PB Fintech Q1 FY25 earnings call
In brief
- Management's tone
- Confident
- What was said
- Leaned positive
- Guidance
- First guidance issued
- Analyst pushback
- Medium
- Stock, next session
- +5.48% (Nifty 50 +1.27%)
- Health and Life new Core premium grew 78% YoY in Q1 FY25; total insurance premium at ₹4,871 Cr and revenue at ₹1,000 Cr+ (52% YoY).
- PAT of ₹60 Cr was deliberately suppressed by ~$3M (₹25 Cr) over-investment in Core operating capacity — could have been ~₹90 Cr.
- Credit business at ₹130 Cr, down ~8% YoY, below the prior 0-10% guidance band; Paisabazaar direction under strategic review.
- New initiatives (PB Partners, UAE) grew 2.3x with adjusted EBITDA margin improving from -31% to -12%; full-year renewal premium growth guided at 45-46%.
- Capital return / shareholder returns ruled out until after March 2026; Reinsurance broking license received but very early stage.
An AI read of the company's transcript · the filing
The numbers
The quarter, Q1 FY25
| This quarter | A year ago | Last quarter | Margin | |
|---|---|---|---|---|
| Revenue | ₹1,010 cr | +51.8% | −7.3% | |
| EBITDA (excl. other income) | ₹1.8 cr | — | −66.8% | 0.2% (-11.6% a year ago) |
| Net profit | ₹60.2 cr | — | 0.0% | 6% (-1.7% a year ago) |
| EPS (₹) | ₹1.34 | — | −0.7% |
From the company's filed results for the quarter ended 30 Jun 2024 (consolidated), not from the call. EBITDA here excludes other income, so it can differ from the figure management quotes.
The numbers management led with
- Total insurance premium (Q1 FY25): ₹4,871 Cr
- Health and Life new Core premium growth: 78% YoY
- Renewal/trail ARR: ₹559 Cr (up from ₹418 Cr last year), ~85% margin
- New initiatives growth (PB Partners etc.): 2.3x (131% YoY)
- Operating capacity over-investment: ~$3 million (~₹25 Cr) on Core, in addition to GST one-off of ₹25 Cr
Guidance
Guidance on this call
| What | For | What management said |
|---|---|---|
| Renewal premium growth (full year) | FY25 | 45-46% growth for FY25, with Q1 at ~34% and Q2 expected at ~40% |
| PAT optimisation potential | Q1 FY25 | PAT of ₹60 Cr could have been ~₹90 Cr absent $3M over-investment in Core operating capacity |
| Shareholder returns / capital return | post-March 2026 | No shareholder returns until after March 2026; will be evaluated then |
| pb Money pilot | Q2 FY25 | Pilot expected in Q2 FY25 using account aggregator framework; no significant cost implication this year |
| pb Rewards pilot | Q3-Q4 FY25 | Pilot expected in Q3-Q4 FY25; no significant cost implication this year |
| Reinsurance business | FY25 and beyond | License received; small team working on broking; clearly not a manufacturing play |
The business
The industry, as management sees it
Management views the Indian Health insurance industry as materially under-penetrated — only 5.5 Cr Indians have retail health cover versus a $10 Bn industry in India vs $800 Bn in the US, implying Health insurance needs to be 8-10x larger over time. The current 'revenue per bed' healthcare model is viewed as unsustainable and is the binding constraint on industry growth, not lack of demand. Renewal rates and claims support seen as the key levers to drive stickier, consumer-centric products.
