,000 INR 8,000
Policybazaar Commission 8,000 3,600 1,760
Call Centre Cost 650 500 150
Digital Marketing Expense 4,400 1,800 375
Payment Gateway Charges 132 79 53
Contribution Profit 2,818 1,221 1,182
Contribution Margin 35.2% 33.9% 67.2%
Source: JM Financial. Note: In case of renewals, while the commissions can decline by 10-20%, digital marketing expenses decline by 80-
90% and hence contribution margins can go as high as 80-90%.
Furthermore, the company continues to invest into tech / product capabilities in order to
reduce the dependence on call centre staff. In FY21, 3.7 million policies, representing 80.4%
of the new policies sold by Policybazaar, were sold with minimal human assistance. Going
forward, we expect the company to continue building product capabilities that are
convenient for buyers to have an end-to-end digital purchase while also improving artificial
intelligence capabilities to use chat-bots to answer simpler buyer questions. These tech
investments will enable call centre cost (as % of Policybazaar revenue) to drop to 27% in
FY31 from 60%/39% in FY20/FY21.
6. Paisabazaar is a synergistic business catering to the massive credit market

While Policybazaar accounted for over 80% of group revenue in FY21, Paisabazaar is a highly
synergistic business that enables the company to tap into the massive credit market
leveraging the pre-existing strength in product, call centre and digital fulfilment. India’s
consumer lending disbursals are expected to reach INR 65tn by FY2031 from INR 13tn in
FY2021, growing at a CAGR of 17.5%.
The company launched Paisabazaar platform in 2014 to simplify the process of consumer
credit in India. This platform enables the consumers to compare and apply for personal credit
products via Paisabazaar’s tie-ups with 56 banks and NBFCs. Consumers can apply for
personal loans, business loans, home loans, credit cars and loans against property.
Paisabazaar acquires a large share of its customers through free credit score checking utility
with ~22.5 million unique consumers having accessed their credit score as of Jun’21. This
platform generates revenue via commissions on loan disbursals, lead generation and fixed fee
arrangements with the partner financiers. Paisabazaar helped disburse ~INR 175bn worth of
loans over the past three fiscal years with FY21 disbursals dropping ~55% due to COVID-
related disruptions. However, the business is reverting now with Q1FY22 disbursals of INR
9.8bn. On a blended basis, Paisabazaar generates over 3% of disbursals as revenue.

Addressable market
PB Fintech has an overall addressable market opportunity of INR 33.3tn for
Policybazaar and INR 64.8tn for Paisabazaar
Life Insurance
India’s life insurance market has grown in spurts historically with the premium growing at
24% CAGR during FY01-11 and then followed up with an insipid 8% CAGR during FY11-21.
However, this past decade was also plagued with several changes in product regulations and
we expect a relatively stable regulatory environment going forward. Driven by increasing
disposable income in India and a discerning need of insurance since COVID, we expect life
insurance to grow at 14.3% CAGR during FY21-31 to reach INR 24.0tn in total premium by
FY31, accounting for 72% of the overall insurance market.
However, life insurance continues to be tougher to sell digitally due to complicated terms and
conditions requiring physical hand-holding for the consumers. Additionally, the largest life
insurer in the country with 65%+ market share, LIC, has not yet adopted to distribute online.
Hence, we expect digital share in life insurance to reach only 2.4% by FY31 from 0.7% in
FY21.
Exhibit 20. Segment-Wise Addressable Market - Premium

(in INR bn)
FY21 FY31
24,030
6,317
3,242 2,655 3,376
637 678 673
Life Health Motor Other

Source: JM Financial, Industry, Company
Health Insurance
The total health insurance premium in India was INR 637bn in FY21 with strong growth
expected in the near-term due to COVID raising awareness about the need of health
insurance coverage. India continues to be severely underpenetrated in health insurance with
only 20% of the population covered and over 60% of medical expenses incurred from out-
of-pocket. We expect health insurance segment to deliver the strongest growth of 17.7%
FY21-31 CAGR to reach INR 3,242bn, driven by increasing penetration as well as a shift to
higher coverage policies.
Similar to Life insurance, health insurance is also a complicated insurance product as

consumers struggle to comprehend the coverage and the timelines with regards to existing
diseases. However, with proper call centre support and insurers’ willingness to sell digitally;
we have seen a much higher digital penetration in this segment. Going forward, we expect
2.8% digital penetration in FY21 to rise up to 8.5% by FY31 and health insurance becoming
one of the most attractive segments to the intermediaries due to an ever increasing renewal
base.

Exhibit 21. Life insurer market share (based on new premium) Exhibit 22. Non-life insurers market share (based on premium)
Others
14.4% Life NBP (FY21) Non-Life (FY21)
New India
14.3%
ICICI Prudential
4.7%
United
Others 8.4%
42.8%
HDFC Standard
7.3%
National
7.1%
SBI Life
7.4%
ICICI Lombard
LIC 7.0%
66.2%
New-age HDFC Ergo Oriental Bajaj Allianz

1.5% 6.2% 6.3% 6.3%
Source: IRDA, JMFL Source: IRDA, JMFL. Note: New Age includes Go Digit and Acko.
Motor Insurance
Motor insurance premium accounted fro INR 678bn in FY21 with a 1.7% de-growth seen
over the prior year. With new auto sales impacted severely during the first half of the year as
well as COVID related work from home mandates resulting in people postponing renewing
their existing vehicle policies, this segment was the most severely impacted due to COVID.
With new auto sales impacted again in FY22 due to the chip shortages, we expect this
segment to bounce back gradually and then deliver a 14.8% FY21-FY31 CAGR to reach INR
2,698bn by FY31.
On the digital front, motor insurance is expected to continue being the highest penetrated to
reach 11.2% penetration by FY31 from 5.2% in FY21 as motor insurance policies are
relatively standardised and simple to understand. However, there remains a regulatory
overhang for the intermediaries’ market share in motor insurance due to the possibility of
five-year insurance (third-party and own damage) purchase obligation at the time on initial
vehicle purchase. In almost all new vehicle purchases, the dealer controls the insurance
transaction and intermediaries have only a minimal opportunity.
Exhibit 23. Digital Market Size across Segments

(in INR bn)
584 FY21 FY31
333
302
274
43 35
18 8
Life Health Motor Other
Source: Company, JM Financial, Industry

Other Insurance
Other Insurance segment includes categories such as fire, marine, cargo as well as the
recently emerging small-ticket categories such as flight, taxi rides etc. With insurance
products being built for newer use cases, we expect this segment to grow strongly to reach
INR 3,376bn by FY31 from INR 673bn in FY21.
As multiple of these categories are actually being launched digitally itself, we expect digital
penetration in Other Insurance segment to reach 10% by FY31.
Consumer Credit Lending Disbursals

India has one of the lowest Consumer Debt-to-GDP ratios amongst major economies at
~17%. Insufficient consumer knowledge on their own credit eligibility as well as available
credit products and limited access to credit facilities are a few reasons, amongst several other
reasons, contributing to lower credit penetration. These issues are further compounded by
lack of quality avenues for consumer education and reluctance of traditional lenders to invest
in physical infrastructure beyond major cities (due to higher customer acquisition costs).
Exhibit 24. Credit penetration in India is significantly lower than other major economies
Consumer Credit Penetration - As of CY20 India USA China
Active credit cards as % of population 4.5% 137.3% 54.1%
People with no credit score as % of population 78.3% 41.0% 29.1%
Consumer loans outstanding as % of GDP 16.7%* 79.2% 60.4%

Source: Company, JM Financial. Note: * indicates FY20
Consumer lending marketplaces that primarily enable lender discovery for customers are
addressing these issues and thereby playing a pivotal role in consumer credit penetration in
the country. They educate customers on a range of credit products, evaluate their credit
eligibility and help them compare, decide and apply for products (such as personal loans, car
loans, home loans and credit cards) that are well-suited for a particular individual. In turn,
they earn commissions from lenders for leads generated and loans disbursed to customers in
addition to earning advertising income. Some marketplaces also facilitate instant purchase of
personal loans and credit cards on their platform with no human intervention or paperwork.
This is subject to the level of backend integration marketplaces have with the lenders.
However, the product purchase process in case of home, automobile, gold, SME loans, etc. is
a bit more complex and requires certain level of paperwork. In such cases, the sales agents of
the marketplace follow up with the customer either online or offline to complete the loan
purchase process. The benefits of partnering with marketplaces from lenders perspective
include access to a broad spectrum of borrowers, wider reach without the need for brick and
mortar presence and comparatively low agent interaction and customer acquisition costs.
Exhibit 25. Consumer credit marketplace: New credit enquiry workflow
India’s consumer lending market has grown strongly until COVID crisis with disbursals
reaching INR 13.5tn in FY20. However, FY21 has seen a small blip with COVID related
uncertainties impacting both, demand and supply for consumer credit. We are now starting
to see a decent reversal in lending and expect this market to reach INR 65tn by FY31, at
FY21-31 CAGR of 17.5%.

