POLICYBZR - PB Fintech Limited Share Price

Management Outlook & Major Points:
PB Fintech's management remains optimistic about sustained growth, driven by strong performance in health (near 60% YoY growth) and term life insurance, offsetting slower savings growth (impacted by market cycles). Key highlights:

1. Core Growth & Profitability:

   • Q3 total insurance premium rose 44% YoY (Rs.6,135 Cr); core insurance revenue up 45%. Revenue grew 48% YoY (Rs.1,292 Cr), PAT surged 92% (Rs.72 Cr).
   • Renewal revenue (trail) now at Rs.665 Cr ARR, doubling every 2 years, seen as a key profit driver.

2. Strategic Investments:

   • Expanding operational capacity and brand campaigns to capitalize on health/life insurance momentum.
   • Tier-2/3 cities contribute ~70% of business; growth focused here with digital/TV outreach.

3. Credit Business Adjustments:

   • Core credit EBITDA-positive, but Paisabazaar faces Rs.40 Cr FY25 headwind. Secured lending (Rs.2,570 Cr disbursal) now exceeds unsecured, though lower-margin.

4. New Initiatives:

   • POSP (agent platform) scaled to 270k advisors; UAE insurance premium up 58%. New initiatives grew 87% with 3% contribution margin.

5. Challenges & Forward View:

   • Savings growth (~30% YoY) lagged due to ULIP-market linkage; health renewals (46% growth) to bolster margins long-term.
   • Prioritizing growth over short-term profitability; leveraging AI/tech for efficiency.

Outlook: Management remains confident in ~30%+ premium/revenue growth, backed by health insurance expansion, tier-2/3 penetration, and renewals. No formal guidance revision, but 2027 targets (Rs.1,000 Cr+ net income) appear achievable. UAE and healthcare ventures (investor talks ongoing) offer additional upside.

Question 1:
"My first question was with regards to profitability. So, while obviously revenue continues to ramp up, the jump in sequential PAT seems a bit muted. What is driving this? Is this just Paisabazaar related impact, or there is more to it, in terms of contribution effect?"

Answer:
The muted PAT growth stems from a Rs.40 Cr YoY impact in the credit business and lower-than-expected savings growth (market-linked ULIPs). Health insurance growth (59% YoY) also contributed to short-term margin pressure due to its upfront cost structure.

Question 2:
"While I understand that Savings is falling a bit short, if you could just sort of touch upon your long-term guidance of 50-55% on the contribution margin. Should we still continue to expect that over the next 2-3 years, or is there any revisit on that?"

Answer:
The 50-55% contribution margin guidance remains intact, with future improvements expected via operational efficiency, AI integration, and reduced acquisition costs as the business matures. Current investments in growth are prioritized over near-term margin optimization.

Question 3:
"An update on the Healthcare foray? If you have anything in place, we'll love a good update?"

Answer:
Negotiations with investors for the healthcare vertical are ongoing, with an announcement expected in ~30 days. Strategic agreements (SSAs) are finalized, but specifics remain confidential until closure.

Question 4:
"This 3% contribution margin looks impressive. Is this the Dubai and the Corporate business, or this is largely the POSP piece? And if we can sort of expect this number to stabilize and move up from here to the sort of 5-7% range that you had at some point entered to?"

Answer:
The 3% contribution margin in new initiatives is driven primarily by PB Partners (POSP) and includes UAE/corporate segments. Margin expansion to 5%+ is plausible but depends on competitive dynamics and scaling efficiency.

Question 5:
"Can you give the Core online business disbursal for the quarter?"

Answer:
Core online credit disbursals stood at Rs.2,866 Cr for Q3, with secured lending (Rs.2,570 Cr) dominating new initiatives. Secured now accounts for 1.4x unsecured disbursals but yields lower revenue per transaction.

Question 6:
"Given the regulator's focus on insurer expense control and pricing hikes, how will this impact Policybazaar's health insurance growth?"

Answer:
Policybazaar's value proposition (new customer acquisition, transparency) remains critical amid industry challenges. Affordability initiatives (e.g., monthly premiums) and service enhancements (90.2% CSAT) offset regulatory headwinds.

Question 7:
"On this high base, should we continue to see 30%+ growth for next couple of years or do you see downside risk to this growth?"

Answer:
30%+ growth is targeted, driven by Tier 2/3 markets (70% of current business) and operational investments. Execution focus and customer-centric product strategies are prioritized over short-term profitability fluctuations.

Question 8:
"Your first-year business is not making money. What is the CAC trend, and what sits in the CAC?"

Answer:
CAC (22-23% of LTV) includes digital marketing and operational costs. Health insurance's low first-year revenue (20% of NPV) impacts margins, but renewals (46% growth) and long-term LTV (2.7x CAC) ensure profitability.

Question 9:
"What portion of health insurance sales are long-term (3-year) policies, and how are commissions recognized?"

Answer:
Long-term policies (3-year) are reported proportionally in renewals. Commission recognition aligns with industry norms, and Policybazaar's focus on premium growth (not commission hikes) sustains competitive neutrality.

Question 10:
"How is agent productivity trending, and what drives growth"”agent additions or productivity gains?"

Answer:
Agent productivity varies seasonally, with Q4 typically stronger. Growth balances new agent onboarding and productivity gains, though ambitious targets led to underutilized capacity in Q3.