PB Fintech Q1 FY26 earnings call

What moved the numbers, as management explained it

• Health premium +65% YoY on more new customers added; transactions grew faster than premium, dispelling ATS or multi-year-mix concerns.
• Fresh Health business runs at -20% on a 1-year EBITDA basis, diluting renewal-heavy core insurance contribution margin as Health share rises.
• Core credit business down 22% YoY; credit contribution margin lost ~15%, dragging consolidated contribution margin YoY.
• Q1 salary increments and growth investments (Paisa, healthcare, FoS) lifted non-contribution expenses faster than contribution expenses.
• UAE insurance turning profitable and POSP scaling/granularising lifted new initiatives adjusted EBITDA margin from -12% to -6%.
• 1/n commission accounting plus rapid Health growth continues to drag operating cash flow through September FY26, a known timing distortion. (accounting)

The numbers management led with

• Insurance premium: ₹6,616 Cr, up 36% YoY
• Health insurance growth: +65% YoY (one of highest in 9 quarters)
• Consolidated PAT: ₹85 Cr (6% margin) vs ₹19 Cr (2% margin) prior year
• FY30 insurance premium target: ₹1 lakh crore (first-time disclosure)
• UAE business growth: +68% YoY; profitable for 2 consecutive quarters

Guidance on this call

What changed since the Fri 16 May 2025 call

By business

Balance sheet, capex and funding

• Operating cash flow drag from 1/n commission accounting and Health growth expected to continue till September FY26; 'not material' at current scale.; There is going to be till September, a little bit of drag on cash flow from normal course
• Receivables as of June 2025 not stated on the call; deferred to investor relations team.; Rasleen can provide that to you
• Fixed costs expected to grow at ~2/3rd of revenue growth rate, not in line with revenue.; It will grow at maybe about 2/3rd of our revenue growth or so
• Long-term ESOP/management incentive cost tied to 5-8 year share price and new-initiative profitability, so will vary with those.; our ESOP compensation is largely linked to our share price performance over the long term
• Effective tax rate guided at 8-10% for the next 18 months, on accumulated carry-forward losses benefit.; some where about 8-10% is, I think, the right number to assume for the next 18 months or so
• No specific consolidated debt, capex or working-capital figures or targets were disclosed on this call.

The industry, as management sees it

Management sees the Indian insurance industry at an inflection point - retail Health and Term remain deeply under-penetrated among 300-400M middle-class Indians earning sub-₹1 lakh family income. Alok stated 'in 10 years, our nominal GDP for the country is triple. There is no reason why insurance should not have been, 6x or 10x.' Management believes industry must undergo transformation around disclosures, claims experience, narrow networks and managed care; PB Fintech positions itself as part of the solution rather than chasing current share.

Risks management named

• Credit business contracted 22% YoY with adjusted EBITDA margin at -20%; weak unsecured lending environment
• Fresh Health business operates at -20% year-1 EBITDA, dragging core insurance contribution margin
• Paisabazaar in financial 'dumps' - 2024 profit of ₹64 Cr unlikely to be repeated until 2027
• 1/n collection cycle creating cash flow drag through September 2025
• Industry claims pressure and price hikes impacting Health renewal economics

Not answered directly

• Receivables exact figure as on June
• New initiatives revenue split between credit and insurance
• Paisabazaar mutual fund long-term revenue trajectory

Asked for a number, answered without one

• Receivables figure as of June 2025: Mandeep/Yashish did not give a figure on the call; deferred to investor relations with a narrative on 1/n cash drag through September FY26.
• New initiatives ₹514 cr revenue split between credit and insurance: Management said: 'That much I don't have. Maybe Rasleen can answer that offline.'
• Breakdown of new initiatives 5.3% contribution margin by POSP, UAE, Corporate: Management declined specifics; only said UAE profitable, UAE+Corporate net to near 0, POSP improving; called the pass-through economics a structural constraint.