Financial Analysis
Insurance to continue being the primary business driver for Policybazaar
Insurance Premium reported 42% CAGR while revenue posted 49% CAGR over FY19-21:
Policybazaar’s insurance business grew strongly during FY19-21 as Indian populace became
more aware of insurance requirements due to heightened medical expenses and loss of life
during COVID. Growth in insurance premium was led by the renewals business, which posted
81% CAGR while new business premium could only manage 26% CAGR. We estimate
insurance premium to post a 31% FY21-31 CAGR driven by an increase in digital penetration
(5% in FY31) and Policybazaar’s physical channel also ramping up well to provide >10% of
the premium in FY31. Unlike other categories, we believe that digital penetration in India
would remain lower for a long period as insurance is a ‘push’ product while also having
inherent complexity in terms of coverage and exclusions. Hence, the large share of insurance
growth will be driven by a digitally-enabled PoSP model. We also estimate Policybazaar’s
digital market share to decline slightly to reach 43% from ~46% in FY21. We expect the
commissions as a % of total premium to stay stable and revert back to FY20 levels to drive
revenue CAGR of 32% over FY21-31.
Exhibit 26. Policybazaar: Revenue forecasts

FY20 FY21 FY22E FY23E FY24E FY25E FY26E FY27E FY28E FY29E FY30E FY31E
Insurance premium market size (INR bn) 7,618 8,304 9,546 11,037 12,742 14,683 16,887 19,390 22,231 25,460 29,129 33,303
Change (YoY) 12% 9% 15% 16% 15% 15% 15% 15% 15% 15% 14% 14%
Policybazaar insurance premium (INR mn) 37,586 47,013 73,301 109,473 154,376 207,257 267,427 338,947 420,040 514,918 611,651 717,393
Change (YoY) 62% 25% 56% 49% 41% 34% 29% 27% 24% 23% 19% 17%
Revenue (INR mn) 5,773 7,927 11,728 17,789 25,858 35,047 45,409 57,655 71,575 87,896 104,592 122,889
Change (YoY) 63% 37% 48% 52% 45% 36% 30% 27% 24% 23% 19% 18%
Revenue as a % of premium 15.4% 16.9% 16.0% 16.3% 16.8% 16.9% 17.0% 17.0% 17.0% 17.1% 17.1% 17.1%
Loan Disbursals reported -24% CAGR while revenue shrunk at -17% CAGR in FY19-21: FY21
has been a tough year for loan markets as both supply and demand were impacted. With job
losses and uncertain financial environment, customers avoided initiating discretionary
purchases on loan while the banks / NBFCs avoided lending aggressively due to a potential
rise in NPAs and RBI enforced loan moratorium prevented them from realising the actual
default rates. Going forward, we believe the digital loans industry would post ~21% CAGR
until FY30 and that Paisabazaar would roughly consolidate its market share in the face of
emerging competition from vertically focused lenders and direct channel of banks / NBFCs.
We expected Paisabazaar disbursals/revenue to record a 25%/26% FY21-31 CAGR.
Exhibit 27. Paisabazaar: Revenue Forecasts

Marketplace lending industry size (INR bn) 13,460 12,900 16,125 20,156 24,792 29,999 35,698 41,767 48,032 54,036 59,440 64,789
Change (YoY) -4% 25% 25% 23% 21% 19% 17% 15% 13% 10% 9%
Paisabazaar disbursals (INR mn) 65,496 29,167 61,751 79,868 98,775 120126 143623 169988 197709 224901 249824 275354
Change (YoY) 28% -55% 112% 29% 24% 22% 20% 18% 16% 14% 11% 10%
Revenue (INR mn) 1,937 938 2,100 2,716 3,358 4,084 4,955 5,950 6,920 7,872 8,744 9,637
Change (YoY) 41% -52% 124% 29% 24% 22% 21% 20% 16% 14% 11% 10%
Revenue as a % of disbursals 3.0% 3.2% 3.4% 3.4% 3.4% 3.4% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%

Operating Costs to increase in FY22 before showing leverage

Employee Costs to continue declining as a % of Revenue: Historically, employee costs have
accounted for the greatest share of revenue at 62.5% in FY21 due to the large base of call
centre employees. We believe that tech enablement and AI chat bots are likely to drive
efficiencies in call centre operations and bring down employee costs to 33.5% of revenue by
FY31.
Advertising Expense to reduce significantly: Management has mentioned that the spike in
advertising expense in FY19 and FY20 is expected to reverse significantly. Additionally, the
growth of physical business mix continues to reduce Policybazaar’s dependence on digital
marketing and we expect advertising expense to drop down to 20% of revenue by FY31
from 41% in FY21.
Physical Store and PoSP Expenses to ramp up: In light of the recently acquired Direct
Insurance Broker license, Policybazaar plans to invest heavily to become the most dominant
omni-channel insurance distribution platform in the country. Over the coming three fiscal
years, the company plans to use INR 3,750mn from the fresh issue in operationalising 200
physical stores and on-boarding PoSPs including their training costs and commissions.
Profitability delayed due to the launch of physical channel

Contribution level profitability amplified in FY21: After ramping up marketing spends in FY19
and FY20, Policybazaar’s contribution margin had dipped sharply. However, the company did
well to recover contribution level profitability to ~36% in FY21 driven by drop in call centre
and advertising expenses. We assume steady improvement in contribution profit going ahead
each year to reach 50%+ in FY31.
Exhibit 28. Contribution Profit to increase significantly to reach above 50%

Group revenue 7,713 8,867 13,830 20,508 29,220 39,136 50,370 63,612 78,504 95,779 1,13,350 1,32,544
Employee expenses (Call
3,479 3,091 4,926 6,849 8,921 11,303 14,077 17,152 20,399 24,172 28,240 32,873
centre)
PoSP Commissions - - 200 566 1,056 1,706 2,512 3,402 4,418 5,451 6,300 6,804
Advertising and
3,181 2,246 3,181 4,512 5,990 7,827 9,822 11,991 14,131 16,330 18,703 21,141
promotion expense
Payment gateway
252 344 484 723 1,019 1,368 1,765 2,203 2,730 3,347 3,976 4,663
charges
Contribution Profit 801 3,186 5,040 7,859 12,234 16,932 22,194 28,863 36,826 46,480 56,132 67,064
as % of Revenue 10.4% 35.9% 36.4% 38.3% 41.9% 43.3% 44.1% 45.4% 46.9% 48.5% 49.5% 50.6%
EBITDA level profitability expected in FY26: With most costs curtailed deeply in FY21,
significant investments across manpower, tech/product along with the launch of physical
store business would require Policybazaar to continue requiring capital investments until
FY24. Additionally, as physical business also requires commission sharing arrangements with
the PoSPs, it will result in a slight margin dilution. However, this dilution would be more than
compensated by the incremental growth that physical business would bring by enabling
Policybazaar in selling complex products and also providing claims support to drive customer
experience. In conclusion, we expect the company to achieve EBITDA margins of ~25% by
FY31 from -18% in FY21.
Exhibit 29. Group Revenue and Margins

Group revenue (INR mn) 7,713 8,867 13,830 20,508 29,220 39,136 50,370 63,612 78,504 95,779 113,350 132,544
Change (YoY) 57% 15% 56% 48% 43% 34% 29% 26% 23% 22% 18% 17%
EBITDA (INR mn) -3,199 -1,598 -6,432 -5,659 -3,458 -578 2,691 8,726 13,385 18,748 25,135 32,677
Change (YoY) NA NA NA NA NA NA NA 220.6% 53.2% 40% 34% 30%
EBITDA Margin -41.5% -18.0% -46.5% -27.6% -11.8% -1.5% 5.3% 13.7% 17.1% 19.6% 22.2% 24.7%

Valuation Methodology
We initiate coverage on Policybazaar with a ‘HOLD’ rating, TP of INR 1,270 per
share. We also reckon there is a likely path for PB Fintech to grow to a US$13bn+
(INR 2200/share) valuation over the next couple of years
We believe Policybazaar is the dominant player in a large market with strong tailwinds
enabling a decadal growth opportunity. With its monopolistic market positioning, robust
balance sheet and strong brand recognition, the company remains impeccably positioned to
drive insurance penetration across India through its web portal as well as via recently
launched PoSP network. To provide the company credit for this, we believe Policybazaar
should be valued with a longer term bias that would also dilute the impact of distorted
financials in the near-term due to one-offs (COVID crisis and investment into physical
business).
Policybazaar does not have any direct comps across India or even globally as most global
insurance markets have distribution controlled directly by the insurers either in traditional
formats or via digital-first plays such as Lemonade and Metromile in the USA and Admiral in
the UK. Additionally, the retail insurance addressable market is curtailed in multiple countries
as health and life insurance is often provided by the employers or by the governments as part
of social security schemes. We therefore value Policybazaar as of Mar’30 at an average of 8x
EV/Revenue and 35x EV/EBITDA. We then discount the Mar’30 valuations back to Dec’22
assuming a discount rate of 11.0%. Our TP of INR 1,270 per share implies ~6% upside to the
CMP, implying EV/FY23 Revenue multiple of 25x. We initiate coverage on Policybazaar with a
‘HOLD’ rating.
Exhibit 30. Valuation Maths for Policybazaar

Revenue EBITDA Average
Policybazaar Metric (INR bn) - FY31 132.5 32.7
Target 12-month forward multiple 8.0x 35.0x
Enterprise value (INR bn) - FY30 1,060 1,144 1,102
Discount rate 11.0% 11.0% 11.0%
Period to discount (in Yrs) 7.25 7.25 7.25
Discounted Enterprise value (INR bn) - Sep'22 498 537 517
Net Debt (INR bn) - Sep'22 -54.0 -54.0 -54.0
Market value (INR bn) - Sep'22 552 591 571
Diluted equity shares (mn) 449.5 449.5 449.5
1-year forward target price (INR per share) 1,270
Upside from CMP +5.6%
What can the Future hold - Significant upside opportunity?

