PB Fintech Q3 FY26 earnings call

Where management's figures differ from the filing

• Adjusted EBITDA / EBITDA YoY growth: said Adjusted EBITDA ₹199 Cr, margin 11%, +154% YoY (stated on call); filed EBITDA ex other income ₹158.78 Cr, margin 9.0%, +473.6% YoY. Stated 'adjusted EBITDA' is ~25% higher in absolute terms and grew at +154% YoY vs filed +473.6%; reconciling items not disclosed on call.

What moved the numbers, as management explained it

• Insurance premium +45% YoY (net of GST) led by new protection +68% and health +79% YoY; core new insurance premium (net of savings) growth accelerated to 56% (vs 35-45% range over prior 11 quarters).
• Operating revenue +37% YoY to ₹1,771 Cr supported by Core insurance +42%, partly offset by Paisabazaar -4% YoY.
• Adjusted EBITDA margin expanded from 6% to 11% on operating leverage; new initiatives contribution margin at 6% with fixed costs growing slower than revenue.
• PAT grew 165% YoY to ₹189 Cr partly on GST transition tailwind; management attributed an extra 20-30 points of growth to post-GST search and conversion. (one-off)
• Premium reporting from Q3 FY26 onwards is ex-GST with historicals restated; this changes the optics of headline premium growth. (accounting)

The numbers management led with

• Q3 FY26 insurance premium (net of GST): ₹7,965 Cr, up 45% YoY
• Q3 FY26 protection premium growth: 68% YoY
• Q3 FY26 PAT: ₹189 Cr, up 165% YoY from ₹71 Cr
• Policybazaar share of new retail health lives in India FY25: ~40% of ~40 lakh new retail health lives added industry-wide

Guidance on this call

What changed since the Wed 29 Oct 2025 call

By business

Balance sheet, capex and funding

• Board meeting on Feb 5 to consider QIP for international expansion; size not disclosed pending approvals.
• Analyst noted ~₹5,000 Cr cash on balance sheet; management did not dispute but did not elaborate.
• Capital deployment framed as 'value investment' that would be EPS/PE accretive; Pension investment under consideration once product clarity emerges.
• PB Health capex on physical capacity: hospital in Noida, small hospital in Gurgaon expected live in ~3 months.

The industry, as management sees it

Management views the EoM framework (30% general / 35% health expense cap) as a positive structural development and would welcome further compression if benefits pass to consumers. They see insurance as a distribution business where 95-98% flows through intermediaries, view MGAs as the next 'NBFC-style' transformation of the industry, and believe developed markets (US 50x, Europe 15x India) are 'profit-rich but almost zero innovation' — a ripe opportunity for India's evolved distribution model.

Risks management named

• GST-driven demand tailwind likely to normalize as customers adjust to new price levels
• Potential commission regulations and EoM framework compression over time
• Customer acquisition cost variability across TV, OTT, paid, influencer channels
• PB Health execution risk — physical capacity, tech, regulatory approvals all in motion
• International M&A outcome contingent on board, shareholder, and regulatory approvals

Not answered directly

• QIP size and target
• International acquisition financial benchmarks
• Specific QIP use of proceeds
• Whether PB-led MGA policies are planned

Asked for a number, answered without one

• QIP size: Mgmt said cannot disclose till board approval on Feb 5; only committed that any deployment would be EPS/PE accretive.
• International acquisition financial thresholds: CEO declined to share more, said 'we've said everything we know'.
• Sustainability of Q3 growth into Q4: CEO said that's 'a very optimistic takeaway'; growth won't necessarily continue at this pace.

Every question, with its answer

1. 1. QIP, COR model, commission cuts

   Sachin Salgaonkar, BofA Securities

   Question. Three questions: (1) QIP announcement — how is management thinking about international investments and which areas are of interest? (2) Impact of transitioning to a COR-based model for health and term — when will it show in the P&L? (3) How has premium growth been since the quarter, given the prior quarter was partly driven by price increase expectations, and what's the view on potential commission cuts in the sector?

