PB Fintech (NSE:POLICYBZR) Q2 2027 Earnings Call

0:00 Good evening, everyone, and a very warm welcome to PB Fintech Limited earnings conference call quarter two FY twenty seven. Thank you for joining us today. On the call today, we have mister Yashish Dahiya, Chairman and Group CEO mister Alok Panzer, executive vice chairman mister Sarabhir Singh, joint group CEO miss Santosh Agarwal, CEO of Esa Prasad mister Drukh Sarin, CEO, PB Fintech Limited, Group CFO and myself, Mohit, head investor relations to PB Fintech. Fintech We will begin with opening remarks from the management followed by q and a session. I now invite Yashish to share his opening remarks. Over to you, Yashish. Thank you, Mohit. Good afternoon, good evening, good morning everyone wherever you're joining from, and thank you for joining us.

0:51 We've had another strong quarter with healthy growth across insurance and credit. The total insurance premium for the quarter was 9,385 crores, up 38% year on year, setting us up well for over 40,000 crores this year. As always, growth was led by protection because that's our focus from, day one and continues to be our focus. Core online, new health, and term grew 42%, and within this, new health grew 46% year on year. Consolidated operating revenue grew 35% to 2,178 crores. Core insurance revenue was up 42%, and core credit revenue up 19%.

1:39 PAT grew 43 to 192 crores, and PAT margin improved from 8% to 9%. The quality of this growth shows in its consistency. Core new premium, excluding savings, has now grown at above 34% for fourteen consecutive quarters. And our core renewal and trail revenue is now over 1,000 crores. It's almost 1,100 crores on a rolling twelve month basis, up 42% year on year. In credit, dispersals grew 22% in the core business, and this is now risen for five consecutive quarters. Our insurance led new initiatives, PB partners, UAE business, and PB for business delivered 826 crore of revenue, up 40%, and are now close to breakeven.

2:33 UAE premium grew 36%. Let me now address the question straight up, which I'm assuming is on everybody's mind. First of all, where do we stand on the IRDA's consultation paper? The IRDA's consultation paper aims for lower misselling, better claims experience, lower prices, and deeper penetration. We absolutely support all of these goals fully. These are the goals POLICYBZR was built on. Our first campaign back in 2009 was aimed at addressing misselling.

3:20 We have engaged constructively with the regulator, and we will implement the final framework fully and in its spirit. Second, the impact. Lower distribution payouts will reduce our insurance distribution revenue for sure. We are working on three fronts. We will expand our non insurance revenue within and as the regulator permits, and there is some anticipation that that could happen. In the discussion paper, it does mention that. We will accelerate our ecosystem offerings. And as any long term business should, we are evaluating other options to strengthen our business over time.

4:10 We will share much more on this as and when the time is appropriate. Now why do we remain confident? Health and term insurance stay deeply underpenetrated. And for the consumer, it's not really about buying the policy. The customer gets nothing on the day he buys it. The real test comes at claims. And I would like to just cover our record on the four points that the regulator themselves lay out on claims in the health insurance industry. The industry data says eighty seven percent of health claims are settled.

4:55 That same number for POLICYBZR customers is ninety seven percent. Last year, 11,156 rejected claims worth 185 crores were reopened after initial rejection and paid. In the first half of this year alone, we supported about one and a quarter lakh health claims and 80,000 motor claims. Our customer satisfaction is consistently above 90%. On persistency, 71% of our life policies are still enforced at month 61. This is against a benchmark of 51 to 66% for the large players.

5:49 Our renewal in health insurance at 89%, rising to 91 from second year renewals onwards. On miss selling, we have 16... In the life insurance category, we have... We get 16 complaints from our customers for 10,000 customers. This is against a benchmark of 30 to 53. In health insurance, we get 21 claims complaints for every 10,000 claims. This is against a benchmark of 29 to 54 on price reduction. For the plans they choose, our health customers pay on average 9% less and up to 30% less than some other channels. And on reach an expansion of the market, about 40% of new customers added in retail health across the country come through us.

6:49 More than a quarter of India's pure term premium, 17.8% of the retail health premium came through us last year. 74% of our term policies and 64 of our health policies come from tier two and tier three cities. These outcomes are very much required in the country, and that is why we are, as a management team, super confident that we solve this particular problem. We are a part of the solution, and we will only grow stronger through this. Our credit business and our UAE business are growing and outside this broad framework, and we will maintain strict cost discipline over the years as we go through this period.