Risks management named
- Credit/Paisabazaar business softness; unsecured credit supply cycles create lumpiness
- Healthcare 'revenue per bed' model is unsustainable; affordability for ₹6-10L income customers under strain
- Renewal ARR Q1 dip is a 12-month lagged effect of last year's slower fresh growth
- Product mix shift to ULIPs compresses take rates even as volume scales
Q&A
Q&A was dominated by deep-dive questions on Health and Life growth (78% YoY), the contribution margin / take rate mechanics driving the 10pp gap between premium growth and revenue growth, and the underwhelming Credit/Paisabazaar performance. Management pushback was strongest around (a) Credit business trajectory — where CEO Yashish openly admitted disappointment and asked for 1-2 quarters to articulate a clearer direction, and (b) near-term cost trajectory — where the team firmly refused to commit to next-quarter contribution margin guidance, reiterating growth-stage discipline. Notable analyst surprise was the Reinsurance license confirmation; strategic clarity on secured vs unsecured at Paisabazaar and on hospital/healthcare partnerships was explicitly deferred to subsequent calls.
Not answered directly
- Near-term (next-quarter) contribution margin trajectory
- Paisabazaar secured/POSP strategy direction
- Hospital partnership / healthcare cost-model strategy
- MyLoanCare write-off quantum / ULIP growth quantum
Every question, with its answer
1. Paisabazaar / Credit strategy
Sachin Salgaonkar, Bank of America
Question. Following up on Paisabazaar/Credit. The industry's recovery towards unsecured is slow — how long before we see a recovery, and any plans to revisit the business model?
Answer, Naveen Kukreja, Co-founder & CEO, Paisabazaar. Industry growth should resume in H2 on the back of 11% nominal GDP and retail credit growth. Secured is expected to outgrow unsecured; secured share targeted to reach ~50% of disbursals from current ~15%. Evaluating POSP distribution. CEO Yashish added that management is rethinking whether to be more than an unsecured credit platform — citing European remortgage market as inspiration; expects clarity on Paisabazaar direction in next 1-2 quarters.
Follow-up. What's the right to win in secured lending for a fintech competing with traditional players?
Answer. Same transparent choice/value proposition as in unsecured. The differentiator in secured will be last-mile fulfilment (offline), where industry is not yet digital. Building offline fulfilment capacity; expect results in Q2/H2. Credit score business continues to be the brand-onramp; engagement to be strengthened via account-aggregator-based personal finance products (development stage).
2. Employee/ESOP expense one-offs
Sachin Salgaonkar, Bank of America
Question. Is there any one-off in employee expense or ESOP, which moved up QoQ?
Answer, Management, PB Fintech management. ₹25 Cr GST cost was paid in Q1 — this is a one-off sitting in Other expenses, not in Employee or ESOP. Operating cost over-investment explained separately.
3. Shareholder returns / capital allocation
Sachin Salgaonkar, Bank of America
Question. On shareholder returns — with new initiatives scaling, no big M&A, and good cash on the balance sheet, any thoughts on capital return over 12-18 months?
Answer, Yashish Dahiya, Chairman & CEO. Shareholder returns are not on the cards anytime soon; will be evaluated after March 2026. The current business does not require the amount of capital on the books, but the company will continue to invest in growth.
4. Insurance take rates vs contribution margins
Sachin Dixit, JM Financial
Question. Why is there a divergence between take rates dipping YoY even as Health/Term mix is gaining (which should support take rates)?
Answer, Yashish Dahiya, Chairman & CEO. Take rate decline is driven by mix shift within Savings towards ULIPs (lower take rate) and away from Capital Guarantee. Health and Term take rates unchanged. Contribution margin dip is because Health fresh business comes at ~0 contribution in year one (vs ~40% blended) — the 0-contribution year-1 effect is the explanation, not product-level take rate erosion.
Follow-up. How much have ULIPs grown YoY and have they really gained in mix?
Answer. Management did not give a precise ULIP growth number; explained mechanically that if Savings is ~25% of business and its margin has come down ~15%, that explains ~4pp of overall take rate compression. Suggested Rasleen can provide exact figures later.
Not answered directly.
5. MyLoanCare investment write-off
Sachin Dixit, JM Financial
Question. Have you written off the MyLoanCare investment? What was the original expectation?