   Answer, Yashish Dahiya, Chairman & Group CEO. On QIP: board meeting requested for Feb 5, then shareholder approval. Spent 3-4 years looking at Middle East, Southeast Asia, European markets; looking at size, ability to transform, comfort. No target identified yet; India business is 'very, very strong' with arguably 93% market share. On growth, Sarbvir and I will address; on commission cuts, both of us can pitch in. Sarbvir: COR is a journey, not a dramatic step change; we have always worked with insurers on quality of business. Post-GST volumes are up; quality gives room to share more with us. The extra 20-30 points of growth were from GST tailwind; no inorganic step. Yashish: We 'can't comment on the debates'. EoM framework (introduced 33 months ago) caps at 30% general / 35% health — in line with global norms. Cost is fungible across marketing/employees/variable/hybrid. I would 'always welcome' lower EoM and lower take rates if benefit passes to consumer. Our quality of book means any tightening benefits us disproportionately. Take rates have not changed in 17 years because we add value.

   Follow-up. If Indian growth is accelerating, why look internationally? What expertise are you trying to bring abroad? Is it replication of India or something else?

   Answer. Policybazaar is 'perhaps the most evolved insurance distribution model across the world' — adds value to consumers and partners. US is 50x Indian market, Europe is 15x. 'Almost zero innovation' in profit-rich developed markets. Yashish notes he was meant to lead Confused.com in 2006; Policybazaar was modelled on that. Diversification has advantages; time for India to have its own MNCs. 'Why should only Google and Facebook operate in India?'

2. 2. Growth sources and commission dynamics

   Sachin Dixit, JM Financials

   Question. First, on growth — most industry data shows much lower growth; even close partners grew at half your pace. Where is the growth coming from? Second, on effective commissions: health and term (highest Y1 commission) grew fastest; new business premium grew at similar rate to renewals — commissions were still roughly flat. Are we reading too much into it?

   Answer, Sarbvir Singh, Joint Group CEO. Sarbvir: Protection business grew 68%; protection is over half of business, so math gets you to the headline. Risk products can't be sold on commission alone — they require disclosure capture and claim support. Policybazaar has spent 18 years on category education, not just brand. GenAI/ML deployed to capture disclosure, communicate it; this allows insurers to price risk correctly, pay claims, build a virtuous circle. 'What we are seeing today is the benefit of decades plus of effort.' On commissions: Yashish says 'you might be reading too much into it.' In health, our largest-selling product is also our lowest-commission product — we pass disproportionate benefit to consumer, the insurer agreed because of our quality. 'We are not commission-centric, we are consumer-centric.'

3. 3. QIP size

   Sachin Dixit, JM Financials

   Question. Size of the potential QIP — you already have ₹5,000 Cr odd of cash and are looking to add more. Are we looking at something very sizable, or multiple acquisitions?

   Answer, Yashish Dahiya, Chairman & Group CEO. 'I don't have the permission to talk about it till I have board approval.' Board meeting in 3 days.

   Not answered directly.

4. 4. COR defensiveness, commission levers, capital allocation

   Manas Agrawal, Bernstein

   Question. Three questions: (1) Is the COR approach a defensive move against commission regulation — will the non-commission part of the take rate be outside any cap? (2) If commission is cut or deferred, what levers do you have — call center, marketing, or both? (3) Capital allocation: QIP, acquisitions, and other income being meaningful — how to think about deployment?

   Answer, Yashish Dahiya, Chairman & Group CEO. Yashish: 'We are very, very comfortable within the EoM. Take rates are 16-17%, fairly average.' Whatever you've heard in news 'takes time to fructify'. EoM is more evolved than a fixed commission split — if 30% becomes 25% or 20% over time, that's fine. We went to COR not to make more money but to settle higher claims and give better products. 'We actually don't want to make more money.' Being most efficient in disclosure capture means tougher market conditions = more market share. Sarbvir: Not defending a profit pool. We barely made money some time back; the path is premium up → revenue up → contribution up → fixed costs slower. 'We are not driving to a business model number.' Added IRDAI data: ~40 lakh new retail health lives added in 2024-25; Policybazaar's share ~40%. On capital: Yashish — new initiatives generating money; pension once model is right would be minuscule; would like to diversify in India and internationally. Whatever deployment happens would be 'significantly EPS accretive, or PE accretive' — 'value investment, which we can transform and make far, far stronger'.

