PB Fintech Limited (POLICYBZR) Earnings Call Transcript & Summary

A very good morning to everybody. [ We'll start our ] earnings call for PB Fintech Limited quarter 2 financial year 2023, 2024. We have with us today Yashish Dahiya, Chairman and CEO, PB Fintech; Alok Bansal, Executive Vice Chairman, PB Fintech; Sarbvir Singh, Joint Group CEO, PB Fintech; Naveen Kukreja, Co-founder and CEO, Paisabazaar; Mandeep Mehta, Group CFO, PB Fintech. May I please now request Yashish to start with the address.

Thanks, Rasleen. Good morning, everyone. First of all, before I get into the numbers, I just wanted to say I'm very thankful to the entire team. This is the first quarter since we went public that I'm actually happy with the results, and it's a very clear reason why I'm happy with the results. It's because for me the priority 1 is always core business growth. Priority 2 is EBITDA, and priority 3 is noncore businesses. And within core growth, if I was to call something priority 0, that would be the growth of our health and term business, which when I do my mathematics accounts for more than 3/4 of the value of this company, so obviously I will feel very pleased when those have on a cumulative basis grown at 53%. And before we get deeper, I just wanted to clarify one thing which I don't think gets picked up very quickly. When health grows, we actually lose on EBITDA for the first year. And that is very simple because health on the first-year business is almost a 0-margin business. So if health last year -- I'm just making these numbers up. If last year health was X percentage and -- of our total business and this year it is X plus 2% -- that's the delta is 2%. There is a very clear 1% loss of EBITDA that happened because of that, but it's something we are very happy about because it obviously comes back in the net present value in a very big way in the future renewal streams. Now I'll get to the numbers. And so this first part was the unprepared part of my speech. The rest of it is fairly prepared part. So our online marketplaces Policybazaar and Paisabazaar, which we refer to as core business, improved their adjusted EBITDA by INR 66 crores year-on-year for this quarter. If you remember, we had guided about 6 quarters ago for this number to be between 150 crores to 200 crores. We are quite pleased, in the last 6 quarters, this is running at about 225 crores. So clearly the 150 crore to 200 crore was a conservative estimate. It was and is a conservative estimate. As I said, we are very pleased with our health and term business growth, which has been the highest since we went public. Our total insurance premium for the quarter is now reaching an ARR of INR 14,000 crores, [ so it's roughly ] 3,500 crores. Of our total core online business, credit continues to be about 25% of the total revenue. Our renewal, trail, which is the other area which leads to a lot of profit growth, is now up from -- to INR 436 crores of ARR, up from INR 294 crores last year. And that is -- obviously operates at about 85% margin, significant source of profit growth today and in the future. We maintain a CSAT of 88% and continue to improve our claims support and customer onboarding services. The credit business continues to grow very well and has been adjusted EBITDA positive since December '22. We are now at an annualized run rate of INR 16,500 crores disbursal and about 6 lakh credit cards issued on an annual basis. About 39 million customers have accessed the credit score platform. 75% of the cards are processed end-to-end 100% digitally, and more than 75% of disbursals are from existing customers. We continue to strengthen our leadership in new initiatives while building further efficiencies. PB Partners, our agent aggregator platform, continues to lead the market in scale and efficiency of operations. We have moved the business increasingly towards smaller and higher-quality advisers. The quality aspect has started to really play in. It has the highest proportion of non-motor business and is present in 16,300 pin codes, covering 85% of the pin codes in India. We are ever more -- so we are more convinced about this business than we've been in the past, clearly, so our conviction is growing on this business. Our UAE premium has grown about 2.5x in -- since the last year. So overall on the consolidated results, the Q1 was at INR 812 crores, and our adjusted EBITDA was INR 13 crores. The PAT loss for the quarter was INR 21 crores. And the PAT for H1 increased by INR 358 crores to minus INR 33 crores. We stay confident of delivering the first full year of positive PAT. That's pretty obvious because Q3 and Q4 are always stronger than Q1 and Q2. And yes, I'm extremely confident that this should be our last quarter of losses, so next quarter, we'll hopefully have -- not hopefully. We'll definitely have profits. Happy to take questions now.

[Operator Instructions] Sachin?

This is Sachin Salgaonkar from Bank of America. Rasleen, can you hear me?

Yes, very well.

Very well, Sachin.

[ Okay ]. I have 3 questions. Yashish, first question, just tying up to the first statement, what you mentioned about the growth coming from health. So wanted to understand in that context the quarter we just passed. Should we -- and I know you guys don't give a mix between, let's say, health and motor and other insurance but wanted to get a context in terms of directionally are we seeing more contribution coming from health. And is that something which is leading to an incremental growth? And of course, a related question is we did see OpEx increase on a Q-o-Q basis, so is it the normal seasonality? Or any one-offs out here or, as what you indicated, the first year of health and hence a pressure on margins.

Sarbvir, do you want to take that?

Sure, sure. So I think yes. Answer to your first question is that health as a proportion of our total business is growing both in terms of new and renewal. Renewal, of course, is -- will happen every quarter because of the cumulative nature of the revenue and APE. In terms of your...

[indiscernible].

[indiscernible].

The higher OpEx, yes...

[indiscernible].