Answer, Yashish Dahiya, Chairman & CEO. MyLoanCare was one of three original investments (along with YKNP and Visit Health). Mistake was taking 70% equity — sweet spot is 20-35%; beyond 50% founders disengage. Founder left, and PB Fintech did not want to run a non-founder-led company. Called it an 'early learning' and unlikely to repeat such investments unless strategically motivated.
Follow-up. What was the nature of business under MyLoanCare?
Answer. Tech-based NBFC, intended to build its own book; PB Fintech never intended to perpetually fund a loan book.
6. Renewal ARR trajectory
Ashwin Mehta, Ambit
Question. Renewal ARR has dipped this quarter (first time seen) — what's driving it?
Answer, Yashish Dahiya, Chairman & CEO. Renewal rates at R1/R2/R3 are actually better than before. The dip is purely a function of the slow growth 12 months ago; Q1 was the last quarter of this effect. Full-year renewal premium growth will be ~45% (Q1 ~34%, Q2 ~40%, then higher). Sarbvir added that ARR is a moment-in-time metric and rolling 4-quarter numbers continue to grow strongly.
Follow-up. Just a reminder on credit-linked revenue this quarter.
Answer. Credit revenue was ₹130 Cr for the quarter.
7. Savings business progress
Srinath V, Bellwether Capital
Question. Progress on Savings business — offline channel, market share, conversion, and product mix over the last 18 months?
Answer, Yashish Dahiya, Chairman & CEO. Savings market share has approximately doubled. Three drivers: (1) offline strategy (first to take it offline ~2 years back), (2) regional expansion via 12 centres in regional languages (regional-language productivity now exceeds Hindi), (3) better product mix — selling lowest-cost ULIPs (often cheaper than mutual funds) to an evolved Policybazaar customer. NRI largely pure ULIP.
Follow-up. On ULIP market share specifically, how is it trending?
Answer. ULIP sales up, and ULIP as % of industry is also up — combined, market share gains are material.
8. Health/hospital engagement strategy
Srinath V, Bellwether Capital
Question. On Health, given ~15-20% of retail hospital claims could be from our base, can we directly engage with hospitals to provide extra service?
Answer, Yashish Dahiya, Chairman & CEO. Yashish acknowledged spending >50% of his time plus Alok's on this exact problem in the last 6 months; Board-level discussions underway. Today's healthcare is built on 'revenue per bed' — future model should be 'lifetime value of customer.' Concrete solution to be shared in a quarter or so.
Not answered directly.
9. Operating leverage and new initiatives investment
Dipanjan Ghosh, Citi
Question. Contribution margins down but EBITDA up — what overhead leverage is driving this? How to think about incremental Feet on Street / new initiatives investment? pb Money and pb Rewards — strategy and cash burn?
Answer, Management, PB Fintech management. Fixed costs are genuinely fixed; standard 10-12% annual increments. POSP/Corporate/UAE built mostly via internal management, so new businesses carry limited incremental cost. POSP/Feet on Street to break-even over a few years; management incentivised on a 5-7 year profit horizon. pb Money pilot in Q2 (account aggregator-based personal finance); pb Rewards loyalty pilot in Q3-Q4 — no significant cost implication this year. Feet on Street is ~20% of sales today.
Follow-up. What was retail Health growth for the quarter?
Answer. The 78% combined Health and Life number is fairly representative of both; not more than 2% difference between them.
10. Renewal premium growth and Health growth drivers
Madhukar Ladha, Nuvama
Question. Renewal premium growth — you mentioned ~45% for the year. How much of the 80% retail Health growth is churn vs new lives, and how much is multiyear?
Answer, Yashish Dahiya, Chairman & CEO. Multiyear share this year is LOWER than previous years — so growth is understated, not inflated. Churn is much lower than industry (~50-60% of industry levels). Growth is from fresh lives and affordability via monthly/quarterly payment modes, not from multiyear or porting. Health and Life at ~80% growth; retail Health industry at ~20%.
Follow-up. Margin differential between a 3-year and 1-year health policy?
