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PB Fintech Ltd
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Hi, everyone. Welcome to PB Fintech Earnings Call Quarter 4 Financial Year 2023/2024. Today, we have with us Yashir Naya, Chairman and CEO of PB Fintech; Alok Bansal, Executive Vice Chairman, PB Fintech; Sarbvir Singh, Joint Group CEO, PB Fintech; Naveen Kukreja, Co-Founder & CEO, Paisabazaar; Mandeep Mehta, Group CFO, PB Fintech; and I'm Rasleen. I will now request Yashish to give his introductory address.
Thank you very much, and good morning to everybody who's in this part of the world. First of all, I'm super pleased with this last quarter. And the branded using for that is Health & Life Insurance combined, which is the core of our business and a bulk of our long-term value had combined growth of 53% year-on-year in new premiums for the quarter. And that is clearly what drives our long-term profitability and [ 100% ] present value of our business.
Health, I must call out as significantly outperformed this number of 53%, but we do not disclose specific segment-wise percentages. Our total insurance premium for the quarter was INR 5,123 crores, and that gives us an ARR of INR 20,000 crores, which was also a long-awaited milestone. So we're also very proud of that. And our new insurance premium grew at 47% for the quarter, which given everything else seems like a fantastic outcome.
Our core insurance premium. So for our online business, the insurance premium, including renewals, grew at 40%, and the core insurance revenue grew at 36%. There was a slight -- it was slightly lower than the 40% growth, and that is primarily because of a lower take rate of the savings side and a few changes -- which were quarter-on-quarter a few changes keep higher than that, but that's basically it.
The credit-linked business, Paisabazaar has slowed down pretty much as expected, so we had been guiding towards a 20% growth. It grew at 22%. If you noticed this, this quarter we are giving out this very specific guidance of how much it got insurance grow, how much is it core? We do not do that. But it is because there's a number that needs to be explained here.
New initiatives grew at 15%. Now that may seem like it wasn't a great growth, but that is actually not the case. Quarter-on-quarter new initiatives grew 50%. So last year, we had an extraordinary same quarter, where we had grown more than 100% quarter-on-quarter. So if you think about it, last year, Q3, new initiative revenue was INR 185 crores. It went to INR 365 crores, which was almost a doubling. So it was a very special quarter. And it was very difficult to grow on that INR 365 crores base, but we still grew at 15%. But because a significant part of the revenue, that subdues the overall revenue outlook to 25%. So the combination of these 3 essentially comes out to 25%. So we had aimed for a full year PAT breakeven. And we are very happy to announce that we achieved that ahead of the target in Q3 itself and have now ended the year with a PAT of INR 64 crores from a loss of INR 488 crores last year. This is a swing of INR 552 crores.
I think if you were to ask me my own opinion, I think the INR 64 crores in my estimate is a little below where I expected it to be. And as I said, there are quarter-on-quarter movements, which you sometimes cannot control. So that's the way it is.
Our revenue for the year grew 34% to INR 3,438 crores. Revenue for our online marketplaces, Policybazaar and Paisabazaar, which we refer to as the core businesses grew to 39% to INR 2,375 crores. While improving their adjusted EBITDA margin from 6% to 14%, adjusted EBITDA for these businesses is now INR 324 crores.
See, our trail revenue. This year was again a very special year because of the growth of health. I have explained it multiple times. In fresh health business, our margin goes down to 0 for that year, obviously. So what you see is approximately 45% coming out on a stand-alone basis, for Policybazaar core. But when we do fresh health business, the part of that is 0. So any disproportionate growth in fresh health will actually reduce margins. And some of that you would see, but our trail revenue, which was INR 577 crores, up from INR 388 crores last year. So if you noticed, that's almost INR 190 crore growth, and this comes at 85% margin and a significant source of profit in. I think as we look forward, that should become stronger and stronger.
We continue to improve our -- and this is another number which was at a particular number, pretty high, but it was stuck there. We have now got a CSAT of 89%, which is actually the highest we have ever reported.
Our credit business growth showed moderation. However, it continues to be adjusted EBITDA positive since December 2022. We are now at an annual run rate of INR 14,000 crores on disbursals and about INR 6 lakh crores on issuance on an annualized basis or cards or credit cards.
The credit score consumer base has now increased to 23 million. 75% of the card process end to end digitally and 75% of disbursals are from existing customers.
We continue to strengthen our leadership in new initiatives while building further efficiencies. If you notice, this year, the new initiatives broke even at a contribution basis. So PB Partner, our agent aggregation platform continues to lead the market in scale and efficiency of operations. Quarter-on-quarter, it grew 50%. So please don't get bogged down by the 15% year-on-year growth, just the biggest was extraordinary.
We have moved the business strongly towards smaller and higher quality advisers that the big change that's happened from this year to the last year. And it has the highest proportion of non-motor business and is present in almost 18,000 pin codes, which is almost 93% of all pin codes in India.
We continue to see improving efficiencies in this business. and increasingly becoming more and more confident of the business breaking even sometime in the near future.
Our UAE premium grew 2.3x and that business also continues to do very well. So very happy to take questions now here. Thank you.
Thank you, Yashish. We'll take the first question from Srinath.
Just wanted to understand that there's been an increase in porting and health policies at the system level. With that context, I want to understand how this impacts our persistency of our back book and our NPV calculation given that our back book is in health, extremely profitable. At least could you share some qualitative understanding on how persistency has played out this year versus, say, last year or the year before, that would be great. And I have a second question on Paisabazaar come after.
So I will hand this question totally to Sarbvir. However, this is something, obviously, you would expect someone like me to be tracking also in addition to Sarbvir very, very closely.
So I just wanted to mention our persistency is the highest it has ever been. It is higher than the past. And our -- the rest of it, I'll just pass on to Sarbvir.
Yes. I think two points. The system actually, in our opinion, has been at roughly the same level as the previous year. So actually, the system is at elevated levels, but it has been the same for the last 2 years.
Our persistency, as Yashish just mentioned, and we measure it both by number of policies as well as, of course, the premium amount is at the highest that it's ever been, and we spend a lot of time and energy in ensuring that, and I also want to just share that our fresh business also, the percentage of porting is at least half of the overall market level. So we bring a lot of fresh new customers to health insurance, and we don't actually end up giving a lot of porting business to our partners.