I think, as Yashish explained right upfront, there are 2 things that have happened. One is that health has grown as a proportion of our revenue. So that comes at -- in the first year comes at 0 contribution, so that impacts our reported margins. I think, if you look at it on an NPV basis, it's very, very positive, but in that particular time period, it looks worse off. And the second thing is that, between Q1 and Q2, we had -- we spent a little bit more money on the marketing side, on the brand marketing side, because the first quarter is very -- is relatively low period in the industry. So we spent less. In Q2, we spent our normal amount that we would spend, so because of which you will see a little bit of impact. And I think the third point which is there is that typically in Q2 we start building our call center and our feet-on-street strength for the back half because the back half is a bigger period. So you have to start investing in that, so that also accounts for a little bit of the OpEx that you referred.

Got it and very clear. And can you give a little bit more color on the reclassification? We did see others increase on a Q-o-Q basis.

Sorry. What's that? Others...

So other operating expense [indiscernible] an increase from 1.3 billion going to 2 billion. I do think there's a bit of a reclassification in that so wanted to get a bit more clarity on that...

There would be some reclassification which would -- the EoM, et cetera does allow for a lot more reclassification, so I would say just those are things that you will see happening as the year goes through.

Okay, got it. Second question is on Paisabazaar. Of late, we are seeing NPAs rise in the unsecured lending so wanted to get some context in terms of where are we in terms of NPAs, ECLs for Paisabazaar.

So Naveen, do you want to take that?

Yes. So Sachin, what you had is that there is an NPA rise in a certain segment of unsecured. By the way, across the industry, when you look at any data from trusted sources like bureau -- or we have access to data through partners. At an overall level, the NPA levels remained well within control. A certain subsegment that's been talked about a lot, especially in media, is the under -- sub-50,000 loan segment, which for context for industry is, I think, less than 1%, whether it's 0.5% or something, around that number. For us also, just to give context, the sub 50,000 segment would be about 5% or so of our loan disbursals. So there might be pockets of concern on NPAs in that particular segment, but a, that's a smaller segment. And b, we are confident. We work very closely with the partners we work with. And the specific partners we're working with seem to be confident on that particular segment on their ability to get the right risk-adjusted margins out of it.

So basically, Sachin, I think it's a -- the issue is more at the smaller ticket items, which is a much smaller part of Paisabazaar than the broad e-commerce category.

Got it. So in a very simplistic manner, we should not see any impact [ on growth ] for you guys at Paisabazaar because [Audio Gap]

Yes. So you broke off, but yes, your assumption...

In a simple manner, yes, that is absolutely right.

Yes.

Got it. [ And last question, Yashish ], on the reinsurance business. How do you guys look at the opportunity? And let's say, at some point in future, you guys decide to enter. What kind of investments should we look at this?

So let's be clear because this is a question that's been getting raised. And we have limited ability to speak on it because -- please appreciate it's, again, a regulated matter. And we are having those -- but how do we think about it? We see ourselves as the data -- we have a lot of data. We have a lot of customer information, basis which we believe reinsurance companies can do final pricing, but we see ourselves as a holder of that information, as a holder of that data; and maybe in some way, the process control side. We do not see ourselves as a provider of capital. I do not think the money we have in our bank is best served being a -- as a reinsurance capital for the industry. That is not our intent, and I want to be crystal clear about us. So when you think about us, think about us like a reinsurance broker. Do not think of us as a reinsurance company. What shape, structure it comes out in -- and please appreciate being a regulated entity. Appreciate our inability to be more clear than this. Thanks. Okay...

Thank you, Sachin. Next question will be from [ Ankush Agrawal ].

So Yashish, firstly, again on the fixed or the indirect cost base for the core business. I think, at the start of the year, you had guided that in Q1 you expect a sequential 8% to 10% increase and that should remain flattish for the remaining part of the year, but we have seen a much larger jump, so -- since you have highlighted that you spent a little more on the branding part, so is there anything else that you want to highlight that has led to this growth?

No. It's largely the brand side here. So when I look at the different items, I think, this last quarter, we would have spent a little more on brand and customer acquisition than before, but those are normal changes.

On that also, [ effectively ], April was the month where we didn't spend too much on the brand. [indiscernible] in the past spent on IPL. And these sort of investment that we do with any particular property are more lumpy in nature. So any particular quarter, if you want to do any such property, whether it's IPL, whether it's world cup, whether it is Bigg Boss, whatever, it will be lumpy, but for the full year, we are very well within the number that we had anticipated how much we want to spend on the brand for both the -- both Policy and Paisa.

Right, right. Secondly...

So I think I would say, on these things like brand costs, et cetera, don't look at us quarter-on-quarter because there can be very significant shifts from 1 quarter to the other, but on an annual basis, it should stay exactly as we said. That is we don't see any major change in our philosophy on how we think about branding or costs of acquisition.

Okay, got it. Secondly, on the contribution margins for our core business. So from last many quarters, it has stayed relatively flat at 44%, 45% even though the share of the renewals is -- kept on increasing. And even the underlying efficiency as guided by, say, the new insurance premium per inquiry per month has increased, but this number is not increasing. So one point you highlighted, that obviously the contribution of health is increasing, which obviously comes at lower margins, but is there anything else that is keeping this number subdued and not expanding it?