As discussed in our opening comments, we reckon that Policybazaar can reach a valuation of
USD 13.5bn, implying significant value creation potential if the below scenarios materialise.
1. Higher digital penetration than forecasted in our base case: Our base case assumes
digital penetration reaching 4.5% in FY31. IN comparison, CY20 digital penetration in
the USA/China was at 13.3%/5.5%. With policy standardisation and faster tech
adoption with increasing awareness, we expect India to reach China’s 5.5% digital
penetration level in FY31.
2. Largest life insurer, LIC, joins hands with Policybazaar: LIC accounts for 65%+ market
share of life insurance in India in FY21 (75%+ in FY19) but distributes its products
primarily via its physical agent network. As discussed in our Investment Thesis, we see
decent probability of LIC partnering with Policybazaar in order to stop losing market
share. Assuming LIC comes on-board in FY24, we see digital penetration in life
insurance reaching up to 4.4% by FY31 and Policybazaar’s market share of overall
digital insurance distribution also rebounding to reach 47.3% by FY27.
3. Paisabazaar drives value creation: Paisabazaar operates in an industry that is expected
to grow rapidly as credit penetration drives the next stage of growth in India. Our
base case assumes disbursals growth via Paisabazaar to deliver FY21-31 CAGR of

25%. As FY21 was suppressed to COVID, this implies FY20-31 CAGR of only 14%.
Assuming that the company becomes more aggressive about expansion of
Paisabazaar and makes it a driver of value than just being an “ancillary” business
currently, we see an upside risk to our forecasts and Paisabazaar disbursals delivering
a 30% FY21-31 CAGR.
Exhibit 31. Path to USD 13.5bn valuation by Dec’24 (INR 2,260 per share)
USD 2.5bn USD 13.5bn
USD 0.5bn
USD 1.5bn
USD 1.5bn
USD 7.6bn
Current Digital LIC Onboarding Paisabazaar Rollover to Bull-case

Valuation Penetration Focus Dec'24 Valuation
These 3 scenarios can combine to deliver strong upside opportunity to the company’s
valuation with target share price reaching INR 2,250+ in Dec’24.
Exhibit 32. Valuation Comps

Rev EBITDA EPS
EV / Revenue (x) EV / EBIT (x) P / E (x)
CAGR CAGR CAGR
MCap EV
Company CY21E CY22E CY23E 21-23E CY21E CY22E CY23E 21-23E CY21E CY22E CY23E 21-23E
(USD bn) (USD bn)
Policybazaar 7.3 7.1 38.4x 25.9x 18.2x 45% nm nm nm nm nm nm nm nm

Insurance Marketplaces
Goosehead 5.3 5.4 35.6x 25.9x 18.8x 38% nm 166.8x 89.4x nm 269.2x 150.1x 97.0x 67%
Moneysupermarket 1.5 1.5 3.5x 2.8x 2.6x 15% 14.7x 11.2x 9.5x 24% 17.9x 14.1x 12.4x 20%
Everquote 0.5 0.4 1.0x 0.9x 0.8x 14% 46.7x nm 32.5x 20% nm nm 36.7x nm
Fanhua 0.8 0.6 1.0x 0.9x 0.8x 15% 9.6x 7.6x 5.9x 28% 16.4x 13.0x 10.1x 28%
Waterdrop 0.8 0.3 0.5x 0.3x 0.2x 40% nm nm nm nm nm nm nm nm
Digital-First Insurers
Lemonade 3.9 3.6 22.4x 13.8x 9.3x 55% nm nm nm nm nm nm nm nm
Metromile 0.4 0.5 6.5x 5.7x 3.1x 45% nm nm nm nm nm nm nm nm
ZhongAn 5.3 5.8 1.7x 1.4x 1.1x 22% 28.9x 15.5x 11.3x 60% 33.0x 24.7x 16.8x 40%
eHealth 0.7 0.8 1.4x 1.3x 1.1x 14% nm nm 10.6x nm nm 106.9x 29.6x nm
Traditional Insurers
Admiral 12.0 12.4 6.6x 6.4x 5.9x 5% 11.4x 15.1x 15.3x -14% 11.9x 20.0x 20.1x -23%
Ping An 141.0 419.6 2.0x 1.9x 1.8x 7% 15.6x 12.9x 11.3x 18% 8.6x 6.9x 6.0x 19%
HDFC Life* 19.4 19.5 2.6x 2.2x 1.9x 17% 13.0x 5.5x 4.4x 73% 118.2x 65.1x 65.2x 35%
SBI Life* 15.6 15.3 1.4x 1.4x 1.1x 12% 58.3x 7.7x 5.3x 233% 80.1x 55.2x 44.7x 34%
ICICI Pru* 12.8 12.9 1.3x 1.6x 1.4x -1% 82.5x 7.6x 5.3x 295% 128.8x 60.4x 50.4x 60%
Max Fin 4.5 3.9 1.0x 0.9x 0.8x 14% 38.3x 30.9x nm nm 94.3x 70.8x 57.9x 28%
ICICI Gen.* 10.1 10.2 6.5x 5.5x 4.8x 16% 35.3x 30.4x 28.1x 12% 57.9x 41.5x 32.3x 34%
Mean - Insurance Marketplaces (ex-Policybazaar) 8.3x 6.2x 4.6x 24.3% 23.7x 61.8x 34.3x 24.1% 101.2x 59.1x 39.0x 38.2%
Mean - Digital First Insurers (ex-Policybazaar) 8.0x 5.6x 3.7x 34.0% 28.9x 15.5x 11.0x 60.1% 33.0x 65.8x 23.2x 40.3%
Mean - Traditional Insurers 3.1x 2.8x 2.5x 10.0% 36.3x 15.7x 11.6x 102.7% 71.4x 45.7x 39.5x 26.6%
Source: Bloomberg consensus estimates for non-coverage companies, JM Financial estimates for JM covered companies (marked by *). Note 1: Valuations as of 15 November 2021.

Key Risks
Downside risks: 1) Tech penetration in India is slower than forecasted by industry reports: Our
digital insurance/credit underwriting growth assumptions for Policybazaar are based on the
assumption that growing share of digitally native millennial/GenZ population in income share
would lead to significant increase in tech-enabled transactions. However, if tech-enabled
transactions penetration in India were to not materialise/or the rate is significantly lower than
forecasted by industry reports it could have significant impact on the company’s ability to
scale up and thereby report sustainable profits/free cash flow. 2) Growing competitive
intensity: Both the digital insurance and credit markets are characterised by few entry
barriers. In fact, a number of fin-techs are now aggressively building their own insurance and
credit platforms either in a D2C format or through partnerships with various insurers/lenders.
Ramp-up of these businesses is also getting accelerated due to current ease of raising private
capital. 3) Stakeholder conflicts: In Aug’21, HDFC Ergo announced plans to delist products
from third-party brokers while deciding to invest heavily on its in-house online platform. With
brokers continuing to gain negotiating power for higher margins, there is a likelihood of
other larger players also following suit, impacting the number of products offered. 4)
Regulatory risks: The insurance segment continues to be under heavy regulatory scrutiny with
regards to commissions, distribution models, capital adequacy etc. and there exist potential
risks with regard to regulatory headwinds. 5) Multi-year bundling of motor insurance policies:
There have been media reports mentioning that motor comprehensive insurance will be
bundled as a 5-year product at the time of vehicle purchase. While auto dealers control the
transaction completely at purchase and hence restrict any business reaching marketplaces
such as Policybazaar, this bundling will also take away annual renewal opportunities and
could impact business growth adversely.
Upside risks: 1) Insurance penetration exceeds our expectations: We expect the insurance
sector to continue to remain relatively underpenetrated in India in the medium term along
with a slower digital penetration trajectory due to the handholding needed for insurance
buyers. We believe there is potential for a positive surprise in both insurance premium growth
as well as digital penetration. 2) Sharp rise in online transacting users: Tech-enabled
transactions could grow at a much faster rate than expected due to faster than anticipated
rise in transacting user base on the company’s platform, thereby significantly upending
insurance premium underwritten/credit disbursements enabled by the company. 3) Company
manages to tie-up with Life Insurance Corporation: With the largest life insurance player
(65%+ market share), Life Insurance Corporation of India, continuing to not work with any of
the marketplaces, any business partnership with it could be a huge upside risk to valuation
expectations. 4) Regulation mandates compulsory purchase of certain insurance policies: E.g.
As in the case of motor insurance, any regulatory push that mandates compulsory purchase
of other insurance policies could also drive robust growth for the distribution players. 5)
Significant value accretion from organic/inorganic expansion: While our model factors in
significant growth opportunities for Policybazaar in its insurance/credit marketplace
businesses, the company is also exploring opportunities beyond these verticals – E.g. the
company has invested in Health-tech (Docprime), Car repair services (Quickfixcars) and
international expansion (UAE) which may provide incremental value to the company’s
valuations.

