Confident of turning PAT positive next year, says PB Fintech's Yashish Dahiya

Yashish Dahiya

After Policybazaar turned Adjusted EBITDA positive in the March quarter, the company’s management said that it feels confident of turning in a profit after tax (PAT) by next year and expanding the number to Rs 1,000 crore by 2026-27 at a time when new-age companies are chasing profitability after years of venture-funded growth.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) is a measure of operational profitability used by new-age companies. It doesn’t include some fixed costs like share-based payment expenses in the calculation.

“We hope to be and feel confident that we will be PAT (profit after tax) positive next year. We have also given some guidance about being Rs 1,000 crore in PAT by 2026-27,” said Yashish Dahiya, co-founder of Policybazaar.

“We expect our new business over the medium term to keep growing at 30 percent. If we don't grow at that rate, then of course there’s a question mark. We think the industry will grow at about 10-15 percent and we should grow 2-3 times the industry level,” he told analysts in a post-earnings conference call.

PB Fintech, the parent company of Policybazaar, reported a net consolidated loss of Rs 8.95 crore for the quarter ended in March. This marks a significant decrease from the loss of Rs 219.60 crore incurred in the same quarter the previous year.

Revenue from operations was Rs 869.09 crore in the quarter ended March 2023, up 60.85 percent from Rs 540.29 crore in the corresponding quarter of the previous year, the company said in an exchange filing.

The company said the growth was driven by three things – renewal income, growth of new business, and higher efficiency in its new business.

The management highlighted that the company had made an excess revenue of around Rs 15 crore on a premium of Rs 47 crore in the March quarter on account of customers flocking to buy high-value unit-linked insurance products (ULIPs). This is because income from life insurance premium over the annual premium of Rs 5 lakh has been made taxable from the current financial year i.e. from 1st April 2023.

“March was a bit of an exceptional month from a savings business perspective, where certain tax advantages led to higher sales on some products than usual,” said Dahiya.

Although the company registered revenue of Rs 365 crore from its new initiatives segment in the March quarter, the management said that it should not be compared to its core business, as the segment still has a long way to go in terms of profitability.

“The guidance we have given is that by 2026-27, our new initiatives will not be negative. New initiatives is a competitive area and so we have given ourselves a leeway of 2-3 years when we are confident of getting to profitability,” said Dahiya.

“It's like a marathon, right? And we don't know when the other guys will run a bit faster for the next three kilometres. And so, we will see how we handle that situation. We don't want to say how we could run the entire marathon,” he added.

The company’s management also remarked that Policybazaar collected premiums of around Rs 8,000 crore in the March quarter, of which half was on account of renewals and the other half from selling new policies.

To an analyst query about a slowdown in the sales on new policies, a senior executive highlighted that it has been an industry trend that the company is hopeful will reverse in the coming year.

Policybazaar management also said in the call that it does not see its commissions from insurance manufacturers changing in the near future.

“We don't see any change to our commission, either up or down. We have always linked our commission to the quality of our business and the overall profitability of an insurance company… In fact, I think we probably deliver better profitability than most channels,” he said.