So just to -- so you don't think we are beating around the bush or anything. Our porting is about -- of our fresh business is about 20%. So just being crystal clear on that in that range, approximately 20% and not widely off that. And our persistency on renewals in both number of transactions and premium, it is the highest ever. It is a percentage or a percentage to 2 percentage more than it has been in the past ever. And I'm talking about the whole year, and it's only continued to improve.
Got it. Just a clarification on this, this 20% that you have shared. Again, qualitatively, can you comment whether it has seen an increase over the last 2 years substantially? Or has it been somewhat constant in a range that would be nice? Again, very qualitatively would do.
Yes. So post-COVID, it seen some increase. I think it would have been in the 15% or mid-teens kind of range earlier. It has gone up a little bit over the last 2 years. But year-on-year, it's kind of roughly been in the same neighborhood.
And the key point to take away was what Sarbvir mentioned that we are at about half the rate of where the system has been mystically called it is. And I think the second part is we pride ourselves bringing new customers to the system.
Yes. Got it. Perfect. One question on Paisabazaar. I wanted to understand as -- it seems like the regulator is favoring secured products over unsecured products. Is there a way with the kind of evolution of technology, maybe digital signatures and so on and so forth, that we could look at originating some part of the secured products, which go to granular retail. Is there any thought on something like this, given that we are a platform which probably has the highest organic traffic for loan searches coming in?
Thanks, Srinath. You're right. It's also there in one of our slide, if you see in the presentation that currently or secured disbursal percentage would be about 13% to 15% on a quarterly basis. And one of our key priorities for this year is to try and increase the secured growth and, hence, the secured contribution.
There are multiple categories that we're exploring. Within that, we already have home loans and loan against property line. There is some digitization that's happened in those category, but it's still limited to income-based sanction kind of stage because the primary asset is still kind of non-digital. And -- but there are some interesting new categories that we're exploring like loan against security. We know that what's happened to the number of consumers taking, coming into equity market over the last 4 years. And that asset or that secured loan category is becoming interesting. So we're exploring couple of additional categories besides home loans and LAP, but the overall priority is to increase the secured loan contribution.
We -- so just to kind of clarify, we have seen tightening, and I wanted to take this opportunity since we have all of you. Thank you for being around. I had said I expected about a 10% reduction. While that has proven correct for the last quarter, I expect this to last at least one more quarter. And the expectation, I think, is going to be below that, so I think we will be good at maybe 0 to 10% growth for PESA. And I'm giving this guidance only because it is a very special situation right now for the next 1 quarter. But we don't expect it to last very long because at a very fundamental level, it's not a quality-based slowdown. It is a process-based slowdown.
And just to also explain one number because Naveen mentioned that about 13% of our disbursals are secured. From a revenue perspective, it's approximately 4% of our revenues from the secured category. So secured does not really exist for us so far. We -- but we were quite convinced we want to build up that category along with unsecured. We're not wild about unsecured, but we think secured is an opportunity.
Thank you, Srinath. We'll take the next question from Moksha.
Am I audible?
Yes, Moksha we can hear you.
Yes, just a second. So I wanted to understand what is the online marketing and consulting services comprise of? And since it's a big proportion of the total revenues, how are these expected to remain in future? Hello.
Yes. No. No. We are trying to understand where to look for this. Yes because as you can appreciate, I spend a lot of my time on this. I actually don't spend a ton of my time on the financial reports. But look, broadly, these are what they say, marketing and consulting services, which is our marketing expenses and the marketing comes in multiple formats. It can even be marketing to influence, et cetera. So it would be in that range. Over time -- but Mandeep, if you want to answer because Mandeep spends a lot more time to get financials than I do.
So Moksha, referring to online marketing and consulting revenue in Paisabazaar?
Policy results.
Yes. So you're looking at the consolidated results, right?
Yes.
Yes. So just basically, the marketing revenue that we generate on our Paisabazaar [indiscernible]. So where we run the advertisement for our plans.
Okay. So as I recall, it was around 54% of the total revenues.
Yes.
Moksha, I wouldn't bother too much about it. These are the classification matters. So if you look at the overall meat of the FIS, you wouldn't see any dramatic shift in the overall numbers. There could be some classification matters. I'm sure if something has increased or decreased, another category would have equally compensated for it. So that's where I would leave it.
Okay. Since...
Looking at total expenses and the total revenues, if you don't see a very significant shift, then don't worry about classifications because classificationskeep changing from time to time. It's just how you classify a particular revenue and how you classify a particular cost, right? So that -- I wouldn't worry about it.
And I think as you look into the future, you should see this settling down. So these should become less and less of an issue as we go into the future.
Thank you, Moksha. We'll we take every next question from Jayant
Congratulations to the whole team for a strong set of numbers. Two questions from my end. One is on the renewals. Clearly, what you've been saying is, Yashish, seems to have played out this quarter I can see the take rate on our renewal commissions in the core business has sort of moved up from the 6.3% to almost 7% this quarter. So I'm guessing the non-life mix is improving over there. Is this sustainable or moves up from here? That is number one. And second is on the other OpEx, the Q-o-Q increase, if you could just help me understand these 2 from end and again [indiscernible].
Sarbvir, you?
Yes, yes. So I'll start with the second question. The second question, if you notice, is just a flip between two lines, right, that when others have gone up and advertising and promotional expenses have gone down. This is just a reclassification of how our PB Partners business work.
See, the same question that Moksha asked in a way, this reclassification matter is certain expenses and certain revenues will be classified 1 way. They would be getting classified a different way. And I think as you look quarter-on-quarter, the will start to settle down. We don't worry too much about it.
I think the first question was on the renewal revenue. Of course, as you will imagine, as the book will build, this will continue to grow. I also now just called out that ever since we become a broker, we do get some renewal revenue on the life side as well. So that is also slowly. So [indiscernible] the to both the things and we are both thing we keep going. So it should [indiscernible]
So Yashish [indiscernible] for the next or moves up from here? I mean how should one think about that?