Company Overview
Delhi-based Policybazaar was founded in 2008, by Yashish Dahiya, Avaneesh Nirjar and Alok
Bansal. The Company initially operated as an insurance research and comparison platform for
consumers and earned revenues through sale of leads to insurance companies. In 2012, after
receiving the web aggregator license consumers could also purchase policies on the
company’s platform for which it would earn commissions from insurers. Later, the company
also started providing telemarketing and outsourcing services to insurance companies. The
Company launched Paisabazaar platform in 2014 that helped consumers’ access credit by
comparing, choosing and applying from a wide range of personal loan and credit card
products. In 2021, the company acquired license to operate as a direct insurance broker in
order to further expand its gamut of services as well as operate an offline PoSP network
channel. The online portal garners ~10 million monthly visitors who can purchase over 340
life, health, motor, travel and home insurance products from 51 insurer partners. As of
Mar’21, Policybazaar has sold 19.2 million insurance policies to 9.6 million transacting
consumer since inception.
Exhibit 33. Brief history

Date Event Description
4 Jun'08 Company incorporated Founders include Yashish Dahiya, Avaneesh Nirjar and Alok Bansal
2008 Fund raise Info Edge becomes the first major external investor through seed funding of USD 4mn
2010 Product launch Health insurance related activities started
Web Aggregator
2012 A subsidiary company received web aggregator license from IRDA
license
2012 New platform launch Mobile website launched
Apr'13 Product shutdown Company shutdown PolicyDeals.co.in that helped insurance agents source leads from their preferred city and location
2015 Product launch Paisabazaar registered as a investment adviser with SEBI
Oct'17 Fund raise Company's valuation nears USD 500mn following a fund raise from a wide range of investors
19 Aug'18 Product launch DocPrime launched. Ashish Gupta the erstwhile CTO & CPO at Policybazaar.com appointed CEO
Company entered the UAE market through the launch of Policybazaar.ae, an online financial products marketplace. Neeraj Gupta appointed as the
24 Sep'18 International expansion
CEO
16 Apr'19 Major valuation round Company achieves Unicorn status following a fund raise from Softbank and others
Nov'19 Major valuation round Tiger Global sells ~10% stake to Tencent at a valuation of USD 1.5bn
1) Sarbvir Singh (ex-MD WaterBridge Ventures) took over as CEO of PolicyBazaar.com, while Yashish Dahiya became the Group CEO
Dec'19 Management changes
2) Sharat Dhall (ex-Yatra COO) appointed as the new Chief Operating Officer replacing Dhruv Sarin who transitions to Chief Growth Officer
2019 Product launch Zphin that offers technology and services solutions to financial institutions globally launched
24 Received in-principle approval from IRDAI for insurance broking business following which company changed name from Policybazaar Insurance Web
Insurance Broker license
May'20 Aggregator Private Limited to Policybazaar Insurance Brokers Private Limited
May'20 Management changes Ashish Gupta the DocPrime CEO leaves to join Max Bupa Health Insurance as the CTO
Quickfixcars that is in the business of providing car repair services and insurance claim assistance launched (Company: Accurex Marketing and
2020 Product launch
Consulting Private Ltd.)
24 Feb'21 Fund raise Company's valuation crosses USD 2bn following a fund raise from Falcon Capital
10 Jun'21 Insurance Broker license Company received IRDA approval to act as Direct (Life and General) Insurance broker
15 Nov'21 IPO Listing on Indian stock exchanges
Source: Company, IRDA, JM Financial
Exhibit 34. Corporate Structure

Exhibit 35. Post IPO: Shareholding (Diluted)

Softbank
10.2%
Alpha Wave Others

Incubation 23.7% Info Edge
1.0% 12.8%
ABG Capital
1.0%
Alok Bansal
1.3%
Tencent
Inventus Capital 8.4%
1.4%
Ithan
Creek True North
1.7% 2.1% Tiger Global
Steadview Falcon 7.1%
2.2% 2.6%
Premji Invest Temasek
3.5% Yashish Dahiya 6.7%
Etechaces ESOP Trust Claymore Investment
3.8%
5.0% 5.7%
Exhibit 36. Funding history and then valuations

Period Funds raised (INR mn) Investors Post money valuation (INR mn)
4 Jun'08-22 Sep'08 0.1 Avaneesh Nirjar, Alok Bansal and Yashish Dahiya 0.1
24 Sep'08-20 Mar'09 50 Info Edge 258

22 Jun'09-21 Mar'11 144.5 Info Edge 403
6 May'11 5.5 Info Edge 420
22 Jun'11-27 Sep'12 400.0 Intel Capital, Info Edge 1,180
26 Mar'13-3 Apr'13 249.9 Inventus Capital, Intel Capital, Info Edge 1,650
2 Jun'14-5 Jul'14 1,189.5 Tiger Global, Ribbit Capital 5,950

Premji Invest, Steadview Capital, LTR Focus Fund, ABG Capital, Ribbit Capital
10 Apr'15 2,558.7 12,600
and Tiger Global
Makesense Technologies, Samvardhana Motherson Internation and Renu
3 Aug'15-13 Oct'15 482.3 13,000
Munjal
Claymore Investment, Inventus Capital, Premji Invest, Renu Munjal, Steadview,
13 Oct'17-29 Nov'17 5,127.3 ABG Capital, Tiger Global, LTR Focus Fund, Ithan Creek, True North, Info 31,100
Edge, Motherson Lease Solutions, amongst others
16 Apr'19 10,589 Softbank, Info Edge, True North and Temasek 66,200
5 Jun'20 3,567 Softbank 76,000
24 Feb'21 4,242 Falcon 151,000

Source: Company, Tracxn, JM Financial
Exhibit 37. Management Organisation Chart
Source: Company

Exhibit 38. Board of Director details

Director
Name Position Education Past Experience Other Directorships
Since
Bachelor’s degree in Technology from Indian Accurex Marketing and Consulting Pvt. Ltd.;
Chairman, Institute of Technology, Delhi; Post-graduate ITW Signode India Ltd., Bain & Icall Support Services Pvt. Ltd.; PB Marketing
Mr.
Executive diploma in management from Indian Institute of Company Inc. (London); eBookers and Consulting Pvt. Ltd.; Paisabazaar
Yashish 10 Jun'08
Director and Management, Ahmedabad and Master’s degree PLC (UK) and CI2I Investments Marketing and Consulting Pvt. Ltd.;
Dahiya
CEO in Business administration from Institut Européen Ltd. Policybazaar Insurance Brokers Pvt. Ltd. and
d'Administration des Affaires (INSEAD), France RattanIndia Power Ltd.
Voltas Ltd.; General Electric Accurex Marketing and Consulting Pvt. Ltd.;
Bachelor’s degree in Technology from Shri Shahu International Operations Co. Inc. Docprime Technologies Pvt. Ltd.; Icall Support
Whole-time
Mr. Alok Ji Maharaj University, Kanpur and Post-graduate (India)., iGate Global Solutions Services Pvt. Ltd.; PB Marketing and Consulting
Director and 20 Oct'17
Bansal diploma in Management from Indian Institute of Ltd., Mahindra and Mahindra Ltd. Pvt. Ltd.; Paisabazaar Marketing and
CFO
Management, Calcutta and FE Global Technology Consulting Pvt. Ltd. and Policybazaar Insurance
Services Pvt. Ltd. Brokers Pvt. Ltd.
Bachelor’s degree in Business Management from
Non- Partner - Info Edge Ventures;
Ms. Kitty Bangalore University and Post-graduate diploma Dotpe Pvt. Ltd.; Smartweb Internet Services
executive 7 Feb'18 Corporate development - Info
Agarwal in Agri-business Management from Indian Ltd. and Srijai India Pvt. Ltd.
Director Edge (India) Ltd.
Institute of Management, Ahmedabad
President - Integrated Master’s Degree in Mathematics and
Managing Partner - WaterBridge
Mr. Policybazaar; Computer applications from Indian Institute of Blue Jay Finlease Ltd.; Class 21A Technologies
Capital Management LLP;
Sarbvir Non- 5 Jun'20 Technology, Delhi and Post-graduate diploma in Pvt. Ltd.; Docprime Technologies Pvt. Ltd. and
Managing Director - Capital18 (a
Singh executive Management from Indian Institute of Inclov Technologies Pvt. Ltd.
part of the Network18 group)
Director Management, Ahmedabad
Brainbees Solutions Pvt. Ltd.; Delhivery Ltd.;
Mr.
Non- Managing Partner - SoftBank One 97 Communications Ltd.; SVF Investment
Munish 26 Master’s in business administration from Cornell
executive Investment Advisers, Deutsche Advisers (India) Pvt. Ltd.; OakNorth Holdings
Ravinder Apr'19 University
Director Bank AG Ltd.; SVF Game (Cayman) Ltd.; SVF India
Varma
Holdings (UK) Ltd. and SVF Investment Corp. 2
Thought Arbitrage Research
Carthero Technologies Pvt. Ltd.; Digilife
Institute (Co-founder), Price
Distribution and Marketing Services Ltd.; HCL
Waterhouse & Co., Chartered
Infosystems Ltd.; NDTV Convergence Ltd.;
Mr. Accountants LLP, and Lovelock &
Independent Fellow member of the Institute of Chartered NDTV Labs Ltd.; NDTV Networks Ltd.; New
Kaushik 19 Jun'21 Lewes, Chartered Accountants.
Director Accountants of India Delhi Television Ltd.; Newgen Software
Dutta Expert on Corporate Governance
Technologies Ltd.; Thought Arbitrage Research
- the Indian Institute of Corporate
Institute; Zomato Ltd.; Zomato Hyperpure Pvt.
Affairs of the Ministry of
Ltd.
Corporate Affairs
Founder - Swadhaar FinServe
Bachelor’s degree in Economics from the
Private Ltd.; ICICI Ltd., West LB
Ms. University of Delhi, Post graduate diploma in Alicon Castalloy Ltd.; IDFC Asset Management
Group (Singapore), FIM Bank
Veena Independent business administration from the Indian Institute Company Ltd.; IDFC Foundation; Paisabazaar
19 Jun'21 (Malta) and ICICI Ltd. Ex-director
Vikas Director of Management, Ahmedabad and The Strategic Marketing and Consulting Pvt. Ltd.; RBL Bank
- Liberty General Insurance Ltd.
Mankar leadership for Microfinance course at Harvard Ltd.; RBL Finserve Ltd. and Swaadhar FinAccess
and Ex-Non-executive
Business School
Chairperson - IDFC Bank Ltd.
Founder and CEO - Paul Writer
Strategic Services and Author of a
Bachelor’s degree in Engineering from Bajaj Consumer Care Ltd.; Creditaccess
Ms. Lilian book titled ‘No Money
Independent Bharathidasan University and a Post-graduate Grameen Ltd.; Expleo Solutions Ltd.; Icon
Jessie 19 Jun'21 Marketing’. Tata Elxsi (India) Ltd.,
Director diploma in management from Indian Institute of Hospitality Pvt. Ltd.; Paul Writer Strategic
Paul Ogilvy & Mather Ltd., Infosys Ltd.,
Management, Calcutta Services Pvt. Ltd. and Royal Orchid Hotels Ltd.
iGATE Global Solutions Ltd. and
Wipro Ltd.
Whole-time member - IRDAI,
Mr. Bachelor’s degree in Commerce and a Master’s CEO and Director - LIC Nomura
Bajaj Allianz General Insurance Company Ltd.;
Nilesh Independent degree in Commerce from Nagpur University and Mutual Fund Asset Management
19 Jun'21 Mahindra Manulife Trustee Pvt. Ltd. and
Bhaskar Director is a certified associate with the Indian Institute of Company and Zonal Manager
Policybazaar Insurance Brokers Pvt. Ltd.
Sathe Bankers Northern Zone of Life Insurance
Corporation of India
BACQ Acquisitions Pvt. Ltd.; GIC Housing
Finance Ltd.; GICHFL Financial Services Pvt.
Chairman and Managing director
Bachelor’s degree in Commerce from the Ltd.; Institute of Insurance and Risk
Mr. - United India Insurance
Independent University of Madras, member of the Institute of Management; Insuretech Digital Solutions India
Gopalan 19 Jun'21 Company Ltd. and Chairman and
Director Cost Accountants of India and a fellow of the Pvt. Ltd., Medi Assist Healthcare Services Ltd.;
Srinivasan Managing director of the New
Federation of Insurance Institutes Navi General Insurance Ltd.; Valueattics
India Assurance Company Ltd.
Reinsurance Ltd.; India International Insurance
Pte. Ltd. and Oasis Inube Fintech FZ – LLC