Answer. On an NPV basis they are the same; cash flow favours 3-year slightly but management focuses on NPV, not quarterly reporting.
11. Premium-revenue gap and ARR seasonality
Yash Gandhi, Stallion Asset
Question. Total premium grew 62% but revenue only 52% — why the gap? Why the sequential drop in renewal ARR?
Answer, Yashish Dahiya, Chairman & CEO. Premium-revenue gap is driven entirely by Savings take rate compression (mix shift to ULIPs, away from Capital Guarantee); if Savings is ~20-25% of business and its take rate is ~60% of prior, that explains the ~7pp gap. Q-on-Q ARR comparison is unfair because Q1 industry goes on holiday; rolling 12-month number is the right metric.
12. Segment premiums, Health industry dynamics, Saving products
Shreya Shivani, CLSA
Question. Three questions: (1) Premiums for POSP, Dubai, Corporate? (2) Industry price hike impact on customer behaviour and porting? (3) Any insurer discussions on traditional Saving product commission structures?
Answer, Management, PB Fintech management. (1) POSP ~₹1,000 Cr, Dubai ₹213 Cr, Corporate ~₹272 Cr. (2) Price hike cycle of 15-20 months ago has reversed; renewal rates only improving, porting below market. PB Fintech framed as 'solution, not problem' — superior disclosure, sustained claims ratios, better claim settlement. Modular products with strong no-claim-bonus accumulation drive stickier renewals. No exclusive products by regulation but PB Fintech gets better economics via better disclosure. (3) No participating products on platform; non-par is a small portion — no plans to expand into traditional Saving products.
Follow-up. Just to clarify on non-par — no plans to expand into that segment?
Answer. Right now, no plans to. Management believes eventual winners will be distributors who lean into lower-take-rate, consumer-centric products.
13. Retail Health market share and lives covered
Nischint Chawathe, Kotak
Question. Colour on retail Health market share, headroom, and ~70+% growth — what's the increase in lives covered? And thoughts on product mix concentration?
Answer, Yashish Dahiya, Chairman & CEO. Overall insurance share only ~3-4% — no concerns about saturation. India has only 5.5 Cr retail health insured vs $800 Bn US industry vs $10 Bn India — Health insurance needs to be 8-10x bigger, not 15-20% growth. Lives covered on fresh business grew ~78% in line with premium (ticket size flat). Focus is social security for middle class (₹50K-₹4-5L monthly income); fierce internal teams run independent businesses with no prescribed mix.
14. Reinsurance, Paisabazaar POSP, Credit margins
Nidhesh Jain, Investec
Question. Update on Reinsurance business? Is Paisabazaar building a POSP-style aggregator for small DSAs? And EBITDA/contribution margin of Credit business?
Answer, Yashish Dahiya, Chairman & CEO. Reinsurance license received a few months ago; small team led by a senior manager working on it — clearly NOT a manufacturer (will not be an insurance company or NBFC). On Paisabazaar POSP: strategy under review; 2-3 players in POSP-secured each doing ~₹600 Cr revenue — opportunity may be leveraged, but want to be precise on direction first. Credit EBITDA margin in 10-15% range (similar to overall); contribution slightly higher, EBITDA slightly lower than overall.
15. Contribution margin dynamics and renewal take rate
Jayant Kharote, Jefferies
Question. Marrying the $3M over-investment with the contribution margin commentary — what actually happened? And is the new OpEx recoverable next quarter if growth continues? Renewal take rate at 7%+ — maintainable?
Answer, Yashish Dahiya, Chairman & CEO. Management is focused on growth, not optimising. The $3M is over and above what was needed for this quarter's sales. Refused to commit to next-quarter specifics ('nothing happens in quarters'). Renewal take rate at 7%+ is just a product mix shift, not negotiated improvement — characterised as a stable equilibrium. Very confident on FY renewal premium at ~45%.
Not answered directly.