No, yes, not really. I think if -- I want to kind of say this, right, that in health the NPV, when you calculate it, is significantly higher than the first-year revenue because it's a lifetime payout product. And that is where the -- when we talk about the renewal revenue, a bulk of that is actually coming from health, so it bodes very well to have fresh health growth, right? And of course, fresh health growth, the cost of acquisition, including marketing, including operating costs, et cetera, is very similar to your first-year revenue. So instead of getting a 46% margin as we usually get, on that part, you'll be getting a 0% margin, right? So obviously that part grows. That will have a impact, but it's a very happy impact. This is not an impact to be sad about. It's an impact to celebrate because -- yes, because...

[ I think ] I was just trying to understand if there are anything else that is keeping it subdued. Or is...

No, nothing else, nothing else, nothing else at all.

Got it. That was very helpful.

See, at the EBITDA level, there are basically 2 things. One is the brand costs from last quarter being 30 crores higher between -- on the core business and very rightly so for the right reasons, but it just seems higher because Q1 was lower and Q2 is higher. And second is this health growth which, in our opinion, causes about a 1% dampening on the EBITDA margin simply because health as a percentage of the overall business has grown. And that has a short-term negative [ hit ] but a long-term beautiful position, so if anything, this [ actually ] makes us happier as we look at '27 results.

Next question will be from Mr. Madhukar [indiscernible].

A couple of questions. I'm not sure whether you covered this, but have you given your credit revenues for the quarter?

Yes.

It's 154 crores.

154 crores. And I think also -- and the PoSP revenue -- sorry, PoSP revenue premium, both, if that is possible for you to spell out...

[ Regarding the ] new initiatives. So we don't give out separate premium numbers, et cetera, but the new initiative revenue is about 257 -- INR 215 crores. And a bulk of that would be PoSP, so I would say 80%, 90% would be PoSP.

Okay, got it. And the renewal premiums for the quarter...

[ So first things ]...

So the renewal premium, we've got 1,500 crores.

Got it. So see also on the contribution margin for the new initiatives. That's also been slightly on the lower side, so is that more to do with the growth in PoSP? And last quarter, you had mentioned that you were sort of consolidating that business and not going to the aggregator large agents, but it seems that the growth has been pretty good even in PoSP, so what has happened? Has there been any change in the thought process of that?

So I'll explain before I hand over to Sarbvir. First of all, the growth was always there. So if you look at the PoSP part: It has 2 parts of the business, right? And one is the large consolidators. One is the small agents or the actual what PoSP was meant to be, right? And our growth on the agent side was actually very strong all along. It is just that we were culling the large consolidation kind of business. And now all that's happening is that the small agent part is becoming a bigger and bigger part of the piece, so that automatically lends to higher growth in some ways. And again it's a competitive, dynamic area. We are -- I can only make one statement. Eventually we will win in this. And we know what's going on in the market very well, but I'll -- at this point, I'll hand over to Sarbvir and maybe -- if he has anything to add on that.

No. I think you said it...

I think it's fairly well covered. And I think PoSP business, just to kind of come back on that a bit, is fairly misunderstood by the overall market. A lot of it is commercial vehicles. There is -- so it's a -- if you just drive on the roads, you would see that there are lots of commercial vehicles out there, right, compared to how many private cars are there. And those also need to be insured, whether they are school buses, trucks, et cetera, et cetera. A bulk of that business comes through the PoSP network. And so it's very different from what we would normally assume. You would -- and that's precisely why we never really saw any competition on the core Policybazaar business from the PoSP side because that business is just a different nature of business. So it's interesting. We are getting fairly deep and increasingly very, very convinced on that business. And I think we're not guiding anything yet, but if you were to look forward, I think profitability should be hit in that business much sooner than we originally anticipated.

Got it. And just one final question: See. I understand that right now you just sort of decide that, because of the, you could call it, new business strain on health, the first-year margins are impacted. Don't we see the same on the term side or the term premium?

Not really. See. You have to appreciate life insurance is largely an upfront payment business, right, so -- and general insurance is a continuous payment business. So in life insurance, you will typically get X percentage in first year and you will get [ X by 10 ] percentage in the second year. And then you will get for a few years -- and after some years, it will just trail off to very, very small numbers, although at our scale they do contribute. On the general insurance side, you get paid every year because every year is effectively a fresh -- is technically a fresh policy, right? Every year or 2 years or 3 years, whenever the policy comes up for renewal, it's actually a fresh policy; and that implies you get paid every year. So obviously you get paid a certain -- and in health, the premiums keep increasing and the renewal rates are very strong. In motor, the car -- like you would appreciate, right, a car dies much earlier than a person dies, in general, because a car has got lower lifetime and it gets older. As it gets older, the insurance premium keeps going down, whereas in health insurance, as people get older, the premiums keep going up, so health is a very special business in that respect where the lifetime is far more important than the first year.

Understood. These are very clear. I'll come back in the queue if I have more questions.

We'll take the next question from [indiscernible].

Yes. Am I audible?

Yes. Please go ahead.

Yes. Congratulations on the business growth, especially your explanation on the health growth this quarter and the initial negative impact on EBITDA. I was broadly looking at a longer-term kind of picture. On a broadly longer-term basis, in one of your conversations, you have indicated the growth being a priority for PB till it reaches a critically large size. And at the same breadth, you also expressed worry about reaching super profitability before reaching that size. What would that size be, considering the market we are addressing, before you are comfortable to reach super profitability which will, anyway, happen incidentally? Currently you're at INR 14,000-odd crores of premium, so from that basis, I wanted to understand.