Exhibit 39. Other Key Management Details

Name Position With Company Since Education Past Experience Remuneration FY21
3 Feb'14 - 31 Mar'16 Bachelor’s degree in Engineering from University of Citibank N.A. (India), Capital One
Mr. Naveen Co-founder and
(Policybazaar) Delhi and a Post-graduate diploma in management (Europe) Plc and Aviva Life Insurance INR 12.20 mn
Kukreja CEO - Paisabazaar
1 Apr'16 (Paisabazaar) from Indian Institute of Management, Kolkata Company India Ltd.
Master of management studies degree from Birla Advisory council member of Oktober6
Chief Operating
Mr. Sharat Institute of Technology and Science, Pilani and a Insight Pvt. Ltd., India; Hindustan Lever
Officer - 18 Nov'19 INR 12.48 mn
Dhall Post-graduate diploma in business management from Ltd., Times Internet Ltd., and Yatra
Policybazaar
XLRI, Jamshedpur Online Pvt. Ltd.
Bachelor’s degree of Technology from Indian Institute
of Technology, Kanpur, Master’s degree in
Chief Technical myMBSC.com Ptd. Ltd. (Singapore),
Mr. Saurabh 23 Sep'10 - 15 Jul'16 Technology from National University of Singapore
Officer - IBM India Pvt. Ltd. and GEP Solutions INR 12.74 mn
Tiwari and rejoined on 1 Feb'19 and an Executive programme in business
Policybazaar Pvt. Ltd.
management from Indian Institute of Management,
Calcutta
Bachelor’s degree in Commerce from Kurukshetra
Director of finance
University, qualified Chartered Accountant with the Fiamm Minda Automotive Ltd.,
Mr. Manoj and Principal
28 Aug'08 Institute of Chartered Accountants of India and Ericsson India Pvt. Ltd. and FE Global INR 6.85 mn
Sharma Officer -
qualified associate with the Insurance Institute of Technology Services Pvt. Ltd.
Policybazaar
India
Senior Vice president – legal,
compliance and corporate affairs -
Munich Health Insurance Company
Bachelor’s degree in Commerce and Bachelor’s
Group Head – Ltd. ; Vaish Associates Advocates,
Ms. Deepti degree in law from University of Delhi and qualified
legal and 10 Feb'20 Canara HSBC Oriental Bank of INR 7 mn
Rustagi Company Secretary with the Institute of Company
compliance Commerce Life Insurance Company
Secretaries of India
Ltd., Aviva Life Insurance Company
India Ltd. and Apollo Munich Health
Insurance Company Ltd.
Company Bachelor’s degree in Commerce and Bachelor’s

Mr. Bhasker Secretary and degree in law from Kumaun University, Nainital and
1 Jun'17 A2Z Infraservices Ltd. INR 2.21 mn
Joshi Compliance member of the Institute of Company Secretaries of
Officer India
Exhibit 40. Business-wise revenue streams
PB Fintech
Policybazaar Paisabazaar
Insurance
Commission from
commissions, Outsourcing Online marketing Online marketing
financial products
rewards and listing services and consulting and consulting
and sale of leads
services

Exhibit 41. Policybazaar: Premium break-up Exhibit 42. Policybazaar: Premium per advisor and no. of advisors
New business premium (INR mn) Premium from renewals (INR mn) Premium per new advisor (in mn) Premium per advisor (in mn)
No. of advisors
47,013
4,422 14.10
37,586 3,675
19,584 3,334
3,134
11,182
8.50 8.23
23,154
6.30 5.97
5,967
15,669 5.00
4.68
26,404 27,429
7,706
17,187 2.54
7,963
FY19 FY20 FY21 1QFY22

Exhibit 43. Paisabazaar: Disbursals data Exhibit 44. Paisabazaar: Users and disbursal % to existing customers
Users accessing their credit score
Paisabazaar disbursals (INR mn) (mn)
Disbursals to existing cutomers 22.5
65,496
67.8%
51,015
67.0%
29,167
21.5
9,842

FY21 1QFY22
Exhibit 45. PB Fintech: Business wise revenue break-up Exhibit 46. PB Fintech: Function-wise employee share
Policybazaar Paisabazaar Others (Docprime) General Administration Sales and Marketing
Technology and product management Operations
0.00% 0.03% 0.02% 0.00% 221

278
197
11% 463 209
16% 515
28% 25%
234
251
167
161 497
462
89% 8,630 8,299

84%
72% 75% 6,662
6,436
FY19 FY20 FY21 1QFY22 FY19 FY20 FY21 1QFY22

Learnings across the globe – Why is Policybazaar unique?

Our analysis suggests that there have been multiple India specific reasons that have helped
Policybazaar scale so far and will continue to drive further growth.
 Fragmented / Accommodative Insurer Ecosystem: Insurer ecosystem in India didn’t

have large, dominant insurers as seen in China and the USA. While LIC was large,
but being a government entity that was only focused on life insurance, the company
was accommodative of newer business models. In comparison, the insurers in China
and the USA have taken a very aggressive stance by exercising strong control over
the supply chain and distributing primarily via their own online / offline platforms.
 Broader Product bouquet available for distribution: The addressable market available
for distribution in most developed economies has been devoid of the larger life and
health insurance opportunity. These segments also have higher ticket premiums and
higher renewal rates and are very attractive for a distributor such as Policybazaar.
However, in most developed economies, life and health insurance is provided either
as social security by the government or by the employers. With a higher share of
population participating in organised employment, the coverage rates are very high.
Even though the remaining insurance segments are also decently large in these
economies but a smaller TAM makes the business model less attractive and private
participants in these countries have focused on becoming the insurer itself to
capture the entirety of the value chain.
 Assisted selling nature of insurance distribution: While having relatively more

mature economies compared to India, the rate of digital adoption has been rather
gradual in the western world unlike India where digital penetration has even
preceded offline penetration in the smaller tier cities and towns. Interestingly,
consumers in India have shown a higher willingness to have a completely digital
purchase journey with Policybazaar selling 80.4% of the total new policies in FY21
with minimal human intervention. Distribution players in the USA focus on
generating leads online followed by offline agents helping with the final conversion.
With ~INR 18bn available in cash and investments, why is primary issuance needed?
Policybazaar is already sitting on INR 18bn pile of cash and the company is planning to raise INR 37.5bn in fresh issue. This will be the highest
amount of cash that Policybazaar has ever had since inception. We need to understand the reasons for this fundraise and where is it likely to
be used in order to comprehend potential future plans of the company.
Policybazaar has had a gradual and sustainable growth path historically with the company roughly breaking even in FY18. Since the Softbank
fundraise, the company has focused on pushing the growth pedal and the next step towards that is disrupting the physical distribution
channel where competitors such as Turtlemint, Renewbuy and InsuranceDekho continue to drive growth. While the company has allocated
INR 3.75bn from the fresh issue for physical offices and PoSP commissions until 2024, this will also be complemented by a strong investment
in advertising & promotion of INR 15bn. Simultaneously, the sector is also seeing enhanced competitive intensity from new entrants with fin-
tech platforms such as PhonePe and PayTM also eyeing insurance cross-sell to their consumer base and OLA, MakeMyTrip etc. getting into
smaller ticket insurance items such as travel, flights and taxis. Having large cash pile not only enables Policybazaar to fight in case of a battle
but also signals potential competitors to not resort to aggressive competitive tactics.

