Online credit marketplace Paisabazaar is expecting a continued slowdown in business growth for the next quarter, as RBI tightens noose around unsecured lending.
PB Fintech, the parent firm of Paisabazaar and Policybazaar, on Tuesday reported its financial results for the quarter ending March 2024.
While the insurance business clocked stable growth numbers, the credit business under Paisabazaar witnessed a slowdown.
While the company had reported Rs 16,000 crore in annualised credit disbursement during the first quarter of FY24, this was recalibrated to around Rs 14,000 crore in the third quarter ending December last year, owing to the cautious approach of its lending partners post the regulatory measures and statements.
Paisabazaar’s annual loan disbursal rate stood at Rs 14,808 crore. The business was growing at 50-60 percent last year, which came down to 20-22 percent in the January-March quarter.
“The credit linked business (Paisabazaar) slowed down in line with expectation. We expect this slowdown for one more quarter (0-10 percent growth). We have seen tightening (in unsecured loans),” said Yashish Dahiya, Chairman and CEO, PB Fintech, said during earnings call to discuss the latest numbers.
Paisabazaar has been EBITDA (earnings before interest, taxes, depreciation, and amortization)-positive since the December quarter of 2022, and was expecting to begin clocking profits starting March quarter.
Over the last one year, the RBI has expressed discomfort at the expanding share of unsecured loans in the system.
In November, the banking regulator issued a directive requiring lending institutions to increase their risk weightage or the amount of capital to be set aside against unsecured loans disbursed by them. The directive led fintech firms, who build their business around small-ticket loans, to rethink their strategies.
Focus on secured lending
Moving forward, Paisabazaar is looking to double down its focus on contribution coming from secured lending business. This includes home loans, loan against property, and newer categories like loan against securities.
“The secured loan disbursal stand at 13-15% on quarterly basis. Our key priority is to increase secured loan contribution,” said Sarbvir Singh, Joint Group CEO, PB Fintech.
Dahiya added to this saying, “We are not worried about unsecured lending business but want to take the secured loan opportunity further.”
In terms of the revenue split, almost 45 percent of the platform’s overall revenues comes from unsecured personal loans, followed by credit card issuances at 25 percent, as on December last year. Distribution of SME loans contributes 18 percent, with the rest coming from secured credit offerings and allied services such as insurance cross-selling.
Shares of PB Fintech tumbled over 5 percent to Rs 1,178 per share on May 8, despite the firm reporting profit for the second consecutive quarter in Q4FY24. Brokerages reiterated their recommendations to 'buy' shares of the online insurance aggregator, anticipating a sustained strong growth momentum moving forward.
The company which managed to break-even in the previous quarter, once again swung back to black in Q4FY24, reporting a net profit of Rs 60.19 crore as against a loss of Rs 9.34 crore in the year-ago period.
The company's consolidated revenue also increased by 25.3 percent YoY to Rs 1,089 crore in Q4FY24 from Rs 869.1 crore in Q4FY23.
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