Turtlemint Fintech shares end first trading day 11% below IPO price

Shares of Turtlemint Fintech Solutions made a weak stock market debut on Monday, listing at ₹136.20 on the BSE, an 11% discount to its initial public offering (IPO) price of ₹152 per share. The tepid debut of the insurtech unicorn was largely in line with Street expectations, as the stock was trading at a 3.29% discount in the grey market ahead of listing.

Following the listing, the insurtech stock rebounded to hit an intraday high of ₹144.90, before slipping as much as 13% to a low of ₹132.15 on the BSE. The shares finally ended their first day of trading at ₹135.40, down 10.92% from the issue price, with a market capitalisation of ₹3,987.24 crore.

The ₹882.66-crore IPO, which was open for subscription between June 19 and June 23, was subscribed 1.20 times overall, driven primarily by qualified institutional buyers (QIBs), whose portion was subscribed 1.59 times. The retail investor category was subscribed 1.07 times, while the non-institutional investor (NII) segment lagged with a subscription of just 0.52 times.

According to Shivani Nyati, Head of Wealth at Swastika Investmart, the weak listing reflects the market's cautious view of the company's financial profile and valuation.

"Turtlemint Fintech had a disappointing market debut, listing at an 11% discount to its issue price of ₹152, reflecting muted investor sentiment and the modest 1.2 times subscription received during the IPO," she said.

Nyati noted that the company's fundamentals remain challenging, with Turtlemint continuing to report losses and posting a negative return on net worth (RoNW) of 47.29%. She added that the IPO valuation of nearly 6.8 times FY25 revenue appears expensive given the absence of profitability.

She further pointed out that revenue visibility remains uncertain following an 81% year-on-year decline in FY24. Profitability, she said, will depend on the company's ability to achieve scale, as Digital Partner costs account for 70-77% of its total expenses.

Nyati believes the stock is suitable only for long-term investors with a high risk appetite who are betting on the company's leadership position in the insurtech space. She advised investors who received allotment to hold the stock with a long-term perspective while maintaining a stop-loss at ₹128. Fresh investors, she said, should wait for greater price stability before taking exposure.

The Turtlemint IPO comprised a fresh issue worth ₹660.72 crore and an offer for sale (OFS) of 1.46 crore equity shares aggregating ₹221.94 crore. Under the OFS, promoters Anand Rohidas Prabhudesai and Dhirendra Nalin Mahyavanshi, along with existing shareholders including Kunal Shah, Blume Ventures, Nexus Venture Partners, Peak XV Partners, Jungle Ventures and GGV Capital, partially diluted their stakes.

Founded in 2015, Turtlemint operates a technology-driven insurance distribution platform that connects insurance advisors, customers and insurance companies. The company enables users to compare and purchase health, life and motor insurance products and has also expanded into adjacent financial services such as mutual funds and personal loans.

The company plans to utilise the proceeds from the fresh issue to strengthen its technology infrastructure, invest in cloud and server capabilities, fund product development and technology teams, support marketing initiatives, meet lease obligations, and provide funding support to its wholly owned subsidiary, TIB. A portion of the proceeds will also be used for potential acquisitions and general corporate purposes.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)