Every question, with its answer

1. 1. Growth vs profitability, Paisabazaar strategy, POSP competition

   Sachin Salgaonkar, BofA

   Question. Three questions. (1) How is management balancing growth and profitability given core online EBITDA margin is flattish at 14% despite 40%+ core growth? (2) Any change in Paisabazaar strategy under new CEO? (3) Are you seeing competitive intensity from smaller players in new initiatives?

   Answer, Yashish Dahiya, Chairman & Group CEO. On growth vs profit: 'Our focus for the time being is entirely on growth. Yes, we will deliver profits, but they will be an outcome... It's like a 14-year-old kid. Do I want the highest performance from him today, or do I want him to train and have a lot of protein.' On Paisabazaar: Santosh outlined three priorities - growing Secured, monetizing 5.3 Cr customer base via savings products (bonds, FDs, mutual funds next), and building alternate data sources for sharper risk underwriting. On competition: Sarbvir said this is a 'very competitive space all around' but basis of competition is shifting to granular, smaller partners; Yashish added the market is 'becoming more and more real, and that plays to our favour'.

2. 2. Market share in Health, Term and Savings; growth sustainability

   Suresh Ganapathy, Macquarie

   Question. What's your market share in retail Health and retail Term? Also how do you reconcile 30%+ growth guidance with industry growth being capped around 15%? Why is Savings stuck at 2% market share?

   Answer, Yashish Dahiya, Chairman & Group CEO. Yashish: 'We are not in the market share game and I think that's a very important statement to make. We are in the market creation game.' Specific shares: Health ~15% of fresh retail, Term ~25% of industry, Savings ~2% overall (~5% ex-LIC). On growth: 'Policybazaar alone will be bigger than that market projection over the next 10 years... as we become bigger, the market actually does start to grow faster.' Sarbvir added Savings is a 'game of patience', with Pensions now 15% of Savings and ULIPs becoming more cost-efficient than mutual funds over long horizons.

   Follow-up. How can PB grow at 30% when overall market growth is curtailed to ~15%? Why is Savings stuck at 2%?

   Answer. Yashish: 'We are a contributor to the growth of the market. So as we become bigger and bigger, the market actually does start to grow faster.' On Savings, noted IPO share was 0.4% vs 2% now. Sarbvir emphasized 'better-quality products will win' and Pension is a 10-15 year opportunity; 'in the end, the better-quality products will win, and they will become a greater and greater part of the market'.

3. 3. Health growth drivers and new initiatives margin trajectory

   Sanketh Godha, Avendus Spark

   Question. Is Health's 65% growth driven by higher long-term policy mix? Will take rates improve once deferred commissions are recognized upfront? Second, can you break down the 5.3% new initiatives contribution margin into POSP, UAE and Corporate, and how should we think about it by FY27 and FY30?

   Answer, Yashish Dahiya, Chairman & Group CEO. Yashish: 'our number of transactions has actually grown at faster than that... we are adding more customers than ever before' - 'no games in this 65% number'. Sarbvir confirmed multi-year share is unchanged YoY. On new initiatives: 'UAE and Corporate kind of balance each other, so they together become very close to 0. POSP has been improving in margins.' Long-term: 'next year you should expect it to be about 0'... 'POSP business is basically a pass-through business... maybe something like a 5% should appear at some point.' Corporate revenue ₹430 Cr, POSP ~₹1,300 Cr. New initiatives revenue split (credit vs insurance) deferred to IR.

   Follow-up. Can 5.3% improve to 7.5-8% by FY27? What about FY30? And premium breakup of POSP/Corporate/UAE, plus new initiatives revenue split credit vs insurance?

   Answer. Sarbvir: 'next year you should expect it to be about 0' near-term; long-term 'maybe something like a 5% should appear at some point but whether it happened by 2030 or 2029 or 2031, I don't know'. Gave POSP ~₹1,300 Cr and Corporate ₹430 Cr. New initiatives ₹514 Cr split between credit and insurance deferred to IR.

   Not answered directly.