7:41 What will we not do? While maintaining this cost discipline and profitability focus, we will not cut back on the customer proposition. Not one step back on that. Choice, transparency, and claim support remain nonnegotiable. We will remain fully compliant and and consult with the regulator on whatever we do in this area. Finally, since our listing, quarterly revenue has grown from 280 crores to 2,178 crores, a 51% CAGR, and the part margin has moved from minus 73% to 9%.

8:31 That came from building around what customers need. And we have a very clear, let's call it, mission or strategy, whatever you want to call it. Over the next thousand days, we will serve customers well. It's a very simple strategy. Over the next thousand days, we will serve customers well. We will stay focused on that, and we will stay disciplined on cost. And we will keep investing in a market that remains deeply underpenetrated. Thank you. Look forward to your questions. Thank you, Ruchish. We will now move to the q and a session. We will take the first question from the line of Sachin Salgavar from Bofa.

9:18 Sachin, please unmute your mic. Hi, Mohit. Thank you. Good day, management. I have three questions. First question, want to understand anything specific happened in the quarter which led to an increase in selling and marketing expenses and other expenses, you know, both in terms of q o q as well as y o y. Sarvi, do want to take this question? So then I think what has happened is two things have happened last year, you know, because of the GST impact and everything. And I think it was kind of pre GST, although this quarter. But But somehow last year from June to, obviously, till December, the demand was very robust and... Which meant that we could... We spent, I would say, lower than our normal level of spending in marketing.

10:11 This year, it's been the reverse. Actually, marketing has been, you know, demand has been very tough, and, I think we've had to spend a lot more money. So I would say that if you look at it on a two year basis, you'll find it's not that dramatic. But, yeah, versus last year, it will look as if it was higher. And it was just lack of demand in the market, and I think we we have to spend money to make sure that we, you know, got the leads. Got it. And, you know, just to follow-up on this, you know, how should we think about the incremental spending in next, let's say, three to six months? And I'm asking from a point of view that there is this entire overhang associated with in terms of, you know, how these commission structure gets implemented. Is there a school of thought that it would make sense to control cost, particularly the discretionary items show contribution margin improvement?

11:01 In the opening remark, Ashish did mention about being disciplined from a cost point of view. And how do you look to sort of, you know, balance it in context of what you you indicated that, from a demand point of view, things are a bit tough in the near term? No. Thanks, Sachin. I think... Look. Philosophically, earlier, we were only focused on growth. And when we say that, p zero, p one, p two, p three, everything was growth. And we could have been a little aggressive on cost because that was not the highest priority. Now that does not imply we were wasteful.

11:48 As we move forward, the cost consciousness will be there, but that does not mean we are backing off from growth. I think growth stays very critical in this market. Two things. First of all, the market needs it. And I think it's... In a way, our scale is very important. And thus, we are gonna keep the focus on growth. However, yes, we will be more conscious about the balance between growth and cost than we were in the past. Got it. And my last question I think, yes, you said it right, Sachin. I think we will be more conscious of the balance. But having said that, you know, the truth of the matter is that the biggest challenge in insurance is demand.

12:38 Everything else is actually manageable. The only thing that you can't manage is demand. So I think, you you know, we will have to spend money to keep the awareness to continue with the, you know, focus on building the categories. And, frankly speaking, I think it doesn't impact this policy with that. I think it impacts the industry because, you know, when we advertise, it helps everyone. And I think that's something that we will have to keep doing. Thanks,. And my last question is, I know, yes, you did mention about you guys evaluating options, and at appropriate time, you guys will mention that to market. But does it make sense in the near term to accelerate and focus a bit more on international business, Pesabazaar, PB Health, and, you know, these kind of things, which is perhaps not impacted by these reg... Recent regulatory, you know, I mean, draft regulation for what we saw.

13:30 So I don't think we are actively considering anything in the international space as of now. And I think on Pesabazar, we are doing everything we can. So it is not like our stance changes in any way. PB Health was and is a very important project, which we, you know, are doing so that continues. I think as we said, there is many ecosystem activities that we do. We may have had a certain time frame on those. That time frame starts to speed up a little little bit. Also, from a revenue expectation, that increases from those areas.