16. Core vs POSP investment, revenue recognition, value drivers
Sanketh Godha, Avendus
Question. Was the ₹25 Cr / $3M capacity investment on Core or POSP? On POSP revenue recognition change post-EoM — which quarter was it effective? And was the 78% Health+Life growth on Core only?
Answer, Yashish Dahiya, Chairman & CEO. Investment was on Core only (call centre + Feet on Street mix; FOS is ~20% of sales). On POSP revenue recognition: management rejected the premise — no such change in their system; revenues are like-for-like. Q1 FY25 POSP premium ₹1,000 Cr vs Q1 FY24 ₹360 Cr explains the growth. The 78% Health+Life growth is on Core fresh business only — POSP is a volume play, ~5-10% of long-term profit, while Core fresh Health/Life is the 'engine of growth' that drives renewals.
What was said
Topic by topic, in the order it was spoken
Overall framing — early growth stage · Yashish Dahiya (CEO)
- Management positioned PB Fintech as still in the very early days of its growth stage, with growth not seen in a long time on the Core business.
- Anticipation of continued growth led to about $3 million of over-spend on operating capacity this quarter, framed as a sign of confidence.
- Renewal/trail revenue (ARR ₹559 Cr) flagged as the bulk of long-term value, operating at ~85% margin.
Insurance business performance (Health, Life, Core) · Yashish Dahiya (CEO)
- Total insurance premium for Q1 FY25 was ₹4,871 Cr.
- New Core insurance premium grew 66%; Core insurance premium grew 46%; Core insurance revenues grew 40% YoY.
- Health and Life combined new premium grew 78% YoY — the headline long-term value driver.
- Continued to improve customer onboarding and claims support; insurance CSAT now 89.9%.
Credit business (Paisabazaar) — disappointment · Yashish Dahiya (CEO)
- Credit revenue at ₹130 Cr, down ~8% YoY — below the 0-10% growth guidance band shared previously.
- Credit business has remained EBITDA positive since December 2022; total credit score consumer base at ~46M.
- Management acknowledged this needs to be repaired quickly; secured and POSP channels under evaluation.
New initiatives (PB Partners / UAE) · Yashish Dahiya (CEO)
- New initiatives grew 2.3x (131% YoY); adjusted EBITDA margin improved from -31% to -12%.
- PB Partners continues to lead the agent aggregation market; moved to smaller, higher quality advisors across 18k+ pincodes covering 95%+ of the country.
- Bulk of new initiatives business is still Motor insurance, complementing the Core Health/Life mix.
- UAE insurance premium grew 64% — a pure B2C brand-building play.
Financial summary — revenue, PAT, over-investment · Yashish Dahiya (CEO)
- Revenue grew 52% YoY to just over ₹1,000 Cr; PAT at ₹60 Cr (versus ~₹90 Cr potential had operating cost been optimised).
- Management explicitly stated not trying to optimise profits in this growth phase; over-investment is a deliberate choice.
In their words
I think every organization has a stage. There is a growth stage; there is a majority stage, and perhaps there is a death stage at some point. I believe we are still in the very, very early days of our growth stage.
This could have easily been ₹90 Cr or so, but it is ₹60 Cr, and that is the over investment in operations.
See, at a very fundamental level if there is ever a problem in renewals, you will definitely hear it from us. Like right now, the renewals are in superb shape.
Transcript
We have not transcribed this call's recording. Read the company's transcript (PDF).
The stock after the call
| After the call | Close | Stock | Nifty 50 |
|---|---|---|---|
| Next session Wed 7 Aug 2024 | ₹1,513.50 | +5.48% | +1.27% |
| 5 sessions Tue 13 Aug 2024 | ₹1,482.65 | +3.33% | +0.61% |
| 20 sessions Wed 4 Sept 2024 | ₹1,729.55 | +20.54% | +5.03% |
From the close of Tue 6 Aug 2024, ₹1,434.85: the close before the call day (the call's time is not on file). Adjusted daily closes; the move includes everything else that happened in those sessions.