Yes. We don't think that way. We actually book it reduces because we hope that our new business grows so much that this is just, [indiscernible]. So anyone take it. yes, that will be a see, both are happening, right? The life is of increasing, and our live renewals in retina, we don't, but yes, assume that stay in the same range. I assume this I don't talk about we don't look at these things in our overall consol basis it. We look at each vertical, each case that makes mixing a little bit, but it's very tough to estimate that, okay, that will become 6.9% or 1.1% because in a particular quarter, things may change a little bit in a particular vertical.
If you look at each vertical, the take rate and the renewal plan, that has not moved at all unless we have changed the product itself.
Opening Yashish mentioned about [indiscernible] the product itself has changed a little bit. And that's why taking come down for that particular product The [indiscernible] .
At a fundamental level, if you need to appreciate is a large proportion of much more than majority of the promotion of the renewal revenue belongs to health. And in the last year, our fastest-growing business in health.
In the previous year to that, health had not grown so much, right? So obviously, as you look into the future, the renewal revenue should show a pretty smart uptick because of what we have done in the past year. But that's a pretty obvious one. I think what we look at, as Alok mentioned, is we don't look at it at an aggregate level. We look at it here, we are quite sophisticated about how we look at renewals and everything. And whether every year, we look at it in a manner, and that has all been inching upwards. So we are very confident of the renewal performance.
Congrats on second [indiscernible].
Thank you.
Thanks. Jayanth. We'll give the next question from Sanketh.
Sorry, you can hear me, right?
Absolutely.
See, I have a few data-keeping questions and a few few related to strategy. One, obviously, if you can give the breakup or you can spell out the exact premium number of PB Partners and corporate, PB Corporate? And also, if you can give us what was exactly the branding cost which we have done in the current year and in the fourth quarter? That's the one on data. And second, to add on the data, we -- if you can confirm the core new business premium number in the fourth quarter is INR 1,770 crores, right? That's the first question. Maybe I'll ask the second one later.
Sorry, I didn't -- we didn't understand the INR 177 crores get in some [indiscernible].
I mean INR 1,770 crores is the new business premium for the current quarter, right?
Yes.
So for core business, yes.
A little higher than that, but yes. It's approximately that, yes, 1,777.
Okay. Perfect. And if you PB Partners and the corporate premium, PB corporate premium, that would be useful and then branding cost.
OSP is 1,200 both. So corporate is about 200.
Okay. This is 200 for the -- okay, perfect.
1,200 for the quarter year quarter. Quarter, right?
Possibly is 1,200. Our corporate is about 200.
Okay. Perfect. And just just wanted to understand your branding cost. How is that mode last year? I think we spent around INR 240-odd crores. How is that number moving in the current year? And how do you expect it to play out?
Sarbvir, you want to answer that?
Yes. I think, Sanketh, I think overall, our branding costs have been going up below our revenue growth. So you see around half, I would say the growth rate. And I think next year also, we would look to -- I mean, I think the fundamental point is that the model works on driving new premium growth. So we focus a lot on driving fresh growth and to deliver that as long as the economics look reasonable, we will continue to do that. So there will be some spend again below revenue growth, but we will grow brand spending in the new -- in this financial year as well.
Okay. Will you be okay to spell out exact number given crores just from a modeling point of view.
It's very tough to give absolute numbers. I think
We don't operate that way, guys. Honestly, we don't operate that way. We see there's a good opportunity. We think if we have a great creative that is working, we will spend a little more. If we don't have phenomenal creative, see, we have a very -- all these decisions for us are very very ROI and tactical decisions. They are not something that we kind of -- yes, we have broad ideas. And broadly, it shouldn't go totally out of whack but at a fundamental level, you need to understand our philosophy.
Our philosophy is growth is a priority, massive priority. Profit is actually not a priority. Profit is like counting the engine has gone through and now you're counting the bogies going through of the train, and primarily that is because the bogies are essentially the renewal year. See, the profit mostly comes from renewables. The fresh business did not give you profits, at least on the GI side. So within that, we focus on health and life growth because we think we are solving a very serious problem for the consumers, right? And out there being at 53% thrills me. Now if that means a slightly higher branding cost, it honestly doesn't -- I feel good about it. That's all, right? So we don't kind of say, okay, last year, [indiscernible] how much would it be this year? We don't really work that way.
We said the brand cost increases roughly half of the premium increase and as a percentage of it is seen coming now.
Yes, as a percentage of course, it keeps coming down.
Yes. Okay. And the next question was largely on this rate, you have stopped speaking on it, but I just wanted to understand how you are looking at it? The off-line channel within the core business, I believe it used to contribute around 20% of the total premium what you collected until first half. If you can give a bit of color how branch addition, people addition or how this off-line has played a role in driving your health growth -- just if you give a bit of color or understanding of that piece will be very useful.
Yes, sure. Yes. So I think the number, as you at least said you used to be around 20%. It's inching upwards every quarter, every month. It's -- the rest of the business is also growing quite rapidly. So it's hard for the proportion to change dramatically. But yes, it is, we are deploying a lot more people in the field, and we are very encouraged by the response to the model. So I think in both the life side and the health side, we are adding people, and we are adding centers also, and it's growing quite rapidly. But at this stage, the number is in the same ballpark of about 20%, maybe 22%, but it's not dramatically different.
And you continue.
The growth in health is quite honestly, it's now been a year and it's just getting faster and faster, and it is not explained by any particular action that we have taken. It just seems to be at a very fundamental level, some kind of a consumer preference for dealing with us and maybe some -- it's not like one particular action or 2 particular actions that are explaining that growth. I'm like -- yes, that's all I would say.
Okay. See, actually, that was my subsequent question. I assume the porting would have been a little lower in the current year relatively at the system level because it increased, you benefited because this year was a very unique year because because every insurance company took a price hike, and naturally, there was a customer grievances and people started looking for porting a lot and that benefited the entire sector with respect to putting, and you naturally participated in that. Sir, I just want to know...
I think that's a wrong conclusion reporting for us, we already explained is 20%. I don't know the exact number, but might have been 17% last year and 3% is [ bust ]. Please hear what I said. 53% is the Health and Life growth and helped significantly our that. It can't be explained by 3% is only trying to say. When I say significantly, it is multiple 10% higher. So please don't force me to give the exact number. It is a crazy number of growth, right? So it can't be explained by 3% here and 2% earlier.