Sure. So see, as far as I can see, my own communication has been extremely consistent both internally and externally. For us, priority 1 is always core business growth. Priority 2 is EBITDA delivery. And when I say priority 1 and priority 2, to me those two are, I would say, 70:30 or maybe even 80:20 in ratio. Priority 0, if I was to call one, is health and term growth because our core business is protection. And our core mission is to have more and more protection. So that is the way we look at it. Now all new initiatives were historically what I would call priority 3, for me, their growth, their EBITDA, because in the very, very long term, they become immaterial. They are -- they support our core business phenomenally, but in the very long term, they become immaterial compared to the core business, right? And that's the thought process, although I must say I'm changing. I'm getting more and more convinced. And I must thank Sarbvir for that, for his consistent focus on the new initiatives while building the core business -- that I'm getting more and more convinced about the new initiatives. And whether it's on the corporate side, we have got now a 3- to 5-year plan, very clear what direction we are headed in, so corporate is no longer a question mark for us. And whether it is the PoSP, it is no longer that we are here from a defensive position and et cetera, et cetera. We think it's a great business, and we think we have a very clear reason and an opportunity. We have a great team and we have a very clear opportunity and reason to win this business. There's a lot going on in the market. We think there are half-truths and half-lies in the -- whatever, in the market. And I think it's a beautiful time. And I think, as time progresses, things will unravel beautifully, like, in our favor, so yes.

Yes. So objectively, like, say currently from INR 14,000-odd crores of premium...

Yes, we don't have a number, so you're -- that's like -- that's what you should never ask, that "what number will you be satisfied with." There is no particular number at which we say, okay, we don't want to grow anymore. That's -- I don't think that's a very -- yes, we don't think that way.

So you have a long runway to growth indirectly -- anyway. So final question: You have normally grown 2 to 3x industry. Based on your current position and based on the previous answer you gave in which you indicated to a 3- to 5-year kind of plan, would you see this kind of 2 to 3x kind of growth continuing over the next...

I see no reason why that should not happen. See. Historically I have been unhappy about our growth. I thought we should have grown more than we grew in the past. Right now I'm extremely excited about our growth. I think, last quarter, we've grown a little more than we should have grown, I think, but these things get sort of standardized over. I don't think you should start [ baking in the bill there ] health and term will keep growing at 53% forever. We've always guided about 35 -- 30%, 35%; and that is where we continue to guide. It is just this quarter was an overperformance and some quarters in the past were an underperformance.

We'll take the next question from Sachin Dixit.

Yashish and team, congrats on the results, great results. Quickly on the renewal side, right: So it looks like the renewal rates are now hovering around the 75%, 80%-odd range. And I do understand some of it might be coming because health was a major sort of chunk that was sold in the last couple of years. Where do you think these can flatline? I think -- where do we see these numbers flattening in terms of renewal rates?

So I just wanted to give you guys some comfort before we answer this question. Sarbvir, I and the whole team did a massive deep dive into renewals. And I don't see any -- we came out very happy with the overall view, as far as the next few years is concerned. Now one part I must explain, which I don't want to get into the details in this call because it's going to be complicated to kind of explain in one call: There are single-year policies, 2-year policies and 3-year policies. 3-year policies renew -- obviously they will renew once in 3 years, and 2 years ones will renew -- when you look at them over a 11-year, 12-year period, there is no difference in the renewal rates. And actually the 3-year policies actually do better somewhat. So many times, you will see -- if you look at annual rates or you look at quarterly rates, you will see some gaps coming in. That could just be because in 1 year we may have a higher proportion of 3-year policies. So this year, our proportion of 3-year policies is much lower than what it was last year. So that's the other part which is the reason I'm kind of overexcited about the current year, is because actually the 53% is not the real growth. The real growth is actually higher if you actually look at it in terms of number of policies, et cetera, but because the multiyear have gone down -- so I don't want to get into the whole detail right now. It will just get too complicated, suffice to say our renewal rates stay very healthy. And the margins at 85% is also the right guidance; and longer term, no change in that...

I think the way we look at it. Basically there's a book of business which goes for renewal every quarter or every month. The renewal percentage on that book of business by vertical and by partner, how is that trending? And that continues to either hold or do better and better. We're doing slightly better than in the past.

Yes, absolutely. Thanks.

Understood, great. On the core or insurance business competitive intensity, right, we are seeing across this world cup that PhonePe is now advertising health very aggressively. The other player, Ditto, I think, has also grown decently well. How do you think that is shaping up? Or do you think the advertising expenses going up has anything to do with this heightened competitive intensity in core?

See. Structurally I hope we have a lot of competition because competition always drives to do things better. And I think competition also grows the industry much faster, as you are seeing as competition happened in the PoSP industry, how rapidly it has grown. It's today almost a INR 15,000 crore, INR 20,000 crore industry. It would not have been direct competition wasn't there, so I -- actually we welcome competition. That said, without commenting on anybody, we don't have any as of today. So yes, lots of things have happened. And this has been our story for the last 15 years. I've always said we welcome competition. It's never arrived. Everybody has told us every year there will be competition. There's somebody in a different frame, different world view. Ours is a tough business is basically what I have come to understand over these 15, 16 years; and yes, I hope we have competition one day. It will be good for the entire country to have more competition and more growth in the protection side. And it will help our growth also more, but lamentably I don't think it's appearing anytime soon.