4. 4. PB Connect, ESOP cost, non-ULIP savings, expense growth pattern

   Shreya Shivani, CLSA

   Question. What's the Q1 PB Connect revenue? ESOP cost outlook for next 2 years? Incremental on non-ULIP savings expansion? Why are expenses outside contribution growing faster than expenses within contribution if it's all for growth?

   Answer, Yashish Dahiya, Chairman & Group CEO. PB Connect at ₹43 Cr this year (vs ~₹50 Cr last year with seasonality). On ESOP: 'we will only get rewarded when over a long period of time, over a 5-8 year period, the stock price also does' - management aligned with investors. On non-ULIP: Pensions was almost 0 last year, now 15% of Savings; also Child plans. On five-product focus: Health, Pensions, Term, Child education, Credit. On expenses: 'It will grow at maybe about 2/3rd of our revenue growth or so' - Q1 has increment impact. The 'multi-year plan' approach was reiterated: 'we don't put out in the market in terms of our short-term business plans'.

   Follow-up. On Pensions - is it with most of the 14 insurance partners or just nascent stage with a few?

   Answer. Sarbvir: 'it's pretty much everyone. I think it's over 10 already, and whoever is left is slowly come on board.'

5. 5. Feet on Street scale, POSP granularity, Paisabazaar mutual funds

   Dipanjan Ghosh, Citi

   Question. Can you quantify sales personnel/Feet on Street and how it has scaled? What's the mix in PB Partners between Motor and non-Motor? With Paisabazaar launching MFs, is broking on the radar?

   Answer, Sarbvir Singh, Joint Group CEO. Sarbvir: 'almost 25% of our sales team present in over 200 cities where we offer Feet on Street capability; about 30% of our business comes from there' of Health and Life assisted. On PB Partners: 'almost 2/3rd or more of the business comes from people who are doing very small amounts of business every month' - cross-sell (Motor + Health + PA) growing. On Paisabazaar MFs: Santosh noted industry growing at 20%; 'just with bonds being launched a month back, we are already a ₹1 Cr AUM without any marketing spend'. Yashish added broking isn't on radar; Paisabazaar leveraging Policybazaar's back-end platforms and Account Aggregator framework. FoS may go from 30% to ~50% of assisted business over 3-4 years.

   Follow-up. What was the FoS % last year? Is 30% going to 50%?

   Answer. Sarbvir: 'It's been growing... now, it is not growing at a very dramatic pace anymore. I think what is happening is it's deepening a lot more' - mixed model with call centre + physical meetings. 'If you look 3-4 years out, maybe it's 50%.'

6. 6. Receivables, tax rate guidance, long-term guidance credibility

   Nischint Chawathe, Kotak

   Question. What's the receivables figure as on June? Can you guide on tax rate for this year and next? Does the long-term profitability guidance assume 8-10% tax?

   Answer, Yashish Dahiya, Chairman & Group CEO. On receivables: 'Rasleen can provide that to you' - clarified there's cash flow drag through September from 1/n collection cycle. Mandeep on tax: 'we have accumulated losses, the carry forward losses benefit which is available to us... whatever tax we are paying is largely on our investment income' - 'some where about 8-10% is, I think, the right number to assume for the next 18 months'. Yashish on long-term guidance: 'Have you seen ever heard us change our long-term guidance?... It stays exactly the way it is. Nothing ever changes' - mentioned Paisabazaar 2024 profit of ₹64 Cr 'may barely hit ₹64 Cr in 2027' as example of long-term planning.

   Follow-up. Does the profitability guidance assume 8-10% tax? Have you changed it?

   Answer. Yashish: 'It stays exactly the way it is. Nothing ever changes. Please appreciate we don't give short term guidance. We usually give these 4 years or 5 years out.'

   Not answered directly.

7. 7. Health renewal take rates, credit margins, PB Money model

   Nidhesh Jain, Investec

   Question. How do you think about Health insurance renewal take rates long-term given vintages deteriorate? Near-term trends - are renewal take rates steady? Credit business EBITDA and contribution margin for Q1? Is PB Money's mutual fund offering fee-earning or direct plans?