Can you tell you your market share today in the new business of health?
Yes, that is for you to calculate, how would we know?
No, we don't know the exact premium number, that's on a [indiscernible].
It's quite good here. It's increasing fast. I will just leave it at that. We have a few other questions coming in.
I think, Sanketh, if I would try to answer the import of your question, right, which is why is our health business growing faster than the market at this point. I think that the answer lies not in 1 silver bullet answer. The answer lies in a series of actions that have been taken over a series of years, right, which have come together.
One is, I would say, our focus on bringing fresh customers to the category. I think everything starts from the fact that we bring customers to the category. Number two, we have worked diligently with our insurer partners to produce products which are relevant and customized to what customers are looking for. That improves the conversion rate that we have.
The Freedom Street plays into that same angle that people are able to meet customers and close sales at their homes or in their offices.
Third thing is the improvement in customer experience that we have. The fact that we are assigning a relationship manager to every health policy. Please step -- just stop for a second and think about it. Every customer is getting a relationship manager.
Number four, at the moment of truth, in claims, we are helping people solve their problems where they're getting stuck. So it's a -- I would say it's an overall series of actions, and I think these actions are coming together, and they will continue to strengthen.
Now growth rates by quarter will change up and now portability by quarter will change up and down. But I don't think that is a fundamental driver of why our business is growing faster. So this is -- I think these 4 things are the reason why it's happen.
And on porting, Sanketh, please note 23 very specific points. We don't enter voting at all. It's customers who will ask for it. If our customers work within our ecosystem, we are basically keep on getting the benefits. But yes, if a customer comes from outside the sector and want to go to us, we get some benefit. But as we said, the number has not significantly changed. So overall, we do not enter quoting about. We don't engage the customers have bought to Policybazaar under the product under data video issue, customers should not even think in putting but we get sometimes they do. And yes, when they do we will tell them if they are for it.
Thank you, Sanketh. We'll request the next Dipanjan.
Good morning, everyone. So a few questions from my side. First, going back to one of the previous questions in terms of the off-line business and the traction we are seeing in that channel. And you also mentioned on deployment of workforce. So can you give some color on the quality of business in terms of the mix that you're seeing in that particular channel? Or how do you see the profitability of that channel from more of a sustainable long-term basis compared to, let's say, your digital business, in terms of the margins that both these segments can come and on, let's say, a like-to-like product basis overall?
Yes, let me first -- I think there is a bit of confusion here because I've heard this word off-line business, online business a few times. It is a closure mechanism. The customer is still coming on the website. The customer can be serviced either through a contact center or through a physical meeting. The cost of both these channels is pretty much the same on a per person basis. You pay a salary and you pay a telecom costs and you pay a seat cost in one. In another one, you pay a salary and you pay some travel expenses and maybe obviously lower telecom costs and lower office costs, we do not really have a branch network. These are meetings at people's homes or people's -- it's only to people who have come through the online channel. So it's just a closure mechanism. You could be odoing calls, video calls, and the mathematics of all of these businesses is exactly the same. In fact, if you ask us to really get into it, the most profitable one of it actually might be the physical channel. It might be slightly more [indiscernible] than running the call center because the conversion rate is slightly higher.
The products are pretty much the same, so the mix is pretty much the same. So if you look at health and life, but I'll let her Sarbvir explain that part to any specific there. I don't know if they need to explain.
So basically, I have a most important part dependent, if the customer still comes online, this is just a way to service the customer. It's almost like [indiscernible] talking on Zoom right now, which is having a physical meeting. The quality of interaction improves a little bit. It's in a product model.
See, a customer can choose to have a bond, a video call or a physical appointment. We will only go there if there is an appointment. We're not not going -- working on streets, knocking on people's doors and saying, "Would you like to buy insurance." That is not our model.
And so I think a lot have been said. I just want to add one final point that we verify all bookings. That verification process is run by an independent team. That team verified all offline bookings and all online groupings.
Now I'm not sure whether, if your question was about this or about PB Partners, but we were talking about the retail direct business. Yes.
It was about the same point. So maybe [indiscernible] basically lead originated but converted physically sort of business. Was the product mix be a little different from your let's say core digital business?
So again, I'll explain that. in health and term the product mix is very similar to what it is online because a person can only buy a certain products. You can only cover your family or yourself in either case.
In the case of savings, yes, the ticket size does go up, in fact, quite significantly when a person meet physically versus doing online, but again, I repeat that the quality of the business as marred by persistency and renewal rates is very much in the same ballpark as the online business. In fact, sometimes a little higher than also. So it's not no quality issue at all.
Sorry, just one last question. On the PSP side of the business, has the -- I mean you used to operate at 80-20 motor, non-motor ratio. Is there any meaningful change in that number over the past, let's say, 6 to 12 months? And how do you see this business from a run rate or a growth run rate perspective from here onwards?
You're right, it normally runs at 80-20. In Q4 of last year because of the changes in the -- some tax regulations, et cetera, Life business in Q4 was actually very high. So that's why it was not 80-20, but now it's we're running in the same neighborhood of 80-20.
Sir, lastly, in terms of the growth trajectory, I understand it might be an output of the productivity of the PSP partners and also the underlying asset class. But in terms of how do you foresee the overall growth trajectory in this second?
We think that the growth rate will continue. We grow above the market. I think if the market is growing around 15%, 16%, especially in motor, we are growing 2, 2.5x that number. I think that growth rate should continue going forward as well. Of course, having said that, now at INR 3,000 crores of scale, we are now fairly in large operation. So we are going to be affected by market forces and how the market behaves as well.
And I think, again, I want to clarify that in PSB right now, our -- the absolute amount of business that we are doing is not a core focus beyond a point. I think the quality of the business, the origin of the business, working with smaller agents, going into deeper into the country, going into Tier 3, 4, 5 cities, I think those are more relevant things for us, especially as we look forward. Just gathering premium beyond a point is not really our focus anymore.
Got it. And if I can squeeze in one more question on the reinsurance broking side. I mean I would assume that sometime during the year, you would kind of kind of give some qualitative commentary on the progress of that particular strategy. But if you can kind of give some color on how do you see the acceptability from both sides, both stakeholders being the manufacturers or the reinsurers and which business segment, apart from protection do you think it can really benefit either from a market share perspective or from a pricing perspective?