Competitive Landscape
Policybazaar
Almost 1.2% of insurance premium in India is transacted through digital channels with
marketplaces accounting for ~54%; the remaining is issued by the insurers directly on their
online platform. At INR 47bn, Policybazaar accounts for ~88% of the digital marketplace
business. While we expect Policybazaar to continue being the most dominant online player,
we believe insurers would continue to enhance their digital platforms to cater to consumers
directly as well.
With the Direct Insurance Broker license in place, Policybazaar can now take the omni-
channel route and compete with the other marketplaces in the PoSP business as well. The
company expects to enhance its physical offices to 200 by FY24 compared with 15 as of
today while also on-boarding PoSPs rapidly. INR 3,750mn from the fresh issue is expected to
be used by FY24 to build out this physical presence.
Exhibit 47. Competitive Landscape – Policybazaar is larger than the remaining four players combined
Distribution Insurer Partners Premium Online Traffic
Online PoSP # FY21 (INR Mn) Monthly Visits % Free Visits
Policybazaar 51 47,013 10mn 85%
Turtlemint X 40 ~8,000 500k 99%
InsuranceDekho 45 ~5,000 900k 98%
Renewbuy 35 ~7,000 210k 97%
Coverfox 32 ~2,000 1.4m 98%
Source: Company websites, Policybazaar DRHP, Similarweb and JM Financial.
Exhibit 48. Digital insurance intermediaries: Recent financials and funding details in brief
Revenue – FY20 EBITDA – FY20 Funding Latest known valuation
Platform Key Investors
(INR mn) Margin (USD mn) (USD mn)
Softbank, Info Edge, Tencent, Tiger Global, PI Opportunities
Policybazaar 5,159 -35% NA NA
Fund, Steadview, True North
Sequoia Capital, Lightspeed Venture Partners and Moonstone
OneAssist 2,460 -31% 41.7 149
Investment Management
InsuranceDekho 329 2% NA NA Cardekho
Apis Partners, IIFL Asset Management, Amicus Capital Partners

Renewbuy 671 -65% 89.7 146
and Lok Capital
Coverfox 323 -178% 55.1 NA Glitterbug
Turtlemint 468 10% 130 176 Norwest Venture Partners, Sequoia, Blume Ventures, GGV Capital
Gramcover* 26 -33% 1.2 NA Omnivore Partners
Toffee Insurance 20 -468% 7.1 15 Kalaari Capital, Omidyar Network, Flourish and Accion
CreditEase FinTech Investment Fund, Insignia Ventures Partners,

Symbo Insurance 25 -385% 9.4 NA
AJ Capital Partners
Policyboss 658 0% 10.3 40.8 TPG
PolicyX 55 12% NA NA NA
Source: Tracxn, VCC Edge, JM Financial. * indicates FY19 financials

Exhibit 49. Key digital insurers / insurance intermediaries

Founded Base Insurer/ Insurer Insurance products Lifetime
Platform Note*
/Entry Location Intermediary Type Tie-ups* offered* Customers*
Life, Motor, Health and Also operates a loans marketplace (Paisabazaar) and
Policybazaar 2008 Gurgaon Broker 51 Insurers 9.6mn
Other General Healthcare platform (Docsapp)
Motor, Health and Other
Acko 2016 Mumbai Insurer NA 62mn -
General
Motor, Health and Other
Godigit 2016 Bengaluru Insurer NA 15mn Has a Agent + PoSP network
General
Navi 2017 Bengaluru Insurer NA Motor and Health 1.1mn -
Presence in 615 cities and network of 1k+ service

OneAssist 2011 Mumbai Insurer NA Electronics 3mn+
agents
InsuranceDekho 2016 Jaipur Broker NA Life, Motor and Health 2.5mn+ Has a POSP Advisor Network
Life, Motor, Health and

Renewbuy 2014 Gurgaon Broker 35 Insurers 2.6mn+ 60k+ POSP Advisor Network
Corporate
Coverfox 2013 Mumbai Broker 40+ Insurers Life, Motor and Health 5mn -
Motor insurance and

Amazon 2020 Bengaluru Corporate Agent Only Acko NA -
renewal premiums
Paytm Money and Paytm Payments Bank have applied
Paytm 2019 Delhi Broker 47 Insurers Life, Motor and Health 11.3mn
for corporate agent license
PhonePe 2020 Bengaluru Corporate Agent 9 Insurers Motor, Travel and Health NA -
Turtlemint 2015 Mumbai Broker 35+ Insurers Life, Motor and Health 1.5mn+ >1 mn policies sold till-date
Life, Motor, Health and

Gramcover 2015 Noida Broker 7 Insurers 1.3mn+ -
Crop/Livestock
Toffee Insurance 2017 Gurgaon Corporate Agent 8 Insurers Life, Motor and Health NA -
Motor, Health, Travel and

Symbo Insurance 2017 Mumbai Broker 8 Insurers NA -
Life
Policyboss 2012 Mumbai Broker NA Motor and Health NA Has a PoSP network
PolicyX 2013 Gurgaon Web Aggregator Multiple Life, Motor and Health 0.2mn+ -
Source: Company, JM Financial. * indicates data based on company’s own web portal/disclosures
Paisabazaar
Exhibit 50. Key digital credit marketplaces
Platform Founded/Entry Base location Intermediary Type Lender Tie-ups* Credit products offered* Lifetime Customers*
Personal loan, Home loan, Car loan, Business
Paisabazaar 2014 Gurgaon Marketplace 54 21.5mn
loan and Credit Cards
Personal loan, Home loan, Car loan and Credit
Bankbazaar 2008 Chennai Marketplace 50+ 50mn+
Cards
CreditMantri 2012 Chennai Marketplace 50+ Personal loan, Business loan and Credit Cards 10mn+
Personal loan, Home loan, Car loan and Credit

Wishfin 2008 Noida Marketplace 43 5mn+
Cards
Source: Company, JM Financial. * indicates data based on company’s own web portal/disclosures
Exhibit 51. Digital credit marketplaces: Recent financials and funding details in brief
Revenue – FY20 EBITDA – FY20 Funding Latest known valuation
Platform Key Investors
(INR mn) Margin (USD mn) (USD mn)
Softbank, Info Edge, Tencent, Tiger Global, PI Opportunities Fund,
Paisabazaar 2,261 -43% NA NA
Steadview, True North
Sequoia Capital, Walden International, Amazon India, Eight Road
Bankbazaar 802 -10% 117 264
Ventures
CreditMantri 280 -34% 14.2 21.2 Accion, Chiratae Ventures, Elevar Equity
Wishfin 395 -88% 16.6 90 Franklin Templeton India, Sherpalo Ventures
Source: Tracxn, VCC Edge, JM Financial

Key Medium to Long-term Industry Trends

 Internet of Things (IoT): IoT devices have already started to penetrate homes, offices and
cars. We believe that the insurance sector will embrace IoT in order to both price the
DriveSmart facility from Bajaj Allianz
policies and also encourage good behavior from their customers. Wearables including
Drivesmart uses driving patterns and
fitness devices such as Apple Watch and FitBit for health insurance and telematics related data to help price motor
devices for the vehicles can generate precious data that insurers can leverage in order to insurance risk, apart from driving
provide benefits to the consumers. However, stronger adoption of IoT devices would costs down for the policy buyer. The
need resolution of any data privacy concerns. insurance company provides a device
 Artificial Intelligence: Most insurance surveys and claims processes have been operating which is to be connected to a car for
in traditional manner through manual surveyors, resulting in high turnaround times. data collection. Benefits for the
With advances in artificial intelligences supplemented by augmented reality, there is an policy buyer include roadside
emergence of start-ups focused on optimising these processes remotely where the assistance, safety alerts, priority
consumers can self-inspect the property / vehicle and the insurance company can use claim services, car analytics, etc. The
that to issue policies / claims using fraud detection. concept is nascent in India and
adoption may have just started.
 Change in Product Mix: The Indian insurance sector is primarily dominated by life and
health insurance that combined generate an over 80% opportunity by insurance
premium in India. However, as seen globally, we expect these verticals to account for a
lower share in the medium-to-long term, while products such as home, travel, pet and
durable goods insurance should grow at a faster rate.
 Pay as you go: Many customers have varied needs that cannot be addressed by
traditional products. For example, some people use cars a lot less than others and hence
would be happy to have the premium priced accordingly; very few home insurance
buyers need theft insurance etc. For such consumers, pay-as-you-go pricing would
ensure they can buy insurance real-time as per the specific requirement.
 Bite-sized Insurance: Niche bite-sized insurance options where potential buyers can opt
for a specific insurance need through a digital policy are also expected to increase. For
example, a bicycle insurance product covers theft, damage and accident insurance,
wherein a particular insurer underwrites theft and damage protection, while another
insurer underwrites personal accident insurance for the company. A combination of the
three becomes a Toffee product.
Exhibit 52. Evolution of Digital Insurance Ecosystem
Source: Cognizant Report: India’s Insurers Embrace Digital’s New Normal