Sure. Just one final housekeeping question. There was this amount that you have reclassified to other expenses from advertising. For apple-to-apple comparison, can you provide that number for Q2?

Maybe Rasleen can provide that off-line to you.

Sure, sure.

We'll take the next question from Nidhesh.

Firstly, on the credit business, we have been doing quite well. And we have also been able to scale renewal business stream on the credit business side. What is the margin and contribution margin in this quarter for the credit business? And how we see renewal revenue growth in the credit business side.

I think in the presentation we laid out renewal, but Naveen, if you want to answer that...

Yes. On the trail business, like I said earlier also, that trail business is coming because of our focus and growth in the co-created products, which where the revenues links to the performance and over the lifetime of the loan or the card as the product may be. We are -- you may have seen it. We are -- our trail revenue currently is at about 14%, which is of course not there about 2 years ago. We expect for it to continue to grow slightly every 6 months, if not every quarter, as we add new partners in the co-created categories. We currently have about 7 products live. And we have 2 in the pipeline which we hope to take live in the next 3 to 5 months, definitely before the financial year. That's on the trail revenue part. On the contribution side, I don't think we give a breakup, but...

Similar to last year.

Broadly similar across both core categories.

Yes.

And the EBITDA margin on credit business...

The amazing thing is, the EBITDA margin, we don't give it out, but very pleased. It's very similar, at this moment, to the overall core EBITDA margin.

And the renewal revenue is -- what percentage of renewal revenue on the credit side will be contributed from credit cards?

What percentage of the trail revenue is coming from cards? We don't share that level of detail yet...

I just wanted to understand the cyclicality in this business. Let's say there is a credit cycle which plays out. How we will be able to protect our revenue in the credit side.

So let me just comment on the first one. So both cards and loans are contributing well into that. That's what I can share. And if you kind of see the reasoned we focus on co-created and trail was to kind of manage the cyclicality better and be more robust in a COVID-like or any credit turn kind of an event where we had our revenue drop by about 90% in 1 month. And as the trail revenue increases, which is linked to loan performance or card spends, we expect that is far more robust in a event, credit turn event, versus new business acquisition, so our effort is to try and increase the trail revenue.

Broadly it's about, what, half-half...

From both -- no. You wouldn't...

[ You're not giving that. It's okay, yes ].

And Nidhesh, see. Generally if you look at the business model that we have right now, yes, there may be a very, very small impact of credit cycle because some of the trail revenue is linked to the performance of that book. And if people are not spending at all, then obviously the portion that we will get out of that trail book will be a little lower, but it's a very, very small number because as a percentage, first of all, trail itself is small.

Yes.

And on top of that, if you actually look at the dynamics, almost 75%, 80% of the commercial value is, anyways, coming in the first year itself. It's just a small portion which is getting deferred for 2, 3 years.

Yes.

So we are not very worried on that side. And yes, the biggest impact from the tail -- on the current cycle actually comes because the supply gets squeezed. And the last cycle also, during COVID, we saw the same thing. Demand was very, very robust. It continued to be very high, but the supply became a challenge, so we are not very worried in terms of any credit cycle...

And if you use this, think to what happened last time when it happened, when I think Paisa lost almost 90% of its revenue in kind of 1 month. Essentially what happens is you stop doing branding. You stop doing acquisition costs. Some of the contact center gets absorbed wherever it can into Policybazaar and servicing and et cetera, et cetera, so we bring down the running costs very rapidly. And I've always -- I remember. About 10 years, 12 years ago, a lot of our investors used to ask us, "Why do you have Paisabazaar?" and all that. I've always said that credit cycles -- because the whole credit cycle question has always been there. Credit cycles will come, but that is exactly why we have Policybazaar, which doesn't have credit cycles. And so it will support Paisabazaar and coming out stronger every time. So if I look at the competitive intensity in the marketplace credit side business, before COVID, it was quite high, but after COVID -- because there was a -- I don't want to name people, but there were a few people who were doing quite well, but after the credit cycle, they've all gone away. And it's simply because they didn't have a Policybazaar to kind of carry them through that period, whereas we clearly did. So yes.

Thank you. We'll take the next question from [ Parth ].

I just wanted one number. What is the new premium per inquiry per month? I think you disclosed it around 1,700 last quarter...

Same, yes, 1,700 only; very, very similar to last month. That's why we kind of stopped it, because it's the same thing. There was no change whatsoever.

Okay. And so other -- in the segment revenue, this other service part has been degrowing. Is there some reclassification there? Or I just wanted to get a sense there. What is happening there?

If there is a significant degrowth of any case, think that there'll always be reclassification. There'll be nothing else.

So what is that reclassification in other services...

Yes, we don't get into those details, but broadly we've explained that it has to do with the regulatory changes, et cetera.

Sorry if I've been misunderstood. I'm not talking about the other expenses part where the ad expense has been reclassified. I'm talking about the segment revenue breakup where one is the insurance broker service and other is the other service.

So it's the same thing, yes. They're related. They are all related stuff. They are all to do with the same thing. Any -- so all I wanted to explain was there's no significant change in our business from last year to this year. If you add up the numbers, they will add up to exactly the same. There could be reclassification matters and that's all, yes, both on the revenue and the costs side.

Thank you, [ Parth ]. We'll take the next question from [ Kireet ].