I think it's a bit early to give too much color. We just got our license a few months ago. We are working on it. As you correctly said, protection is one category that we definitely see it impacting, and we'll see how that goes as the year progresses.
I think the good news also is that I think the industry also sees us as a channel, which is a specialized channel, especially for protection. So I think a lot of things that we would like to do for customers are available from the industry directly as well. But I'm sure with reinsurance, we will be able to make better propositions as time goes by.
Thanks Dipanjan. We are taking next question from Shreya.
Congratulations on a great quarter. First, just a data keeping question. Did you share Dubai premiums as well for the quarter?
It's about INR 210 crores.
INR 210 crores. Okay.
Coming up yes, a significant operation. That become a decent sized operation. It was INR 110 crores last [indiscernible]
Correct. Correct. Correct. That's also a good growth. And did you share the credit revenue, Sorry, I was a little late for the call.
Credit revenue was INR 146 crores.
Got it. Sir, my main question is great, great delivery on the and particularly on the health insurance side. Just going ahead, what comes to my mind is now that as the life insurers and general insurers have to achieve an expensive management cap and that data is coming closer, does it concern you that they may try to push more into those channels, which are considered lower cost channels going ahead. And I also want to understand the business dynamics that if your website is naturally generating far greater volume in terms of customers in terms of people are naturally coming to your website and raising queries more over there, how much flexibility will insurers who are -- who also have EoM cap restriction in, say, moving away from PB Fintech while they try to balance their growth and their expenses? So just trying to understand your thought process around this thing.
Thank you, Shreya. See, look at the picture here. We are at a take rate of about 17%, 16%, maybe 16%. I don't know of any EoM cap below 30%. And in health is actually higher at maybe 35%. The reason we don't even -- the reason someone like me is not hassled about it, you saw when the renewal question was asked, I was very precise in my answer. The reason someone like me is the ceiling is so far high compared to where we are that we really need to be the last person bothered about -- so we were at about half of where the ceiling is being placed or whatever, whatever you want to call it, right? So -- and we are full cost mechanism, like an insurance company does not really need a branch network, a regional network to do everything we do. In fact, we we lean in at the point of claims. Also, we lean at the point of service. We lean at a point of customer service, issuance, payments. There's a huge amount we take on.
So if you really thought about it, at some level, an insurance company has to give us a product. And we can do a lot of the variable cost expense for them. And so I wouldn't worry about it too much.
The second thing I would like to point out, which is our PoSP business itself because one thing is just looking inwards, one is looking at market data. Our PoSP business is a far higher take rate than our core business, which again points out because our PoSP business should be comparable to the other businesses that exist, right? So that again points out to where the issue is. It's actually not in the online business. And if you again notice, our PoSP business is 80% motor, where our core business is 80% health and life, and you would appreciate motor actually has lower take rates than health and life. So all of this is pointing to at the very simple thing that Policybazaar on the whole is actually a lower take rate channel, and you have to look at the total expense. And I think it's a brilliant thing for us, the expense of management is coming because that allows somebody to look at total expense.
When you run other channels, you need a lot more cost. See, I don't want to -- we are not here to say anything negative about other channels. But the basic thing is when you run another channel, there's a lot more handholding required and there's a lot more cost that still need to happen, whether it's a branch infrastructure, whether it's a sales infrastructure, whether it's a service infrastructure. In our case, Sarbvir mentioned even the relationship manager is [indiscernible]. So I don't think -- I gave a pretty elaborate answer. I don't think that's a worry point or a concern point for us at all.
And I'll just add one point here. So if you look at industry, the biggest pocket are the claims, so the 3 cost claims, distribution and servicing. And honestly, if someone were to analyze these 3 together for any particular channel, online acquired customer will come out to me the most efficient channel. Everything put together [indiscernible] because the nature of the product is different, the districts are lower, but net claim numbers are very, very different. So this is a channel which is here to stay and to grow. More and more customers who are young want to be control of where the money is going and what could have [indiscernible]. So yes, from that perspective, we are very [indiscernible].
Yes. No, I appreciate the part on the claims that you are mentioning, definitely the quality of customers, which comes via an online channel versus any other channel, there could be a big data over there.
Just following up on this question. So if we do a reverse, as I understand your take rates are at a certain level, but if I go and pull out the data of the broker channel for different insurers and divide that by commission, broker commission by bulk of the premium, it does look higher. I know you are not the only broker, but at least on the health side, it does look higher than 16 to 17. And that's why my concern that maybe if the broker channel is really higher than 16, 17, then the EoM cap may affect you. Is my understanding correct? Or how..
Shreya, I just want to, I think if you give a very elaborate answer. I just want to explain one thing to you. that actually the expense of [indiscernible] rules in favor of channels like Policybazaar versus the earlier system of cap on commission. See, expense of management is commissioned plus total cost plus all other costs. So commission plus all other costs for Policybazaar are lower than or, let's say, comparable to that other channels. And I think that is the crux of the point. Now you can sort channels not necessarily by commission paid only, but by the total cost of operations. And I think the total cost of operation, even excluding claims for a second, is lower for Policybazaar than others. So we are -- if you were to make a graph of suppliers by cost, we would be a lowest cost supplier. And hence, it starts [indiscernible] people from the top. We would be the last in that list.
Okay. Understood. Understood. I got your point, yes.
Thanks, Shreya. We take the next question from Sachin.
Congrats for a great set of numbers. I have three questions. First, clearly, you mentioned growth is a priority as compared to margins. So I just wanted to understand how could one think about steady-state margins for core insurance and how far are we in terms of getting out there?
We genuinely don't think that way. I know it's a desire for a lot of people to have that answer. We don't think that way. We would grow -- we would try to do the best possible products for the consumers. And whatever is the market clearing price for those products from a take rate perspective is what we will receive. It is not like we want to have a higher take rate than what is the market sharing price or we want to have a lower take rate. The take rate is a function of the products we sell, right, and of where the clearing price is. And we are comfortable -- I don't want people to take the wrong message out of this, but our preference is for lower and lower commission products, which are better and better for the consumer. But it is not like Policybazaar as a channel would be markedly different from the market clearing price. On the total expense basis, not just -- see commission is just one expense. But cost has to be looked at overall.