   Follow-up. On the capital allocation piece, can you put more color around that as strategy?

   Answer. Yashish: All new initiatives generating money; pension model might attract minor investment — minuscule vs overall org. Subject to board/IRDAI/shareholder approval, would diversify in India and internationally. Whatever we do would be 'significantly EPS accretive, or PE accretive' — value investment, transformed and made stronger. Alok: 'Execution-led business; no secret sauce; customer at the center.' We are 'not a distributor only; we are a partner.' 18 years of compounding. India depth (insurance brokerage, garage networks, PB Health, PB Pay) and width (bonds, pensions) both funded from internal accruals. Dubai/Middle East learnings potentially applicable to SE Asia, Middle East, Europe. Looking for 'strategic fit, large market, ecosystem alignment, comfortable team and financials.'

5. 5. International cost base, POSP, hybrid expansion, Paisabazaar products

   Dipanjan Ghosh, Citi

   Question. Four questions: (1) For international expansion, can the cost base be shifted/domiciled in India? Do developed-market regulations allow that? (2) POSP consolidation has benefited you in growth and margin — is the path to profitability over 2-3 years better than expected given this consolidation? (3) Progress on hybrid strategy into newer locations. (4) Paisabazaar: you mentioned bonds; previously mentioned mutual funds and broking — what's the long-term product suite?

   Answer, Yashish Dahiya, Chairman & Group CEO. On international cost base: 'Clearly, technology, finance processes... India does tend to have a very significant advantage.' Integration opportunities and cost synergies are real. On POSP: Insurance is a high-level push sale — agent spends 95% on sale. We're at ₹7,000-8,000 Cr ARR; #2 at ₹4,000-5,000 Cr. 'Margins are very, very thin... maybe a small sliver of revenue.' Sarbvir adds — POSP and mutual fund B2B2C are 'two businesses that could not be more separate.' Insurance is push (no AUM), mutual fund is pull (AUM compounding). Consolidation value is 'not as valuable as it may seem' because underlying agents are the same. PB Partners goal is scale, not near-term profit. 'It does not make big losses' — fixed costs are very small; mostly variable. Sarbvir: Health expanded to ~300 cities with home-meeting presence. New 'savings' model in mid-sized cities (smaller offices, advisors meet in person) — now in 20-odd cities, 'very delighted' with early results. On Paisabazaar: Santosh — vision is 'full financial platform' managing assets and liabilities. Bonds and FDs launched, building up; mutual funds 'maybe a quarter later'. Goal is to improve LTV and stickiness across the customer lifecycle.

6. 6. GST sustainability, take-rate, PB Health progress

   Nidhesh Jain, Investec

   Question. Three questions: (1) GST impact is behind us — is what we saw this quarter sustainable? (2) More on the take-rate/economics side — are partner negotiations done? (3) PB Health update — when is the first hospital going live?

   Answer, Yashish Dahiya. Q1: 'That's a very optimistic takeaway... I would definitely not say that it would continue forever or something.' Sarbvir: Take-rate negotiations are 'very cordial'; GST win-win is behind us, proceeding with confidence. Yashish adds — Sarbvir's answer to your GST question was about volume, you asked about take rate: 'in the mind, we are all tuned to think volume. It's just how we are... take-rate is the outcome.' On CAC: Yashish — channel mix has evolved through TV, regional TV, OTT, connected TV, Google non-brand, Meta, influencer. 'Spend over revenue has gone down in the last 3 years' — outcome, not intent. Marketing teams 'do a great job'. On PB Health: Alok — execution business; Noida hospital acquired, small Gurgaon hospital in 3 months. Focus on keeping people out of hospital — OPD, digital GP, preventive, chronic disease management. Yashish elaborates — PB Health is NOT a hospital chain; it's a network of 14,000+ hospitals segmented into secondary/tertiary with routing logic (analogous to PB Wheels). 15-20% is self-owned with differentiated tech. 4 properties at different stages: one fully acquired and ready, one in development, one to go live in 3-4 months.