I have 2. I just want to get a better sense for what's happening to market growth and market share in health. I mean it seems like we're accelerating, which is not a bad thing at all, but I don't think we have the correct context for how the market is evolving. If the market is bigger than we thought and growing faster than we thought, I would love some context there.

Sure. I -- [ Kireet ], I can try to give you some context. I think on the protection side, on term insurance, clearly there has been a revival in the market from December onwards, from last December. And we have been growing well ahead of the market, as the numbers would indicate. On the health side, very honestly, the market is not really necessarily accelerating. I think, if you will have seen, the growth has been very consistent in the reported numbers, which include both fresh and renewal at around 18%. However, our growth has definitely been ahead of the market. And I think we are -- that part of our business is growing much faster than the market. There are a variety of reasons that we -- that is possible. I think a lot of it is due to the way we have organized ourselves, the way we've segmented the market, et cetera. We can go into that in detail at some other time, but overall I think, if we look at the protection side, we are growing ahead of the market. And I will say protection also is growing in the market as well.

And obviously Sarbvir does this all the time too. Sometimes when you are seeing it from too close, you may or may not observe the change, but I had the opportunity to start interacting with some consumers recently in various places. And the word is changing. The word I heard was that if I -- earlier what I used to hear was that, when I have a claim, I will be left hanging onto a phone, where Policybazaar [ is policy ]. Now the word I hear increasingly is, if I have a claim, I think my chances of getting my claim are better if I am being handled by Policybazaar than many other channels. And that is both true. It was always true, but it's become more true now and that's in reality. And the perception has started moving in that direction, so I -- actually I was -- internally I've always believed, in health, we should grow at 100% because it's such a huge market. And looking at our term performance, I think we do much better in term as a percentage of market share than health. And so internally I've always believed that, right, and well, to the frustration of some of my colleagues who kind of thought, "Why he has this special passion for health." I can't give out the number of our growth, but it's not very far from my expectation on health alone. And so it's a very interesting phase where we are actually delivering to potential. And somewhere or to me, that has to do with something which we could not put our finger on immediately because it's not like our marketing spend has -- on health has changed dramatically or anything of that sort. To some extent, that was the goodwill that we were receiving. And it's happening incrementally, so every month, we are getting higher growth than the previous month. And that's just continued throughout the year, ever since April, and very happily so...

And [ Kireet ], just to add to what Yashish and Sarbvir said. See, this is not a very [ trivial ] product that people just come and buy, but this is a very thoughtful [ sort of ] product when customer comes on their own and [ we are going to put them ]. Secondly, the industry is very, very resilient. In a particular quarter, you may see very different results because -- like what happened in quarter 4 versus quarter 1, when some of the quarter 1 savings sales got pulled into quarter 4 of FY '23, but if we look at overall trend of the industry, it's a very resilient industry which has got built over last 2 decade-plus. Now specifically, currently we are very excited to look at what's happening in the industry because people have started to think of creating much more customer-focused products. People are using much more tech. So the consumer [indiscernible] across the industry, some of it driven by us, some of them because industry has realized that at some point they have to evolve. It's a very exciting [ pace ]. And what Yashish mentioned, that claim part is the most important piece because that's something for all of industry, including us, to be taken care of because somewhere the consumer trust on the industry has to be built in a much better way that, if I've got a product, then the claim is almost a certainty unless I have not declared properly. So that's a big jump for the industry to take, but overall I think this is very exciting for -- phase for the industry. We will see next 3 to 5 years a lot more innovation coming out of this industry.

And statistically we are now significantly outperforming other channels in terms of claim settlement, significantly. There's almost no doubt there. And just the way we are doing the Claim Samadhan Diwases, the physical presence, just the number of appreciations from customers -- of course, we -- it's a difficult industry. It's a complaints industry. You get a lot of [ big bats ], but there is some beautiful stuff happening on the claims side on our business.

Thank you. We'll take the next question from Sanketh.

Can we get a simple breakup of the premium number INR 3,475 crores into core PB Partners and PB corporate given Dubai is already mentioned in the result -- in the PPT?

Sure. So the core is about INR 2,630 crores, which is almost equally split between renewals and fresh.

Yes.

And PoSP is -- basically PoSP -- Dubai is about INR 155 crores. PoSP is about INR 600 crores. [indiscernible] is about -- whatever. Our corporate business is about INR 115 crores or so. So yes, that's the broad breakup.

Got it. Sir, this is in the previous -- one of the questions you answered, that your renewal premium is 1,500-odd crores. So this is all businesses put together. Or you are just alluding to the core business.

This is the core business. The core business -- sorry. The [ INR 1,500 ] including the corporate business and the PoSP business. The core business is about 1,350.

Perfect, perfect, yes. And the second question what I had is that just wanted to understand the traction on the offline of the core given, in the past, we said that the contribution was almost 20 percentage of the total new business what we do, whether we are seeing significant pickup in that number from those levels. Or is it on similar lines?

So Sanketh, we see incrementally every month some progress on that number, but it's not -- that number is not obviously growing dramatically now because, frankly, the core business itself, the online -- the call center part is also growing very fast. So if you see, our growth this quarter has been really good. And we've alluded to the protection number, but even then, other businesses have done very well. So overall, that number continues to grow incrementally, but so far, it's not like changing dramatically. I also expect in the second half that it will do better because we've been putting some capacity in place. And as that capacity matures -- it takes a person about 3 months to learn how to sell insurance properly. And I think, as that maturity happens, we will see that impact in the second half.