And I just had one last comment from the last answer because some we mentioned that if some channels were to be removed, then it would not be us. It would be some others who are at a higher cost on a total cost basis, but please appreciate when a channel gets renewed, the amortization of fixed costs does not happen if whichever then actually, that increases the cost for everybody else on the -- whatever.
So expense management [indiscernible] everything and actually [indiscernible] cost over [indiscernible] in an EoM environment and essentially [indiscernible] 30%, 35%, you're in a great shape, but being lower than everybody else sort of further help. I know I've kind of diverted a little bit from your question, but I hope I answered you as and the biggest one both.
And if I would just add one thing that, we have to also remember the context. The context of India is low penetration of health and term insurance, growing middle class, growing spread across the country. So I think this is not the stage at which one should try to maximize percentage margins. I think one should try to serve more and more customers. These customers will become more and more valuable over a period of time. And at some point into the future, there will be some time in 15, 20 years from now and you should start thinking about optimizing that mix. But right now, I think the thing is to have more customers, and these customers will become more more valuable over time.
Very clear. My second question is more on tech. And since your last Analyst Day, which roughly happened about a year back, have been good, meaningful strides and improvement in generative AI. So any big picture thoughts in terms of how you guys are looking to utilize it? And I'm asking it because you guys have a good call center support system. Are we trying to automate or trying to move and leverage generative AI in that perspective?
Yes, absolutely. I think we -- not just generative AI, I would say that. I think there are a series of technologies that have come up over the last 5, 10 years, broadly AI, machine learning, et cetera.
We are using them in a variety of areas. I think as we showed some applications last time also. One is around the whole area of risk. Second is the area of call center productivity to see how we can make our advisers more productive or we can have more productive conversations with customers. Then there's an area of customer service. Again, the same thing, how can we offer more sell service options, how can we understand natural language of customers and again, make our agents more productive.
And then finally, there's an overall opportunity to use generative AI in sort of breakthrough kind of manner, where I think right now, it's more experimentation, I would say, rather than results, where we are trying to see what we can do to change the total nature of how a customer reacts or interacts with a digital asset. So I think those are 3, 4 areas, which we are working on. Each of these areas has dedicated people working on them. And I think over a period of time, we'll continue to give examples as we go along.
Got it. Very clear. And my last question is more a bookkeeping question. I noticed you guys paid some income tax this quarter. I would assume there are certain tax credit carryforward losses. Just wanted to get more clarity on that.
Yes, we have about INR 2,100 crores of carryforward losses. So of course, as the future years play by, we should get the benefit of those, but pleased do appreciate there are multiple companies, profit mill line, 1 company, loss another company, but Mandeep is the right person to answer a little more detail.
Sachin, if you look at the tax loss if you are generating income from your investments, that is where the setup of carryforward losses are not available, and this is a portion where we are paying taxes.
Especially the treasury income, that's what you're saying, right?
Yes.
So only the losses of the last year and the previous year can be included in that. So all I'm saying is we do have that INR 2,100 crores, but its play out will happen over time.
Thank you, Sachin. We'll take the next question from Ms. Nischint.
Yes. Sorry, am I audible now?
Yes, Nischint.
Just on the take rates. Now if I look at it on your year-on-year take rate has gone down. And I think you made a small comment on that. If you could just elaborate a little bit in terms of which segment have you only seen kind of a decline.
It is only 1 segment. The take rate has not changed in any segment. So whether it's health, whether it's terms, whether it's motor, whether it's PoSP or even Paisabazaar, take rates have not changed at all. The only segment where take rate has changed is in the savings segment. And yes, that's it.
And that's because you moved from guaranteed return products to ULIPs.
We moved in some portions from capital guarantee products towards pure ULIP. And I think that is the industry trend that we must have observed across all the calls. And I think that's something that we are also very frankly, very happy about because we believe that low-cost ULIPs are the right product for customers. And in the long run, it's a happier customer and that customer comes back and buys more.
One of the life insurance companies has launched a high trail product on the lighting side.
So.
We are delighted partners.
Sure. Just one small thing is if you could break up the revenue premium of INR 2,000-odd crores between digital and others because at [ PoSP ] we're also getting meaningful now.
Sorry.
If I look at the renewal if you look at the renewal premium, you could just divide it between PoSP and others and...
[indiscernible]
Yes. I think the core business is about 750. And that's the job. But PoSP is about 105. Sorry. Maybe I've got something wrong. So let's Sarbvir answer it.
No, no. I think we'll just stay with 1,750 is the core renewals from the core.
Yes.
Sure. That's it. And just, sorry, just one last one was on take rate in the PoSP business. So I think as we had a discussion, your PoSP take rate is kind of on the higher side versus the company average, although the commissions, you mentioned that the motor side would be lower than the other businesses. So how do we reconcile this?
No, no. There are two reasons. One, I think what Yashish was trying to indicate was that there are channels, PoSP represents closer to the rest of the industry. So there are channels which have higher commission. PoSP also had higher commission in motor because we sell commercial vehicles. So commercial vehicles don't actually come through the online route because of various reasons. So because it's more commercial vehicle heavy, that's why also the commission rates are higher in basically
Yes, at a fundamental level, see on Policybazaar, because the competitive platform and competitive on product and issuance rates, et cetera, et cetera, you cannot necessarily increase your volume by paying more commission, whereas the PoSP channel essentially competes on commission. If you really think about it at a fundamental level, it essentially competes on commission. And I think you should -- somebody ask me to stop here. on this.
But just I think going back to the EoM point, does this kind of -- not for you for the for the entire PoSP industry does this kind of come under some pressure because of guidelines.
I guess, we don't care to like [indiscernible] like a lot of things will play out.
Thank you, Nischint. We will take the next question from Yash Mehta.
On the renewal repeat the renewal premium, which was INR 4,400 crores last year, what does this correspond in the current year?
INR 58,145 crores.
Okay. And if I were to kind of look at the renewal rate, it seems like there's a sharp drop through about 70-odd percent to 50-odd percent. Am I missing something?
It is exactly 69%. It was 70% last year, 69% right now. So it's been the same. If I look at the last 4, 5 quarters, it's about 68% to 70%. In fact, the last quarter is 70%.
