POLICYBZR - PB Fintech Limited Share Price

During the earnings call on May 16, 2025, management provided a positive outlook for PB Fintech Limited, highlighting several key growth metrics and future strategies. The total insurance premium for Q4 FY2024-25 reached Rs.7,030 crore, up 37% YoY, and for the full year, the total was Rs.23,486 crore, a growth of 45%. Management noted a 48% increase in new health and life insurance premiums. The core insurance revenue grew by 46% YoY while consolidated operating revenue for the year approached Rs.5,000 crore, reflecting a 45% increase.

The management specifically mentioned that while the new insurance core premium grew 21% YoY, it was somewhat subdued due to savings products. They indicated a robust customer satisfaction score (CSAT) at 92.1%. The net profit after tax (PAT) surged to Rs.353 crore, up from Rs.64 crore, marking a significant uptick in margins from 2% to 7% for the fiscal year.

For FY2025, management expects a continued CAGR of approximately 30%. They are confident in the health insurance segment's growth trajectory, outpacing industry growth rates by 4-5x. Despite hurdles in the savings business, they anticipate recovery over the coming quarters, focusing on enhancing product offerings like pensions.

Key points included:

• The UAE insurance premium witnessed a 76% growth, now profit-making.
• They aim to shift towards smaller, higher-quality advisors within their agent platform.
• Operationally, they expect deeper integration of PB Money to bolster customer understanding and drive credit lending efficiencies.
• Management emphasized ongoing investments in technology, particularly AI, to enhance customer service and sales efficiency.

Overall, the company demonstrated strong growth metrics and a clear strategic direction, positioning itself well for the upcoming fiscal year.

Q&A Section Summary of Earnings Call Transcript (May 16, 2025)

Question 1: Can you break down the drivers of the 5% jump in contribution margin, specifically in terms of renewals and new business premium?

Answer: The 5% jump comes from several angles: our core fresh health business operates at a negative margin of 15%-20%, while renewals yield high profitability. The core online business (excl. fresh health) operates at a 20% margin. Thus, half of the margin growth stems from renewals and the core online business, while fresh health sales dampen profitability. We're investing for growth across business fronts, tweaking product offerings during periods of slower savings growth.

Question 2: What led to the sequential improvement in operating cash flow?

Answer: The operating cash flow improvement is driven mainly by reduced call center costs, as we scaled it back after earlier expansions. Significant improvements are evident when observed on a 12-month rolling basis, which accounts for seasonality and one-off costs.

Question 3: How does the company's strategy address the potential reduction in renewal commissions?

Answer: We feel less pressure than the market on renewal commissions due to our solid claims track record. Our renewal claims ratios are improving, allowing us to attract more customers. We're actively working on understanding long-term renewal ratios while ensuring our economic model remains robust with more evolved discussions with insurers.

Question 4: What are your expectations for the savings contribution to premium in FY25?

Answer: We anticipate a slow recovery in the savings segment. The first two quarters might also be slow, as we're focused on introducing new segments like pensions. Excluding savings, overall growth remains in the 35-40% corridor, reflective of our robust market position.

Question 5: Can you elaborate on the expected growth trajectory for health insurance in FY26 and FY27?

Answer: We foresee long-term growth around 30% CAGR. Health insurance is surprising us positively, and we are witnessing growth rates of 4-5x compared to industry growth, driven mainly by increased hospitalization awareness among younger consumers.

Question 6: Given the recent management changes, how will credit business strategy evolve?

Answer: We're focusing on deeper secured lending, enhancing our understanding of consumer risk via our savings initiatives, and building collections capabilities. We aim to create a more robust framework, leveraging tech-led strategies along with deep collections for improving our unsecured lending sector.

Question 7: On the contribution margin for new initiatives, did UAE's performance significantly contribute to improvements?

Answer: While UAE showed positive profitability, its current impact on total metrics is still minimal, accounting for 10-20% of overall figures. However, its long-term potential to drive profitability is promising since it's a core operation comparable to our existing business.

Question 8: What are your plans regarding AI's implementation in servicing and acquisition?

Answer: We're leveraging AI for customer service efficiencies and initial contact strategies. While sales still require human interaction due to the complex nature of insurance, we're engaged in continuous exploration of AI applications across various operational fronts to enhance productivity.

Question 9: What can you tell us about the persistency rates for health insurance renewals?

Answer: Our health renewal persistency is at an all-time high, especially our first-year renewals due to products with increasing No Claim Bonuses. This has led to substantial retention both in terms of policies and premium value, marking significant improvements over prior years.