See, on the -- both the people and the process side, the off-line side has been maturing. And those who've heard me consistently over time have always heard that we were in an early stage of our physical development. Today, I will say we are getting to a more mature operation. I can see the quality of the operation improving significantly and the quality of the management and the people starting to improve significantly as -- whenever one is traveling, one meets the people. Subjectively, I'm saying that, that part of the operation is getting better and better. And I do believe, as we go into -- see. This quarter was a very strong quarter on our core businesses, so -- but I think, if we ever had a weak quarter, this would be a very strong way to manage the growth. And also I think, in Q3, in Q4, we should see more benefit from this.

Perfect, perfect. And just one question is on the new protection. What you highlight is 53 percentage. See. Looking at the companies' results, life insurance companies' results, we all know that protection has come back very sharply. And probably the growth is much higher than 50 percentage for all the companies which have reported the results, so just directionally...

No, I just wanted to correct you there. I don't want to get into specific companies, but if you look at the overall industry growth, it is nowhere near that number. Yes, the listed players had a very bad last year. So you saw minus 50%. And then you are seeing 50% for the listed players, which would basically imply, over a 2-year basis, minus 25% or whatever, right? That's broadly where the number comes to. If you take 100 to 50 and then you grow by 50, you grow to 75, so over a 2-year period, it's minus something. Now first of all, we did not degrow last year. That was number one. And as -- and I don't think the industry degrew that much last year. So I think some players degrew more than others last year. And yes, some players would have grown because of base effect, so let's not get too much into the detail of it. I don't want anybody...

No. The reason for asking this question was this 50 -- 53% growth health and protection, what you said, whether health is also growing at that similar rate of 53%. Or did it start lower than -- or it is more driven by individual protection is the point I was trying to get at.

Yes. It's a sensitive matter for us. Health is growing faster is all I can say. Health is a higher percentage than term on the growth rate. That itself, I have said too much.

Got it. And last one from my side: The PoSP business, you said, is around 600-odd crores. And we chose to degrow in 1Q FY '24, but compared to 460 crores what we did in second quarter, 600 crores seems to be a very decent growth. So this is -- it means, as you highlighted, this is more driven by the gradual business. And we expect this growth momentum to continue in PoSP.

We have an amazing team. I am increasingly impressed by our team and the quality of our team, and I think we're on the right path. Yes, I think, from day 1, I did not like the large consolidation part of the business too much. And I think we all agreed, but at that time, the scale was coming from there. As soon as we could start to cut that part away, we have been doing that. And of course, that, the core part of that part -- see. In everything -- there's a core and a noncore in everything. There is part of the business that you want to do. There is part of the business you don't want to do. The part of the business that we want to do, we've been growing in that. That's becoming a larger and larger part, so as that becomes a larger part, you will start to see growth again, but listen: Don't get too stuck up on the PoSP thing. It's a long game. I would say it's going to play out over the next 4, 5 years, but I'm not saying it will take us 4, 5 years to get profitable in that, so I think we are on the right track. We've got a great team very focused. We understand the market quite well. We understand -- I'll make one statement in this PoSP thing from the -- on the private world side. The better players will look worse for a while, and this does happen in some industries. I'm not an expert in investing, but right now the amount of misinformation on the PoSP side is so high that I think people are getting -- investors are getting confused. And so you would almost find that the best-quality players -- we're not raising capital for it, right, but I'm saying in the private world the best-quality players actually struggle because they will not be able to demonstrate the growth and the profitability that they have promised to their investors. However, the ones who are only selling a story will gain for a while, so I think it's a narrative game, but the business is what it is. I think, this year, growth will be challenged in the PoSP area for almost everyone because -- please appreciate you've gone from nothing to 20,000 crores. You can't go to 200,000 crores. It's not going to happen, all right? So I think I'll leave it there, but yes...

I just want to add one thing, Sanketh, to what Yashish said, that you have to remember there is one very important difference between PB Partners and every other PoSP competitor, which is the brand Policybazaar. So as you go deeper and as you go into smaller agents and people for whom their livelihood depends on this business, they care a lot more about the brand than anyone else because it stands for reliability and certainty of payout. And that is why I've seen that, while the numbers as Yashish said will change up and down, depending on the quarter, month, et cetera -- but more than that, the -- structurally the business is going in the right direction, where we are leveraging the strengths that we have which no one else has. And I think, over a period of time, this will keep playing out, so I think that's one of the things to keep in mind as we look at the PoSP business.

Perfect. If I'm allowed to ask this last one: In the annual report, we do disclose our renewal revenue. I just wanted to know. It will be great if you can disclose that number on half yearly or quarterly basis because it helps us in that sense. Because, anyhow, you are disclosing in the full year's. And if you can provide today that number of core revenue broken down into renewal -- and we know the Paisa's number given...

It is 436 crores divided by 4...

4, yes.

So it's 109 crores. Because...

[ So you're ] on Slide 12. On Slide 12, there -- renewal revenue...

[indiscernible] 109 crores in the quarter.

No, no. I thought that ARR is the last one which is annualized, so I thought...

No, no, no. We do [ for every ] quarter.

Quarter [ into 4 ].

We'll take the next question from Dipanjan.

