Alok Bansal (left), co-founder and executive vice chairman, PB Fintech
Image: Amit Verma
Gurugram, January 2023. Yashish Dahiya is not an entrepreneur, he is an emotion. Sample this. “I was not very excited on the day of listing,” confesses the CEO and co-founder of Policybazaar. PB Fintech, which has Policybazaar and Paisabazaar as India’s largest online platform for insurance and lending products, respectively, got listed on November 15, 2021. Any founder whose company gets listed at a 17 percent premium—listing price of ₹1,150 versus an issue price of ₹980—should have all the reasons to be excited, elated and celebrate.
Dahiya, though, was doing none. He was pensive. This is why. “I could see all the expenses happening,” he recalls. The cost of an IPO, underlines Dahiya who co-founded the company in 2008, is quite high. “It is almost 3 to 4 percent of the funds that you’re going to raise,” he says. “I was a bit worried about a lot of expenses.”
What also makes Dahiya unique is his bluntness. “I am candid, but at times, candid can be foolish,” he smiles, adding that he is a man who usually goes by consensus. “Sab ne kaha tha
IPO karna zaroori hai, tu hum kar rahe they
(everybody said doing an IPO was essential, that’s why we were doing it),” he says. Since 2008, every funding contract signed by Dahiya had a clause mentioning IPO. “In a way, it was good that the IPO was happening, finally,” he says.
The IPO did happen and listing happened at 17 percent premium. Dahiya makes another brutal assessment. “I was never comfortable with the pricing,” he says. Though 17 percent premium was amazing, the founder found the numbers baffling. “I was, like, wow,” he says. Two days after listing, there was a bigger wow in store for the entrepreneur. The stock touched an all-time high of ₹1,470 on November 17.
Dahiya couldn’t understand what was happening. “It was a bit of a crazy time,” he recalls. There was a lot of market buoyancy. The issue was subscribed 16.59 times on the back of strong interest shown by institutional buyers. While the portion for qualified institutional buyers was subscribed 24 times, the non-institutional buyers’ portion got a bid of 7.82 times. “I was very surprised. I didn’t know what these people were thinking,” he says, adding that he met a lot of investors and tried to find out the method in the madness. “I used to ask them ki mujhe samjha toh do
(at least make me understand this frenzy),” he says.
Meanwhile, eight months ahead of the IPO, it was Dahiya’s turn to explain something to his father. He asked his son why the family is not investing in the share market. There are so many who are doing it and are having fun. Dahiya, in return, lobbed a counter-question. “Suppose you invest and your money gets halved, how would you feel?” he asked his father, who didn’t take a second to reply. “Heart attack aa jayega (I will have a heart attack),” he said. “Toh phir aap
FD (fixed deposit) mein daalo
(then invest in FD),” was the advice.
Also read: Don't worry about the wild swings, highs and lows. Just keep batting: Hemant Jalan on life after IPO
Fast forward to November 2022. The stock tanked to an all-time low of ₹356.2. The daggers were out, the critics blasted the company, and the negative emotions were at an all-time high. Dahiya, though, stayed calm. “I never panicked,” he says. And there was no reason to. The company did not need to raise money, and it didn’t sell the stock. “So why should the company worry about where the stock price is?” he asks, decoding the thumb rule of investment in stocks. “All I’m trying to say is if you don’t have the heart to lose money, then you shouldn’t be investing in the markets,” he says. There is no guarantee, he continues to laboriously explain his point, and surety that it’ll only go up.
A company and a CEO, Dahiya explains, must focus on the primary job of growing the company rather than looking at share price. “I don’t think you can try to run a company to solve the share price problem,” he says, adding that the stock has to follow the company and not the other way round. “Ek saal mein ye to samajh main aa gaya hai ki
markets in the short term cannot judge companies (In one year, I have realised that markets can’t judge companies in the short run),” he reckons. On January 6, the stock was trading at ₹461.
There is also something that Dahiya has been trying hard to explain: The business model. “We have a complicated business,” he says. Had it been so straightforward, he underlines, Policybazaar and Paisabazaar would have got some serious rivals so far. “There are none,” he contends. In a country which doesn’t have a dearth of talent and capital, why is it that nobody has managed to give us a serious fight, he asks. After March 2024, he lets on, the company would be best-placed and have nothing to explain to the stakeholders. “By then, things will become very clear to people,” he reckons. Also read: Life after IPOs: From sizzling highs to sobering lows, Humpy Dumpty had a great fall
What, though, is clear now is a bulging bottomline. Look at the losses. From ₹59.19 crore in FY18, it swelled to ₹304.03 crore in FY20 and two years later, ballooned to a staggering ₹832.87 crore. Is the falling stock a reflection of the losses? After all, the conventional wisdom is that public market in India values profitable companies or those who have a clear path to profitability. Dahiya begs to differ. “I don’t agree that the US understands loss-making companies better and India doesn’t,” he says. “First of all, we are still a loss-making company, and we are still worth ₹20,000 crore,” he says. This, in itself, debunks the myth that Indian markets don’t appreciate loss-making companies.
So how are Indian investors different from their counterparts in the US? He explains. “In India, there’s a lot more focus on current metrics,” says Dahiya. The US investors, in contrast, want to understand a lot more about the potential of the company. Irrespective of nationality, he underscores, everybody has to see a profit. Somebody is happy to see it five years from now, others might want an early picture and some might wait for long. Pointing out his recent guidance on posting ₹1,000 crore PAT by 2026-27, Dahiya reckons that the number is well appreciated in India. Though in the US, the investors don’t care. “They want to see how the business will evolve over 10 years,” he says.
Commenting on market behaviour and wild upswings in the price, Dahiya maintains that usually people either exaggerate or underestimate the future. “But both are market dynamics, and I’m not capable of controlling these dynamics,” he says. As an entrepreneur, Dahiya is used to grappling with uncertainties. He takes us back to the first year of Policybazaar. “When we started, I thought the company would go bust in 250 days,” he says. The numbers kept improving every year. After two to three years, the ‘suvival’ and ‘bust’ days evened out to 175 days each. “Now, it is 300-plus good days, and maybe 50 bad days,” he says.
Ask him about his learning as a founder of a listed entity, and Dahiya lists out the top one. And the learning comes from a friend’s advice. “You cannot think about everyone. Share price is an investor problem,” he says. But, as somebody who has shares in PB Fintech, is he not worried about the stock price? “As an investor I am,” he says, sharing how a CEO feels. “My job is to make the company do well.” The job of the CEO is to protect the company from lots of noise, and not let pressures pass on to the rest of the company. “I think I’m doing that quite well,” he underlines.
Any advice for those planning to go IPO? Dahiya has one. “Go public when you don’t need to explain your business,” he says. Every founder, he reckons, must ask two questions. Is your time running out or is your time yet to come? If your time’s running out, Dahiya underscores, it means you’ve been selling narratives which are untrue. And if that be the case, the entrepreneur should be worried. But if your time is yet to come and whatever you have committed or promised is on the track to happen, one should not be worried. “Such entrepreneurs will have the last laugh because they have time as their friend,” he signs off.