14:20 So I guess that is how it would be. And we are also in disc... We we have been in discussions with the regulator on various other options for us. And we will... You know, as and when we have the clarity, we will, of course, announce them. There is no point announcing them in advance of a regulatory approval. So we will take that approval. And once we have that, we will definitely inform the market. This is very helpful. Thanks a lot. Thank you, Sachin. We will now take the next question from the line of Mahrez Agriwal from Bernstein. Mahrez, please unmute your mic. Thank you for the opportunity. Couple of questions. One, is there any understanding of whether collecting numbers the way we collect, is that a dark pattern or not in discussions with the regulator.

15:16 And b, you talked about cost discipline, but at the same time, you also talked about not cutting back on the core proposition to the customer. So just want to understand where are those cost opportunities. I understand you've spoken about ad spends in the past. Any any more color on how exactly we should think about the balance between growth and spending? Those two questions. So on dark patterns, we, of course... We and other players in the industry are engaging with the regulator, and there is, you know, increasing clarity on what the expectations are, and we are fully committed to aligning on those.

16:05 In terms of... I think we've said what we wanted to on the cost side, etcetera. But... And and people, of course, you know, align it with the with the new realities of the net present values, etcetera. That is that is obvious. See, we've had a very consistent framing of how our costs and our revenues work, and I don't think that'll be very different. We had a certain expectation from NPV, and as that evolves, the costing will also align with that. See, our approach at this moment is we are not behaving the way we were in q one, q two, which was all in growth.

16:51 But at the same time, we are being cautious, but we are not stepping away from growth. Right? We're not stepping away from spending. We're not stepping away from increasing our strength in terms of conversion ability, etcetera. We're also waiting and watching. This is a discussion paper. Look. Let's let's be clear. This is a discussion paper. Let's see how it evolves and what comes out finally. And I think that will advise us more appropriately on what the, you know, final course of action should be. We will stay prudent. There's no kind of doubt about it. Prudent, but with purpose. You know, as we said, over the next thousand days, we don't want to step back from where we would have been otherwise.

17:36 If anything, want to do more. How? Let's see. We'll align to the new realities. Understood. Thank you. Thank you, Manas. We will now take the next question from the line of Nidesh Jain from Investec. Nidesh, please unmute your mic. Smoit. So, yeah, Ashish, as you talk about most... More consciousness on the cost side, which are the line items you see that there are... You have levers to pull in terms of cost consciousness or cost control? And if you can provide any quantification for that. See, I think you know it as well as I know it, Nitesh.

18:24 But look at the POSP business. Right? We we do make a loss there today. I think the way the regulations are, that entire business is a bit under a question mark because to an extent it relies on, you know, being able to pay people. And if people are gonna be, you know, what else? So you know you know what the regulation is like. So there is some possibility of... In that area, maybe, you know, a different outcome. The second area that... Of course, we look at both our fixed costs and our variable costs and how we were looking to expand our proposition.

19:20 I I don't think you're gonna see anything which is dramatically different than that. But but, yeah, of course, we will we will wait for the new NPV to to emerge. And if that NPV is markedly different, then, of course, our variable costs will also be markedly different. And I think even on the fixed cost side... See, please appreciate there are a lot of... As we said, we are gonna be accelerating our ecosystem. We are looking at new offerings. A lot of our current management, we are very unlikely to hire external people to be running those, right, at those pieces. So a lot of the current management will get repurposed.

20:06 And I think from a current management perspective, that is a fairly exciting proposition because people are looking forward to the challenges of building these businesses. But, yeah, I guess that's that's where I'll stop. Yeah. I just to want to what Ashish is See, one of the thing that we have to understand is that in 2026, right, in a way, one very big force that is in the whole world today is AI, right, or gen... Gen AI. Now if you think about it for the last eighteen months, we have been preparing. Right? We've got it takes time. See, whatever... I mean, whatever I I... We all read about in the papers and, you know, on websites, etcetera. But the fact is for a a running organization, it takes time for these technologies to bite and for them to start becoming there. And if ask you me personally, I believe that in the last eighteen months, we have done a lot of work. We have understood... You know, there are some, you know, slides in the deck about the improvement that we have made whether in terms of, you know, our adviser's ability to handle 15, 20% more leads, improve conversion, on the customer service side, on the risk side, you know, on our ability to train our people faster than we used to earlier.