   Answer, Yashish Dahiya, Chairman & Group CEO. Yashish on long-term: 'At our scale, we will never be able to pass on even 1% loss to anybody... Our objective is to make sure we have a sustainable, profitable industry.' Sarbvir: 'we have a favourable fresh to renewals ratio. Quality of our book is better than average... I don't, particularly at this point see that being a huge challenge.' Near-term: 'At this point we have not seen any change.' Credit: contribution margin ~30%, adjusted EBITDA -20%. On PB Money MFs: 'Its fee earning.' Sarbvir added suppliers are now saying 'on your old book, I want to pay less, but in a new book maybe we can pay a little more' - positive quality signal.

   Follow-up. Near-term trends in renewal take rates - steady? And is the MF offering fee-earning or direct?

   Answer. Sarbvir: 'At this point we have not seen any change.' Yashish: 'Its fee earning.'

8. 8. Core margin dip, insurance penetration, healthcare strategy

   Sachin Dixit, JM Financial

   Question. Core business contribution margin has dipped YoY - what's driving it? Why is insurance penetration dipping back to FY18 levels when PB has grown well? Any update on the healthcare foray?

   Answer, Yashish Dahiya, Chairman & Group CEO. Yashish: 'Our fresh Health business has grown faster. Our fresh Health business on a 1-year EBITDA basis probably operates at -20%. Our renewal business probably operates 75-80%... the credit business has lost about 15% on the contribution margin.' On penetration: 'we are part of the solution' - 400M middle class need solutions; Alok added 'in 10 years, our nominal GDP for the country is triple. There is no reason why insurance should not have been, 6x or 10x.' On healthcare: Sarbvir said 'it will take us another few quarters to get everything in place... in about a year time, you'll start to see some impact'. Yashish: 'whatever I said all of that does not necessarily require us to be in the physical infrastructure'.

9. 9. Renewal take rate, new initiative cost growth, porting, data keeping

   Madhukar Ladha, Nuvama

   Question. Why isn't the core insurance renewal take rate improving despite more Health sales? Indirect costs in new initiatives grew ~41% YoY - what's driving? Of the 65% Health growth, how much is porting from within your base vs outside? Renewal premium breakup of POSP, UAE and Corporate?

   Answer, Yashish Dahiya, Chairman & Group CEO. Yashish: 'FY24, we were at 6.5%; FY25, we were at 6.7%; now, we're at 6.9%' - inched up. On indirect costs: Sarbvir said costs are being managed and any quarter can have variation from people investment. On porting: 'we do not port. We do not encourage customers to renew with another insurer... 82% of the business that we did was from New-to-Insurance customers' - less porting externally than last year. Data: POSP renewal ~₹180 Cr, UAE ~₹111 Cr, Corporate ₹292 Cr (vs total Corporate revenue of ₹272 Cr same quarter last year, showing strong renewal compounding).

10. 10. Healthcare partnerships, mutual funds right to win, Paisabazaar loan bottoming

    Prayesh Jain, Motilal Oswal

    Question. On healthcare - are all insurance partners aligned with you, or do you need a special arrangement? On mutual funds - is this a second attempt, and what's the right to win vs discount brokers? When does the core online loan business bottom out?

    Answer, Yashish Dahiya, Chairman & Group CEO. On healthcare: 'every partner in the industry is doing this... the industry has to go through a transformation' - mentioned South Africa examples like Discovery and global players like Bupa working on narrow networks and care pathways. On MFs: 'right to win comes from execution' - acknowledged previous attempt 5-6 years ago where 'there was internal conflict between management, because of which that group left'; Yashish noted he's 'a very small investor in that business'. Santosh: 'the fact that Mutual Fund is a large part of household savings for the country today... gives lot of confidence'. Yashish candidly noted: 'We are in dumps right now, as far as Paisabazaar is concerned. We couldn't be in a worse position from a financials perspective, but we couldn't be in a better position from a team perspective.' On credit: Santosh said 'Q3 is when we see things really turning... we should see healthy growth resuming from Q3'.

Topic by topic, in the order it was spoken

In their words