Understood. Fair, and one more question. In terms of, let's say, the employee counts that we have for the full year versus what it was the last year. And within that, if you could break up between selling sales force and non-sales force.
Can we respond to that offline because that will be a fairly detailed thing? We won't have the answer right now, but we will respond to it separately. Is that okay?
And I'll reach out to Rasleen.
Thank you.
Thanks, Yash. We'll give the next question from Yash.
Am I audible?
Absolutely.
Yashish, so you mentioned that INR 64 crore PAT was a bit short of expectation. What number -- what PAT number you would have thought you would have closed this year?
We don't give expectation, but I was expecting 80. We came in at 64. I know. So yes, I thought we should have been there, but it's okay. It's not a big deal, right? I'm just saying it is what it is. We can't -- the number is what it is. And in fact, there's been a INR 3 crores on the taxation and maybe some quarter movements here and there, sometimes you have to take some costs and some revenue. Accounting is accounting at the end of it. So it is what it is.
So we are very strong in cash flow. If you really think about it, we add INR 160 crores on cash, but we had some classification differences. I'm just taking a little bit of detail, but I just wanted to share with you how I think about it, right?
The classification changes in terms of our expenses and et cetera. Now what that does is certain basically, the GST kind of tax that you have, those increase -- those goes from 2% to 10%. Now those are just working capital. Some things going earlier, something is going later. So we have about INR 150 crores of cash, which kind of went into that. And all that is, is the cash will come in later. So some of those things affect our cash flows. But if I was to remove that, our positive cash flow for the year is very close to INR 400 crores, which is a very positive result. And I guess -- anyway, I cannot stop there because maybe I'm just giving more detail than we are comfortable with at this stage.
Got it. Got it. And Yashish, just last question here. So FY '25, you think we can grow about 40% and about 50% contribution from core business? Is this the right estimate that we can build on for next year?
We don't give estimates here. You are free to kind of draw your own conclusion. I hope we keep growing I'll be mean that we keep growing the way we are. And I'll be delighted if that happens here.
Sure, sure. Just last question, Yashish, this is not a forward guidance or anything like that. The website views, I mean, are they higher basically on in April versus March on Policybazaar or something has changed, the number of upside if you track this data?
So normally, there is a little bit of drop in traffic from March to April, not I mean we don't drop as much as the industry does, but we do have some drop. But it's -- this year, actually, April is similar, I would say, seasonality is very similar to every other year.
Thanks, [indiscernible] questions now. One from Kireet. Okay, we take your questions [indiscernible].
Yes. am I audible?
Yes.
Yes. So the question is primary on [indiscernible]. I think the launch of the platform is closer than ever it has been and you guys being the interest insiders, you would have some insights on how the platform is shaping up, specifically on the point that is being talked about the most that it would offer policies on a preferably lower prices due to charging lower commissions. So I wanted your thoughts on how -- I mean, even though the platform is yet to launch, but in case this kind of offering does come in where it is offering lower prices, how do you think, based on your understanding, it would impact consumer preference towards platform like Policybazaar, which is -- which would be at a higher pricing versus say, [indiscernible], right?
I think it's a fantastic thing that would happen. It would expand the market dramatically. I think with it coming in, the market might be 20x of where it is. And if it is 20x, I'm sure we also have some share out there. So I think competition -- I don't see this competition as as an enabler. And I see it as a massive enabler from the back end in terms of digital processes in terms of digital outlook. So yes, we are very, very positive about it and awaiting its early launch.
No. But I mean as a consumer who is comfortable with buying online, why would then he prefer buying through your platform, which is [indiscernible] getting better price in [indiscernible], right? I mean that's a fundamental question that would impact your business?
Yes. Maybe we will also have lower prices and that will really, really expand the market. So if you really think about it, with UPI Google Pay have also done very well. So the back-end rails as streamlined, it really, really benefits the digital players.
So I don't want to get too much into a speculative mode here, but everything in history tells us when the back-end rails really get sorted. The world moves on. And maybe if we get 20x the volume, we'll be okay with 5% of our take rates, like, why not? And maybe we'll be okay with less and maybe we'll make money from some other industry and not make money on insurance. So I would say don't get too worked up about it yet.
Yes. Just a data keeping session, what was the ESOP cost for the quarter?
INR 63 crores.
INR 63 crores. Okay.
Let's take one last question because we could not take one.
Kirit, please unmute yourself.
Sorry, can you hear me? This is Kireet speaking.
Yes, we can.
Okay. Congrats on the great results. So if you read some of the industry rags around what is, I guess, the current topic to go an health care insurance. I think there's 2 or 3 high-level kind of issues. I just want to understand how you're contributing to solving them. The first would be inflation. There's clearly a lot of inflation in premiums, I think, consistently double-digit increases. So how do we make sure we don't run into kind of an affordability issue. Are we increasing the mix of sort of low-cost plans? How do we sort of -- what are we doing on our side from an innovation standpoint to sort of combat this?
I think the second thing is, which maybe plays into what you've done already, but I'd be curious what incremental innovation is coming in that. A lot of these claims require high waiting times despite pre-approvals. So people sitting in hospitals for hours just waiting to get approved and have things go through. So a high amount of inconvenience and decreasing affordability, I guess, with the two biggest issues. So maybe if you could just help us add some color.
Thank you. I think a great question. I'm so glad I asked Rasleen to take this question. Sarbvir?
Yes, absolutely, I think you identified 2 very burden issues, affordability is an issue, especially as prices have gone up over the last 2 years. So if you see, we are -- affordability is a segment that we are focused on this year. And we have introduced products. And one of the ways to handle affordability many many answers. One is our preferred provider network. We are focused on deductibles that offering small deductibles. We are offering monthly and quarterly mode of payment on our platform right now. So I think we're doing a series of things starting from the product, payment as well as certain other deductible copay kind of arrangement to make the product more affordable. So I think that's one area that we are very much focused against.