21:19 So my view is that there bunch of factors will be at play in the next twelve to eighteen months, and I think we will drive these technological changes also faster. See, finally, necessity is the mother of invention. Right? Now today, we understand that we cannot afford a certain cost to serve or to, you know, do certain things. So we will have to work out other ways. And I think this GenAI has come at exactly the right time for us in that respect. And, you know, again, our teams are very excited about this. We are using it as you you would would expect. And I think that this will also help us, you know, in the next few year... Few years going forward. So so... Yeah. I mean, it's hard to quantify. It's hard to give you really, you know, big numbers today. But my view is that it... As a lever, since you asked for what levers do we have, I think AI is a very big lever for POLICYBZR to, you know, become a lot more efficient.

22:13 Sure. Sure. And secondly, do do you see a scenario where you will return back to cash burn scenario or we still be profitable in in in in all the scenarios which we are seeing in future? I think, Nyesh, to be brutally honest, we need to wait a little bit for the final regulations to come out. See, the way the regulator has, you know, placed the discussion paper... The regulator themselves have said this is a discussion paper, and they have undergone intense discussions since bringing out the regulation papers. And they're receiving feedbacks from many quarters.

23:00 You know, more than 1,000 feedbacks have already reached the regulator. And I think let them have the chance to go through that and come back with the the draft regulations and then the final regulations. And I think once we have those in place, we can start to have a better sense of where this will all end from a cash flow perspective, as you said, and from an NPV perspective. To me, the NPV is more critical than the cash flow element, thinking about the situation. Because if anything, the cash position is a position of of capability because, you know, if the NPV is there and the cash is not there, that that can assist us in that time frame.

23:59 Mentally, the intent is not that. Mentally, the intent is not a cash burn intent. Now let's let's see where the paper comes out and what opportunities arise out of it and what situation arise out of it. Sure. And last question is that we are providing a lot of claim assistance services to the clients, to the customers, and we are not charging anything for it. And now with the commission and the economics getting severely impacted, is there a possibility to start charging explicitly for that services that we are providing for free today? We will see. Whatever the regulation permits, the regulation has made an explicit mention of non insurance services being allowed.

24:47 We will explore those in in their in their entirety and see which ones of them make sense to us. I'm sure there are quite a few, and and we are fairly confident a lot of them will emerge and emerge quickly without without long gestation periods. But I guess... Yeah. I think that... That's that's where we would like to place it. And just lastly on dark patterns, have you done any analysis that... If, let's say, that is implemented, how much business can be lost or how many leads that are getting converted through calls, etcetera, and any analysis that you have done internally?

25:34 Nidish, we have done the analysis fully, and we have committed to the regulator to align fully with the discussions. I would not want to say what is the quantum of those impacts. I think it's not prudent for us to say that. Sure. Sure. Thank you, Ashish. Thank you. You're welcome. Thank you, Nitesh. We will now take the next question from the line of Nishin Chakte from. Nishin, please unmute yourself. Hi. I hope I'm audible. You know, you know, going forward in the future, you know, can you can you... Are you are you open to sort of integrate with Pesa Bazaar to kind of, you know, have a more, you know, full service financial super house, you know, rather than kind of focusing just on insurance, obviously, being a... Being an insurance heavy entity.

26:37 Oh, see, I think Pesa Bazaar is that entity. Policy Bazaar will continue to be centered on insurance. Its primary task is insurance. It is... Let me put it this way. It's not a money supermarket. It's an insurance supermarket. But let's look at the regulations in the final form as they come out. See, when a discussion paper comes out of the final regulations come out, we have to see how that time frame runs. And, of course, it's a positive opportunity to be able to do non insurance activities. There was a time before 02/2011, I believe, or maybe '13 that it was allowed, and then it was no longer allowed.

27:28 And now it may be allowed again. And it could possibly open up in a... And and it's a... It's an advantage that, you know, we have Pesabazaar already ready with lots of products, not just credit, but also the investment products. And we see that as a massive opportunity. But let us wait. See, there is no point... And the teams in the background have started assessing all this work. So that work has started in trying to assess, okay. If we had to do this, how would we do this? So that discipline we have, that operating discipline to, you know, get ready. But it it doesn't mean we can act on anything. Right? We have to wait for the final regulations to come out, and let's hope that they come out with this possibility. And if they do, yeah, there should be some serious opportunities, but it would be Peso Bazaar platforms and Peso Bazaar offerings being utilized in POLICYBZR to some extent, but not becoming the primary as I see it. So we don't wanna become a lending platform or something else.