Financial Tables (Consolidated)

Income Statement (INR mn) Balance Sheet (INR mn)
Y/E March FY20A FY21A FY22E FY23E FY24E Y/E March FY20A FY21A FY22E FY23E FY24E
Net Sales 7,713 8,867 13,830 20,508 29,220 Shareholders’ Fund 12,658 19,917 57,216 58,492 61,722
Sales Growth 56.7% 15.0% 56.0% 48.3% 42.5% Share Capital 0 0 0 0 0
Other Operating Income 0 0 0 0 0 Reserves & Surplus 12,658 19,917 57,216 58,491 61,721
Total Revenue 7,713 8,867 13,830 20,508 29,220 Preference Share Capital 0 0 0 0 0
Cost of Goods Sold/Op. Exp 0 0 0 0 0 Minority Interest 0 0 0 0 0
Personnel Cost 5,208 5,540 13,353 16,492 20,000 Total Loans 0 0 0 0 0
Other Expenses 5,703 4,924 6,908 9,675 12,678 Def. Tax Liab. / Assets (-) -1,117 -550 -1,037 -1,538 -2,191
EBITDA -3,199 -1,598 -6,432 -5,659 -3,458 Total - Equity & Liab. 11,541 19,368 56,179 56,954 59,530
EBITDA Margin -41.5% -18.0% -46.5% -27.6% -11.8% Net Fixed Assets 1,473 1,248 1,474 1,644 1,848
EBITDA Growth 0.0% 0.0% 0.0% 0.0% 0.0% Gross Fixed Assets 753 712 1,114 1,505 2,001
Depn. & Amort. 473 414 405 431 502 Intangible Assets 1,070 1,013 1,013 1,013 1,013
EBIT -3,672 -2,011 -6,836 -6,089 -3,960 Less: Depn. & Amort. 350 478 653 874 1,166
Other Income 843 708 1,135 1,977 2,022 Capital WIP 0 0 0 0 0
Finance Cost 119 115 120 120 120 Investments 20 1,378 1,378 1,378 1,378
PBT before Excep. & Forex -2,948 -1,419 -5,821 -4,232 -2,057 Current Assets 13,149 20,133 58,211 59,764 64,153
Excep. & Forex Inc./Loss(-) 0 0 0 0 0 Inventories 0 0 0 0 0
PBT -2,948 -1,419 -5,821 -4,232 -2,057 Sundry Debtors 1,788 1,729 2,652 3,877 5,444
Taxes 92 83 0 0 0 Cash & Bank Balances 11,056 18,102 55,060 55,149 57,657
Extraordinary Inc./Loss(-) 0 0 0 0 0 Loans & Advances 0 0 0 0 0
Assoc. Profit/Min. Int.(-) 0 0 0 0 0 Other Current Assets 305 302 498 738 1,052
Reported Net Profit -3,040 -1,502 -5,821 -4,232 -2,057 Current Liab. & Prov. 3,102 3,390 4,883 5,832 7,847
Adjusted Net Profit -3,040 -1,502 -5,821 -4,232 -2,057 Current Liabilities 2,264 2,106 3,085 3,166 4,049
Net Margin -39.4% -16.9% -42.1% -20.6% -7.0% Provisions & Others 838 1,284 1,798 2,666 3,799
Diluted Share Cap. (mn) 350.4 365.3 436.2 485.6 485.6 Net Current Assets 10,048 16,743 53,327 53,932 56,305
Diluted EPS (INR) -8.7 -4.1 -13.3 -8.7 -4.2 Total – Assets 11,541 19,368 56,179 56,954 59,530
Diluted EPS Growth 0.0% 0.0% 0.0% 0.0% 0.0% Source: Company, JM Financial
Total Dividend + Tax 0 0 0 0 0
Dividend Per Share (INR) 0.0 0.0 0.0 0.0 0.0
Cash Flow Statement (INR mn)

Dupont Analysis
Y/E March FY20A FY21A FY22E FY23E FY24E
Y/E March FY20A FY21A FY22E FY23E FY24E
Profit before Tax -2,948 -1,419 -5,821 -4,232 -2,057
Net Margin -39.4% -16.9% -42.1% -20.6% -7.0%
Depn. & Amort. 473 414 405 431 502
Asset Turnover (x) 0.7 0.5 0.3 0.3 0.4
Net Interest Exp. / Inc. (-) 24 -238 -1,015 -1,857 -1,903
Leverage Factor (x) 1.3 1.2 1.1 1.1 1.1
Inc (-) / Dec in WCap. -243 394 374 -516 135
Others -554 652 5,620 5,508 5,287 RoE -34.6% -9.2% -15.1% -7.3% -3.4%
Taxes Paid -392 485 -488 -501 -653

Operating Cash Flow -3,640 287 -926 -1,168 1,311 Key Ratios
Capex -325 -48 -631 -601 -706 Y/E March FY20A FY21A FY22E FY23E FY24E
Free Cash Flow -3,964 239 -1,556 -1,769 605 BV/Share (INR) 36.1 54.5 136.8 130.1 137.3
Inc (-) / Dec in Investments 1,026 -12,317 0 0 0 ROIC -295.9% -210.8% -1,124.3% -443.9% -170.2%
Others 85 348 1,135 1,977 2,022 ROE -34.6% -9.2% -15.1% -7.3% -3.4%
Investing Cash Flow 787 -12,018 504 1,376 1,316 Net Debt/Equity (x) -0.9 -1.0 -1.0 -1.0 -1.0
Inc / Dec (-) in Capital 10,594 7,809 37,500 0 0 P/E (x) -138.5 -292.3 -90.1 -137.9 -283.7
Dividend + Tax thereon 0 0 0 0 0 P/B (x) 33.3 22.0 8.8 9.2 8.8
Inc / Dec (-) in Loans 0 0 0 0 0 EV/EBITDA (x) -165.3 -325.6 -75.1 -85.4 -139.0
Others -281 -221 -120 -120 -120 EV/Sales (x) 68.5 58.7 34.9 23.6 16.4
Financing Cash Flow 10,313 7,588 37,380 -120 -120 Debtor days 85 71 70 69 68
Inc / Dec (-) in Cash 7,460 -4,142 36,959 88 2,508 Inventory days 0 0 0 0 0
Opening Cash Balance 3,596 22,244 18,102 55,060 55,149 Creditor days 39 36 36 29 33
Closing Cash Balance 11,056 18,102 55,060 55,149 57,657 Source: Company, JM Financial

APPENDIX I
JM Financial Inst itut ional Secur ities Lim ited

Corporate Identity Number: U67100MH2017PLC296081
Member of BSE Ltd., National Stock Exchange of India Ltd. and Metropolitan Stock Exchange of India Ltd.
SEBI Registration Nos.: Stock Broker - INZ000163434, Research Analyst – INH000000610
Registered Office: 7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025, India.
Board: +9122 6630 3030 | Fax: +91 22 6630 3488 | Email: jmfinancial.research@jmfl.com | www.jmfl.com
Compliance Officer: Mr. Sunny Shah | Tel: +91 22 6630 3383 | Email: sunny.shah@jmfl.com
Definition of ratings
Rating Meaning
Buy Total expected returns of more than 10% for large-cap stocks* and REITs and more than 15% for all other stocks, over the next twelve
months. Total expected return includes dividend yields.
Hold Price expected to move in the range of 10% downside to 10% upside from the current market price for large-cap* stocks and REITs and
in the range of 10% downside to 15% upside from the current market price for all other stocks, over the next twelve months.
Sell Price expected to move downwards by more than 10% from the current market price over the next twelve months.
* Large-cap stocks refer to securities with market capitalisation in excess of INR200bn. REIT refers to Real Estate Investment Trusts.
Research Analyst(s) Certification
The Research Analyst(s), with respect to each issuer and its securities covered by them in this research report, certify that:
All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their securities; and
No part of his or her or their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research
report.
Important Disclosures
This research report has been prepared by JM Financial Institutional Securities Limited (JM Financial Institutional Securities) to provide information about the
company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its associates solely for the purpose of information of the select
recipient of this report. This report and/or any part thereof, may not be duplicated in any form and/or reproduced or redistributed without the prior written
consent of JM Financial Institutional Securities. This report has been prepared independent of the companies covered herein.
JM Financial Institutional Securities is registered with the Securities and Exchange Board of India (SEBI) as a Research Analyst and a Stock Broker having trading
memberships of the BSE Ltd. (BSE), National Stock Exchange of India Ltd. (NSE) and Metropolitan Stock Exchange of India Ltd. (MSEI). No material disciplinary
action has been taken by SEBI against JM Financial Institutional Securities in the past two financial years which may impact the investment decision making of the
investor.
JM Financial Institutional Securities renders stock broking services primarily to institutional investors and provides the research services to its institutional
clients/investors. JM Financial Institutional Securities and its associates are part of a multi-service, integrated investment banking, investment management,
brokerage and financing group. JM Financial Institutional Securities and/or its associates might have provided or may provide services in respect of managing
offerings of securities, corporate finance, investment banking, mergers & acquisitions, broking, financing or any other advisory services to the company(ies)
covered herein. JM Financial Institutional Securities and/or its associates might have received during the past twelve months or may receive compensation from
the company(ies) mentioned in this report for rendering any of the above services.
JM Financial Institutional Securities and/or its associates, their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell
the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) covered under this report or (c) act as an advisor or lender/borrower to,
or may have any financial interest in, such company(ies) or (d) considering the nature of business/activities that JM Financial Institutional Securities is engaged in,
it may have potential conflict of interest at the time of publication of this report on the subject company(ies).
Neither JM Financial Institutional Securities nor its associates or the Research Analyst(s) named in this report or his/her relatives individually own one per cent or
more securities of the company(ies) covered under this report, at the relevant date as specified in the SEBI (Research Analysts) Regulations, 2014.
The Research Analyst(s) principally responsible for the preparation of this research report and members of their household are prohibited from buying or selling
debt or equity securities, including but not limited to any option, right, warrant, future, long or short position issued by company(ies) covered under this report.
The Research Analyst(s) principally responsible for the preparation of this research report or their relatives (as defined under SEBI (Research Analysts) Regulations,
2014); (a) do not have any financial interest in the company(ies) covered under this report or (b) did not receive any compensation from the company(ies) covered
under this report, or from any third party, in connection with this report or (c) do not have any other material conflict of interest at the time of publication of this
report. Research Analyst(s) are not serving as an officer, director or employee of the company(ies) covered under this report.
While reasonable care has been taken in the preparation of this report, it does not purport to be a complete description of the securities, markets or
developments referred to herein, and JM Financial Institutional Securities does not warrant its accuracy or completeness. JM Financial Institutional Securities may
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This
report is provided for information only and is not an investment advice and must not alone be taken as the basis for an investment decision.

