PB Fintech, the parent company of renowned platforms Policybazaar and Paisabazaar, is a leading insurtech player revolutionising the insurance and financial services industry. Founded with the mission to simplify complex financial decisions, PB Fintech leverages cutting-edge technology to provide users with transparent and efficient solutions.
Its flagship platform, Policybazaar, is a trusted marketplace for insurance products, while Paisabazaar offers a comprehensive suite of financial products, including loans and credit cards. PB Fintech’s innovative approach has made it a dominant force in the market, driving substantial growth and profitability.
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Impressive Q1 performance
PB Fintech, the parent company of insurtech platform Policybazaar and Paisabazaar, has made a remarkable turnaround in Q1 FY25. After reporting a net loss of ₹11.9 Cr in the same quarter last year, the company posted a net profit of ₹ 60.2 Cr. This significant improvement underscores the company’s robust growth and strategic execution.
Revenue growth: A closer look
The company’s operating revenue rose by an impressive 51.8% YoY, reaching ₹ 1,010.5 Cr in Q1 FY25 compared to ₹ 665.6 Cr in the year-ago quarter. This growth was driven by a 46.1% YoY jump in core online premiums, lifting the core platform business insurance revenue by 40.1% YoY.
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Sustained profitability for PB Fintech
PB Fintech turned profitable in Q3 FY24 and has maintained this momentum. Despite a 7.3% decline in revenue from the previous quarter (Q4 FY24), the company managed to keep its profit steady at ₹ 60 Cr. This stability is a testament to the company’s ability to manage costs and maintain efficiency.
PB Fintech financial performance
Revenue breakdown
In Q1 FY25, PB Fintech’s revenue was primarily driven by its insurance broking business, which formed 83.6% of the collections. This segment saw a slight decrease of 7.5% to ₹ 845 Cr.
The income from other operating activities, which includes marketing, advertising, consulting, and support services, also dipped by 5.7% to ₹ 165 Cr. Despite these declines, the firm’s total revenue stood strong at ₹ 1,111 Cr, including ₹ 100 Cr from non-operating activities.
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Expense management
The company’s total expenditure decreased slightly to ₹ 1,081 Cr in Q1 FY25 from ₹ 1,114 Cr in Q4 FY24. Employee benefits cost remained the largest cost center, forming 42% of the overall expenditure, which saw a marginal increase of 3.4% QoQ to ₹ 455 Cr.
Operating income and margins
The operating income was down by 211.1% QoQ but increased by 40.82% YoY. The adjusted EBITDA margin climbed 144 basis points YoY to 4.9%, driving overall adjusted EBITDA to ₹ 49 Cr against the estimate of ₹ 38.20 Cr.
Quarterly performance (Amount in Cr):
| Quarterly | Mar 2024 | Dec 2023 | Sep 2023 | Jun 2023 | Mar 2023 |
| Sales | 30 | 34 | 27 | 13 | 35 |
| Other Income | 62 | 63 | 63 | 63 | 61 |
| Total Income | 92 | 97 | 90 | 77 | 96 |
| Total Expenditure | 80 | 104 | 63 | 75 | 74 |
| EBIT | 11 | -6 | 27 | 2 | 22 |
| Interest | 0 | 0 | 0 | 0 | 0 |
| Tax | 1 | 8 | 0 | 0 | 0 |
| Net Profit | 9 | -14 | 26 | 1 | 22 |
Market performance and analyst views
Stock performance
PB Fintech shares rallied 16.23% to hit a high of ₹ 1,664.35 after the June quarter results. The stock later trimmed some gains and was trading at ₹ 1,516.35, up 5.90%. The company has a market cap of ₹ 65,073.05 Cr, with a 52-week high/low of ₹ 1,543 and ₹ 661.3, respectively.
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Analyst recommendations
Analysts have mixed views on PB Fintech’s stock. Out of 15 analysts covering the company, 2 have given a Sell rating, 5 have given a Hold rating, 4 have given a Buy rating, and 4 have given a Strong Buy rating.
Jefferies maintained its ‘Buy’ on the stock and raised its target price to ₹ 1,500 per share, while Morgan Stanley maintained an Equal weight on the stock and raised its target price to ₹ 1,125 per share.
Future outlook
Nuvama Institutional Equities increased its revenue estimates but lowered margin expectations, changing its FY25E/26E adjusted projections by -1.4%/1.6%. The firm also reduced its cost of equity assumption to 13.5% and rolled over the valuation to Sep-26E, yielding an increased DCF-based target price of ₹ 1,370 from ₹ 1,160.
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Growth drivers and challenges for PB Fintech
Premium growth and new initiatives
The company’s core platform insurance revenue grew 40.1% YoY, led by a 46.1% YoY jump in premium. Growth in total premium was impressive, with new online business premiums surging 66% YoY, within which online term and life new premium growth was 78% YoY.
Margin impact and strategic moves
Despite the impressive premium growth, the take rates moderated due to a change in product mix towards ULIP sales within the savings business. The core online insurance renewal premium, which has an 85% margin, grew 28.9% YoY.
However, the company’s contribution margin for existing business came in at 43%, down 234 basis points YoY. Increased contribution of new health business and expenditure on call centre capacity impacted margins negatively.
Future growth expectations
PB Fintech’s management remains optimistic about future growth, expecting scale-up to aid margin uptick in the coming quarters. The management has guided for 45% growth in core online insurance renewal premium in FY25E and remains bullish on premium growth and growing trail revenues.
Conclusion
PB Fintech’s Q1 FY25 results highlight the company’s successful turnaround and growth trajectory. Despite some challenges, the firm has managed to sustain profitability and show impressive revenue growth.
With strategic cost management and a strong focus on premium growth, PB Fintech is well-positioned for continued success in the coming quarters.