28:27 Got it. And are you open to sort of, you know, extend software services support to insurance companies, you know, which is which is not, you know, not distribution of their products but for for some of the other channels? So we already do that. And in fact, you know, it's it's a bit unknown, but the the Bahrain government's financial, you know, platform is being powered by by us. So, you know, there is there is clearly both an ability and an intention to power more and more people's technology and operational back ends.

29:13 There is no doubt about it. And, yeah, we will we will, of course, keep exploring that. So it's not it's not a new thing that we already have. Sure. And just finally, you know, PB PB health, you know, how does this feature into it? Any any thoughts on that? Look, PB I I believe that... Yeah. Look. Let's be let's be crystal clear here. There are... Today, if I was a health insurance company, according to me, there are only two ways to... We... What problems do we have as an industry? Right? Let us say claims is a massive problem. I don't think anybody is denying that health insurance claims is a massive problem. Why is that problem there? If you actually look at why claims are denied, a large component of it is either some level of preexisting diseases which existed but were not disclosed, so disclosure problems.

30:11 And the second large part of it is, at some level, treatment not required, etcetera, etcetera. I believe we can't run that way. See, the health insurance achieved a lot, and I want to explain this in just, you know, some brief data points. Back in 2008, 1% of hospitals bills used to be settled by insurance, health insurance, retail health insurance, and insurance per se. Then it became about 10%, and today about 40% of hospitals bills are being settled by insurance. So there is massive growth in in health care costs being addressed by insurance. Massive growth.

30:58 But still, we have a lot of negativity around claims. And that negativity is coming from these two problems, disclosure and the ability to align the network. The job POLICYBZR historically did was of better disclosures and increasingly has been doing of better network management. And in that network management, creating a benchmark for, let us say, consumer lifetime value will be PB Health. Not from the highest profit perspective, but from how the customer ought to be treated without an intent to make the maximum from the customer in every visit.

31:51 Is something PB Health has to do, and we started this project. And there's no changing our thought process on that. It is neither speeding up nor slowing down. But, yeah, some of the associated associated activities like PB Care Plus, etcetera, which were around network management, those will, of course, you know, are are ever more important as... If claims is a problem, then claims need to be solved, and, you know, we have to be part of the solution. No change in the business plan. I think that's what I was looking at. Basically, that that sort of systems. No. No change in the... In that particular business plan. Got it. Thank you very much. Thank you,. Our next question is from the line of from.

32:38 Hello? Am I audible? Absolutely. Yeah. Yeah. Hi. So first question is on the POSP business. We had... Last time, we... I mean, we did not have a clear answer because the regulations are fresh. Have you had a chance to talk to your USP partners given the value we bring to the table for, you know, for many of them, they may be able to work at at a lower commission structures. Maybe this is my conjecture, so I wanna understand from you if some of those conversations you've had and and can can help us understand if that business can still continue to to operate maybe at a lower scale? Or or or maybe you can tell us how should we think about it. Hey, Jant. Look. If you really look at the POSP business, a lot of it was motor insurance.

33:31 And it is not that POSP was there that that business was happening to a large extent. Yes. Some of the health insurance business and some of the other business, yeah, there would have been some growth because of the POSP business. The way the current regulations are, it says if you are open architecture, you're gonna get paid less than the closed architecture. That, in my opinion, does not leave scope for POSP the way it is today. Now if POSP becomes a totally different business, like, maybe a services play or something of that sort, then maybe there is some possibility.

34:22 I don't think that business... The people involved in that business suddenly have the ability to sell mutual funds or or other products. I don't think that is is as easy as it is assumed. At the same time, these are not the final regulations. So let us wait and watch, and and we stay observant. And, like, we are waiting. We're waiting for the final regulation that I hope time is provided because there are also cash flow elements in that business. Because to a large extent, we end up paying the POSPs sooner than we get paid by the insurance companies.

35:08 So there are also those concerns. So let's see how that happens. Right? It's it's about many many part... Parts. And I think given that, I hope, you know, some time is given to transition on that business. Understood. So second question is on the balance sheets businesses. PB Health, last time you had mentioned, you know, we can look at a revenue of 500 crores and then some timelines around it. If any update on that, how is it progressing? And then in... If if at all that business is scaling up well, would you be open to probably taking your stake higher over there and and building it out in in a bigger way?