The second thing that you asked about waiting time for claims. Yes, it is an issue from time to time. And there again, we are working with our insurance partners. 2 clients see that copolicy with our customers. are there ways that we can that we can provide like a green channel kind of concept, where the documentation, a lot of the stuff that is required is pre sort of populated. So that at the end, only the last, the doctor, discharge, somebody, et cetera, can be added and that person be sent home. So again, this is an area where we are working. During the year, I don't want to talk about it, but we are looking at some innovation around this area as well to offer customers a better experience rather than having to wait. So both I think are areas that are very top of mind for us.
See, at a fundamental level, on claims ratios, we are at the 45 percentage range on a 16-year-old book rate, which is way, way below where the industry is. And that implies to some extent, the benefit of that in one way or the other can be passed on to consumers, whether it is in terms of more convenient claims handling and whether it is in terms of smarter products. At a very fundamental level, my belief system is that insurance is for the really big events and not for the everyday expenses. And so deductible is a great way to reduce costs and make the product more efficient. But very fundamental level, in the product like insurance disclosure is the critical part. If you can't, get very good disclosure that everything else fails and then our ability to control claims, the ability to control inflation becomes impossible. And I think we're doing a phenomenal job on disclosure compared to most of the other channels. So feel quite confident about that and I think we will do more in this area as we go forward. I would say way ahead. And I'm quite excited about what all we can do in this area to make this a more robust proposition in the health care segment. One last question, I think Sachin.
Yes, Sachin, unmute yourself.
Congrats on a great set of results. My first question is on basically PAT increase rose by almost INR 560-odd crores in this fiscal year. Do you see this rate going up or going down going forward? I'm asking this because almost INR 330 crores, INR 340 crores impact I see from ESOP in expense and other income. And that's the light in which I was trying to check because the ESOP expense impact will decline over time, I guess?
So Sachin, you are too smart to ask this question here. You guys have your calculations. You guys know everything sometimes better than us. The calculation of profit is a pretty straightforward calculation that we have discussed many times. And you are absolutely right, the profit calculation in the medium term actually does not get impacted by new business growth at all or in a significant matter. So say at all was actually incorrect.
But in the medium term, in 1, 2 years, profit does not really depend on what happens in new business. I think that's the key. And which is why for the last couple of years we hear my commentary, I've said, let's not focus on profit, that's an outcome. Let's focus on new business growth because as the engine that will drive future profit, and that's what I'm assuming all of us are valuing the company on future products, right?
So I think the focus stays on -- and that's not to say we don't care about profits. It's just that's an outcome. We can't really do anything about it, right? So I think you are going to up as we grow it. I think this year's profitability will show up in future years in terms of that. So yes, I feel good about it.
Understood. Second question, and this was experience I was buying health insurance Policybazaar the agent was able to sort of immediately send me a link, which I could join where he could talk about what he was talking about. I just played on scene as well, which was a very new and sort of good experience for a customer. So thinking from those lines, I believe there must be some more initiatives like that going on? Will you want to highlight them? Or secondly, is there the incremental cost that comes because of this is also resulting in better conversion rates and basically, it's making sense.
So yes, e are looking at a very segmented and specific approach. I think the team are doing some very elaborate work on how we should utilize process and technology changes to make things better. But I think it's Sarbvir's question to answer.
No, I think, first of all, I'm glad that you had a very positive experience. I think we are trying to explained, we have segmentation strategies. Health insurance and not health insurance, We have broken it into various markets. In each bucket also, then we focus on making sure that we -- the adviser is trying to authorize a screen-sharing option. We call it screen-sharing rather than video call or because customers prefer that rather than having cameras on both side. And we show the customers the whole journey as what is the product, what is the comparison, what is good about it, what are the issues, so both thing very transparently can be discussed. So if you think about it, this is an alternative to a physical meeting. So physical meeting is, of course, very good. But this is equally good because you can go through the whole process. So we are continuously thinking of ways to make the process smoother as well as answer all the questions that the customer may have. Some of them actually they directly asked and some are implied. They may not ask it, but they may be worried about it. So let me share that information to them on WhatsApp or on e-mail and say that, look, this is some of the issues that you could have that's around waiting period, around and what is allowed in the policy, what is not allowed. So I think it's a series of things that we are doing to address customer needs, some implied some direct, and it's a continuous process that we are doing.
So much cost benefit analysis, if you can get it.
Honestly, at the scale at which we operate, all of these are very small marginal cost that come and the conversion -- the change in conversion overcome the incremental cost very, very easily. So it's not really a cost issue. It's more trying to find ways to get more business. And as you know, right, the economics of the health business with the renewal is really, really good. So spending a little bit of extra money upfront is not a challenge.
See, we are at a very early stage, I'd like to just close as we are closing, I'd like to close with one particular few statements, right? We are in a very, very early stage of evolution. We are solving a pretty big problem. What is the problem we are solving? We're solving the -- at a high level, we are solving the social infrastructure problem, which is that social security. Most countries, whichever way, whether you talk about the government or the people and are spending about 30% of all income on on social security. And I'm pleased that spend on social security is 30% of GDP and countries where we do not spend a lot, then the people have to pay for the social security, either pay for it in cash or paid for it in kind in terms of agreed situations, but it's a very, very big industry, perhaps the biggest industry in the world.
Within that, we are very specifically focused on the health care industry. And I know in some of the questions, they -- at this point, you see us as a baby because you basically -- some people are seeing it as some kind of an online platform that gets traffic. And yes, that's a starting point. But you expect us, as we look into the future to get deeper and deeper in this. At a fundamental level, the problem we have is what is the problem in health care, right? It's all about misaligned interests. A person does not want to buy insurance until they need it. By the time they buy insurance, nobody wants to give them insurance. The hospital wants to overcharge for stay. The insurance payer pay problems.
Now all these problems need to be ironed out and solved. And yes, our endeavor if you ask us in the long run, it's going to be to address all the problems. And I emphasize in the word all not on just the front-end demand side. And which is where sometimes when I know we always never respond very properly some questions. I think the take people make up looking at us is looking at us in a very static position and looking at it as just the online platform. I think if you got to look at us from a 15-year point of view, that would be a mistake. That at least not our endeavor. I wouldn't be happy if 15 years from ow we're just online platform we're just doing some comparison and sending traffic here and there. That would actually from me personally be quite a disaster.
So with that, I'll close now and look forward to these next 15 years, but thank you very much for joining. And yes, thank you.