7. 7. Acquisition criteria and MGA framework

   Supratim Datta, Jefferies

   Question. Two questions: (1) Acquisition criteria — what boxes would an acquisition need to tick to be lucrative? (2) MGAs now allowed in the new Insurance Act — how are you looking at that, and would you underwrite policies under PB's own name (PB-led policies)?

   Answer, Yashish Dahiya, Chairman & Group CEO. Yashish: Criteria for international acquisitions — 'large market, stable player. So, there is not much damage we can do to it through the acquisition.' Second: can we transform it to the better — do we have skills to add? Familiarity with market (UK 'like the back of my hand' vs Indonesia is hard). On MGA: 'MGA is the single most transformational move that can happen in the Insurance industry.' Like NBFCs were to banking. When the distributor becomes responsible for both underwriting and claim settlement at wholesale level, it transforms insurance. Sarbvir: Ties into our 'focusing on the customer from the beginning till the end.' Flexibility to make underwriting/claims decisions at Policybazaar level. Brand — 'we are very comfortable' with selling insurer-branded products. Goal is insurance penetration; insurance is a distribution business — 95-98% sold by intermediaries. 'Double down on your strength.'

   Follow-up. Are you looking only at insurance-focused platforms, or insurance plus other products?

   Answer. 'Let's wait and see. I have to first get board approval. Already I'm speaking a bit out of turn here. I have to first get board approval, then we have to get shareholder approval. Let's see if we get those two. And once we get those two, let's then get the money in the bank, and then let us see what all we can approach and how we can do it.'

   Not answered directly.

8. 8. Manufacturing, health growth decomposition, health margins

   Prayesh Jain, Motilal Oswal

   Question. Three questions: (1) If you stay within insurance, would you also look at insurance manufacturing, or is it restricted to distribution? (2) Health insurance growth decomposition — sum assured going up, multi-year policy adoption, or new lives? How did each contribute? (3) Health margins — if you look at core online insurance, margins have been flattish. Is that just scale or something else?

   Answer, Yashish Dahiya, Chairman & Group CEO. On manufacturing: 'I don't think we are going into manufacturing quite yet.' On health growth decomposition: Yashish — 'Mathematically, nobody can deliver the kind of growth we are delivering over the last 12 quarters, by any of those means.' Core answer is claims experience. 'We have the right to settle claims because our disclosures are better. Because of that, we get the right to settle claims, and we put a huge amount of effort in settling claims.' Sarbvir: 79% is fresh new growth. Multi-year policy proportion is roughly same YoY. Portability has gone DOWN this year. Contribution of fresh lives to business is at its highest. On margins: 'In health, you mostly make your profits from renewals. In life, you mostly make your profits from fresh business. Because both term and health are growing, it's become like a double-engine contributor. For 12 quarters growing 60% on health, renewals also start to grow at the same rate — which is what is starting to happen now.'

9. 9. Growth decomposition and international financial benchmarks

   Nischint Chawathe, Kotak

   Question. Two questions: (1) Term and health together are around half the business, grown ~70%. Is it customer count, policy count, or ticket size? Is this growth 'preponing' or is the new normal somewhere between this quarter and prior? (2) International foray — are there threshold ROCEs or other financial benchmarks to keep in mind?

   Answer, Yashish Dahiya, Chairman & Group CEO. On growth: 'It's largely number of customers. Health, a little bit of ticket size has also grown, year on year, but that's a smaller contribution.' On sustainability: 'Me and Sarbvir were joking today morning, because we were saying one day this growth won't be there, and we said that doesn't seem like an immediate problem... It's pretty hard for us to say that, we are going to be at 30% growth on health, anytime soon, but it might happen.' On international benchmarks: 'I would say I don't want to bore all of you with the same answer again and again. I think we've said everything that we know. I'm usually known to be saying more than what I'm allowed to say anyway. So, I think we've said everything we know. We don't know more than this.'

   Not answered directly.

Topic by topic, in the order it was spoken

In their words