The investment discussed or views expressed or recommendations/opinions given herein may not be suitable for all investors. The user assumes the entire risk of
any use made of this information. The information contained herein may be changed without notice and JM Financial Institutional Securities reserves the right to
make modifications and alterations to this statement as they may deem fit from time to time.
This report is neither an offer nor solicitation of an offer to buy and/or sell any securities mentioned herein and/or not an official confirmation of any transaction.
This report is not directed or intended for distribution to, or use by any person or entity who is a citizen or resident of or located in any locality, state, country or
other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject JM Financial Institutional
Securities and/or its affiliated company(ies) to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be
eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession this report may come, are required to inform themselves of
and to observe such restrictions.
Persons who receive this report from JM Financial Singapore Pte Ltd may contact Mr. Ruchir Jhunjhunwala (ruchir.jhunjhunwala@jmfl.com) on +65 6422 1888 in
respect of any matters arising from, or in connection with, this report.
Additional disclosure only for U.S. persons: JM Financial Institutional Securities has entered into an agreement with JM Financial Securities, Inc. ("JM Financial
Securities"), a U.S. registered broker-dealer and member of the Financial Industry Regulatory Authority ("FINRA") in order to conduct certain business in the
United States in reliance on the exemption from U.S. broker-dealer registration provided by Rule 15a-6, promulgated under the U.S. Securities Exchange Act of
1934 (the "Exchange Act"), as amended, and as interpreted by the staff of the U.S. Securities and Exchange Commission ("SEC") (together "Rule 15a-6").
This research report is distributed in the United States by JM Financial Securities in compliance with Rule 15a-6, and as a "third party research report" for
purposes of FINRA Rule 2241. In compliance with Rule 15a-6(a)(3) this research report is distributed only to "major U.S. institutional investors" as defined in Rule
15a-6 and is not intended for use by any person or entity that is not a major U.S. institutional investor. If you have received a copy of this research report and are
not a major U.S. institutional investor, you are instructed not to read, rely on, or reproduce the contents hereof, and to destroy this research or return it to JM
Financial Institutional Securities or to JM Financial Securities.
This research report is a product of JM Financial Institutional Securities, which is the employer of the research analyst(s) solely responsible for its content. The
research analyst(s) preparing this research report is/are resident outside the United States and are not associated persons or employees of any U.S. registered
broker-dealer. Therefore, the analyst(s) are not subject to supervision by a U.S. broker-dealer, or otherwise required to satisfy the regulatory licensing
requirements of FINRA and may not be subject to the Rule 2241 restrictions on communications with a subject company, public appearances and trading
securities held by a research analyst account.
JM Financial Institutional Securities only accepts orders from major U.S. institutional investors. Pursuant to its agreement with JM Financial Institutional Securities,
JM Financial Securities effects the transactions for major U.S. institutional investors. Major U.S. institutional investors may place orders with JM Financial
Institutional Securities directly, or through JM Financial Securities, in the securities discussed in this research report.
Additional disclosure only for U.K. persons: Neither JM Financial Institutional Securities nor any of its affiliates is authorised in the United Kingdom (U.K.) by the
Financial Conduct Authority. As a result, this report is for distribution only to persons who (i) have professional experience in matters relating to investments
falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Financial Promotion Order"), (ii)
are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the Financial Promotion Order, (iii) are outside
the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial
Services and Markets Act 2000) in connection with the matters to which this report relates may otherwise lawfully be communicated or caused to be
communicated (all such persons together being referred to as "relevant persons"). This report is directed only at relevant persons and must not be acted on or
relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons and will
be engaged in only with relevant persons.
Additional disclosure only for Canadian persons: This report is not, and under no circumstances is to be construed as, an advertisement or a public offering of the
securities described herein in Canada or any province or territory thereof. Under no circumstances is this report to be construed as an offer to sell securities or as
a solicitation of an offer to buy securities in any jurisdiction of Canada. Any offer or sale of the securities described herein in Canada will be made only under an
exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable
securities laws or, alternatively, pursuant to an exemption from the registration requirement in the relevant province or territory of Canada in which such offer or
sale is made. This report is not, and under no circumstances is it to be construed as, a prospectus or an offering memorandum. No securities commission or
similar regulatory authority in Canada has reviewed or in any way passed upon these materials, the information contained herein or the merits of the securities
described herein and any representation to the contrary is an offence. If you are located in Canada, this report has been made available to you based on your
representation that you are an “accredited investor” as such term is defined in National Instrument 45-106 Prospectus Exemptions and a “permitted client” as
such term is defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Under no circumstances is the
information contained herein to be construed as investment advice in any province or territory of Canada nor should it be construed as being tailored to the
needs of the recipient. Canadian recipients are advised that JM Financial Securities, Inc., JM Financial Institutional Securities Limited, their affiliates and authorized
agents are not responsible for, nor do they accept, any liability whatsoever for any direct or consequential loss arising from any use of this research report or the
information contained herein.

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16 November 2021

INDIA | INTERNET | COVERAGE INITIATION

Insurance - a long-term Omni-channel distribution Initiate with a HOLD

INDIA | INTERNET | COVERAGE INITIATION

Policybazaar is the dominant market leader in a large and growing

India Internet Digital Insurance Zomato Digital Payments India Auto-tech

JM Financial Institutional Securities Limited Page 2

INDIA | INTERNET |COVERAGE INITIATION

Recommendation and Price Target Financial Summary (INR mn)

Sachin Dixit Swapnil Potdukhe

JM Financial Institutional Securities Limited Page 3

India US India France India France

New-age HDFC Ergo Oriental Bajaj Allianz

Exhibit 4. Segment-wise addressable premium Exhibit 5. Segment-wise digitally addressable premium

3,242 2,655 3,376

Life Health Motor Other Life Health Motor Other

Source: Company, JM Financial Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 4

Exhibit 6. Illustrative Unit Economics for new policies

Exhibit 7. Valuation Maths for Policybazaar

Online PoSP # FY21 (INR Mn) Monthly Visits % Free Visits

Policybazaar 51 47,013 10mn 85%

Turtlemint X 40 ~8,000 500k 99%

InsuranceDekho 45 ~5,000 900k 98%

Renewbuy 35 ~7,000 210k 97%

Coverfox 32 ~2,000 1.4m 98%

Source: Company websites, Policybazaar DRHP, Similarweb and JM Financial.

JM Financial Institutional Securities Limited Page 5

Exhibit 9. Insurance: Country-wise Penetration/Development

JM Financial Institutional Securities Limited Page 6

Exhibit 10. Insurance penetration across various segments

Life Insurance Health Insurance Motor Insurance

India US India France India France

JM Financial Institutional Securities Limited Page 7

1.2 1.95 2.85

FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20

Exhibit 15. Channel-wise distribution (FY20)

Brokers 1.2% 31.4% 23.0%

Corporate Agents 16.4% 10.9% 11.0%

Individual Agents 29.4% 40.3% 1.0%

Direct - Online 0.51% 29.0%

Web Aggregators 0.08% NA 1.0%

Others 0.1% 10.7% 1.0%

JM Financial Institutional Securities Limited Page 8

Exhibit 16. Maximum permitted commission rates for insurance intermediaries/agents

IRDA also allows payment of up to

Source: Media Reports, Reliance General Insurance DRHP, JM Financial

3. Policybazaar to continue dominating online insurance distribution, undeterred

seamless customer journey including record-keeping, customer education, payments etc.

4. Foray into physical business to empower newer attractive avenues

Exhibit 18. Key Dos and Don’ts for Online Intermediaries

New business underwriting allowed? X X X

Can intermediary offer rebate/discount/commission share? X X X

Online aggregation and comparison of policies allowed?   

Remuneration for Lead generation and Product display? X  X

Online policy distribution purchases allowed?   

Off-line policy distribution purchases allowed?  X X

Offline PoSP network allowed?  X 

Policy renewal allowed?   

Claims management/settlement services mandatory?  X 

JM Financial Institutional Securities Limited Page 10

5. Operating leverage, larger renewal base and tech investments to enable