I hope I'm audible.

Yes...

Yes, you are, Dipanjan. Please go ahead, yes.

A few questions. First, [indiscernible] questions. One is if you can give some color on the margins of your corporate business. Second, you have mentioned in the presentation that your overall hybrid or digital-led business has been picking up. If you can give some color on the mix in that or the margin trajectory. Or what proportion will be that in your overall business today? And thirdly, you have mentioned in the call some points. Like you expect PoSP to achieve profitability or improved profitability much better than what you had anticipated before. You've also retained your growth stance in new business. You have mentioned that you're also growing quite sharply in your high margin -- or high-renewal-margin products, so what would be the levers that you would probably look for in terms of upgrading your FY '27 guidance? Or do you even think of upgrading your guidance? If you can give some color on that.

That guidance was given in a very weak moment when the world thought we were really a cr** company, right, so I don't think we are going to upgrade guidances and all that stuff. In fact, we will not give too many more guidances, right? So whatever guidances we gave at that time, which were '24 being profitable and '27 having 1,000 crores of profit, where the guidances, they were given in a moment that I thought people could lose a lot by misunderstanding the company. Because at that time we were a 1,000 crore loss-making company, right? So at that time, people needed to have that -- I knew where our business was headed, so it was given in that context. We don't get into specific stuff, et cetera. Now since you asked: Corporate is a low-margin business. However, it grows on renewals. We have a plan by which we will invest some amount in that. I will not go into specifics of how much, but within a reasonable time frame which is few years out, it will start to get towards profitability. And that profitability is a function of how much of our business comes from renewals rather than fresh. In that also there's a whole -- and there is some types of businesses. Like the group health business has got very low margins, whereas the nonemployee benefit part has much better margins. But too much detail for this call, I will say. The phygital side. Please don't misunderstand. The phygital side is margin accretive, not margin diminishing. The reason we invest into phygital is only if I get more sales from a certain amount of cost. I have the same person. He could be sitting in a call center or he could be meeting somebody. If that person has higher productivity, then and only then would I send him out. Otherwise, why would we send him out? His salary does not increase because of that. In fact, the air conditioning and some of the office costs actually go down. Tele call -- telecom costs go down. So it is the same person. Every customer we handle is the one who came to us digitally, so our marketing and our customer acquisition route stays the same. It is the how we service the customer is changing. And if we can service the customer better through a physical meeting or a video conversation, we will do that, and it will most likely be margin accretive. So far, it's been margin accretive, and it will continue to be so. On the PoSP side, we are certainly not giving out any guidance. It's a competitive area. All I'm saying is a lot of smoke and mirrors in that area. We understand them. We understand the weaknesses of players. We understand our strengths. We are extremely confident of eventual victory. And you have to somewhere go by our track record also, right? We are not the only person who set up a business like Policybazaar. There are hundreds. If we have done what we have done, hopefully, we'll do the same in similar stuff as well. And maybe we are wrong. Maybe we are drinking too much of our own Kool-Aid. That's also possible, but I don't think so. So I think we'll be the winners there.

Thank you, Dipanjan. We will take the last question from [ Nischint ].

[ Nischint ], we can't hear you. Maybe you want to try someone else and come back to [ Nischint ].

Yes. We'll take the next question from [ Aditya ].

Basically congratulations on very good growth numbers. One thing that I was looking at was Slide 13. And in that, what I was seeing was that, whether you look at adjusted EBITDA or PAT or EBITDA, till Q4 of '23, every quarter, there was a quarter-on-quarter improvement. However, since then, the trajectory is slightly different. It's slightly worsening. What is exactly the reason behind that?

Insurance is a somewhat seasonal business. So quarter 4 will always be the strongest quarter. And I think Q1, Q2 are quite similar to each other. We've explained some of the differences, but yes, I don't think Q-on-Q is a great way to look at us. Of course, you can choose whichever way you want to because there is seasonality in the market.

Sure...

And you will see -- you would -- so what I really look at is the delta from the previous year to this year, which has stayed quite stable. And that was the delta I mentioned about 6 quarters ago, that, that delta should be about -- on the core business alone should be -- about 150 crores is what I said. Then some people said, "Why not 200 crores?" I said, yes, I have been conservative. It should be about 200 crores. That delta is about 225 crores [ if we look at ] last 6 quarters. That delta is about 225 crores, which is the year-on-year annual growth in EBITDA, adjusted EBITDA, whatever you want to look at -- actually it will be slightly higher on adjusted -- on EBITDA than adjusted EBITDA because your ESOP costs keep coming down every year, but that's the broad guidance and that should not change. If anything, it should keep increasing because, as we scale, the renewals become a larger and larger part, et cetera, et cetera.

Good. The second question is a little bit on new initiative, right? Normally most of the start-ups -- or whenever there is a new initiative, because of a lower base, new initiatives actually grow much faster. In our case, core business is actually growing much faster, which is good, but new initiatives are growing a little slower. Any specific thing there?

My friend, our core business is gold.

Yes.

New initiatives are between bronze to silver, right? We've never shouted from the rooftops our new initiative -- that they are the last -- best things in sliced bread or anything of that sort. They are good businesses. They are okay, but they don't compare with our core business. I think any of our competitors in those businesses will give an arm and a leg to have our core business. Thank you very much for those questions and the engaging conversation. We'll close now. Thanks very much.