35:54 So I will let Alok answer on the plans and on the, you know, what is the... How we are against our target for March from a revenue standpoint. In terms of stake, no. We want to maintain our stake at at present. We are not expanding it, neither reducing it. Yeah. In terms of the execution on PB Health side, things haven't changed actually in last month quarter. We are on track of executing few new hospitals. So around March, we should have a run rate somewhere between 40 to 50... 45 per month, which is about 500 for the year. That's what we got. Some of these are learning hospitals. We don't need to invest too much. They are already generating profit, so you will have some OpEx coming from corporate and one or two greenfield operations.

36:48 Otherwise, pretty much you are sort of breaking even in that business. And we want to execute first to streamline these properties, and then at some point, as we get more confidence, then look at, you know, and they should be growing. But next six months to one year, it's mostly around executing what we have in hand. And, Alok, you want to take that o and m product to other hospitals which are not on on on PB Health balance sheet. How long do you think you'll take that time... Timeline wise? Yeah. Nothing is plastic right now. I think let's understand the lay of the land. I think, as I said, once we have five... Three to five properties which we are managing, it will be a steep learning curve for everyone in the team.

37:36 And at some point in about, you can say, eighteen months onwards, we'll start to look at those sort of options, but still a bit far away. Understood. And last question to Ashish again. So, see, there is a... We we will probably become a very high... Highly profitable business with the new commission structure. Right? The car moves to maybe 65% in in in, let's say, health, for example. How do you capture that economic value? Right? So why not take up minority stakes in in an insurer? Have you thought about something like that? I mean, I I understand there could be plans to to go back and become manufacturing yourself, but instead, what if what if it can be done through through minority stakes in in in manufacturers rather than the entire value chain?

38:27 Yeah. We think of lot of options. Taking minority stakes is not one of them. And, you know, I can... All I can say is we are already in conversations with the regulator, of course, informal conversations. And there is clear precedent and laws out there. And, course, we will engage with the regulator further and seek their guidance on, you know, how they want to see this. But, yes, the the intent is quite clear in our mind that we want to serve our customers more. See, if you look at a fundamental level, we have been a distributor with the heart of a manufacturer from sort of day one, which is we think combined operating ratio.

39:27 Most distribution in India does not think combined operating ratio, but the the first metric we have in almost every review is not how much our sales increased, but what is the claims ratio of our insurance companies. Like, if you talk to our team and ask them what questions I ask them, it's mostly around claims ratios and it's about... So we we think combined operating ratio. Right? And thus, that can be called responsible distribution. And somewhere, that is part of the paper where it says pay for outcomes. Right? Now in what form, what shape it comes out is interesting to see and will be will be very...

40:12 Will inform some of the thinking. We... I... Our discussions with our partners will sort of... We are around the the combined operating ratio model because the combined operating ratio model already gives our partners sufficient profitability. If you think about it, 30 to 40% return on equity, which is much higher than the return on equity they receive in the market. And I think expecting more than that could be an unfair expectation. Could could be could be construed to be a... An an unfair expectation. And, you know, how that...

41:01 Assuming our take rates reduce dramatically, then, you know, the customer benefit may have to increase to ensure that the profitability stays in that 30 to 40% return on equity, which is a fair fair profitability. So I think the the matter will evolve is is all I would say, Jayant. But, you know, that's that's that's the reality. The reality is we think like a manufacturer while we are a distributor. But, yes, he cannot... But but... Sorry. Sorry. Sorry. Go ahead, Ashish. Sorry. Yeah. No. I think I think that's it. I think you're you're spot on. And the rest is... There are conversations which is not prudent to speak about at this stage because they are they are subregulation and judgment there.

41:48 No. I just want to add, Jen, that one of the things that is kind of about the policy with our business model is that if you think about the four things that have to be done in insurance. Right? The first is to create awareness for insurance, you know, bring people to buy insurance. Right? The pool, which the paper talks about. The second is to sell or help them choose the right insurance policy. Right? What are the right terms, conditions, price that they should pay? Third is to manage the sales process as well as to provide a level of service, you know, claim support, etcetera, that is required by the customer. And then fourth are the core insurance activities of underwriting, risk management, compliance, etcetera, etcetera. So if you think about it, compare POLICYBZR to any other distribution network, right, you'll find that we are doing at least three and a half things.

42:39 We are doing the first one, actually, I think very significantly. Second one, fully done by POLICYBZR. Service and claims, now we are a significant part. And even in the fourth part, we help with risk management. We help with, you know, managing the book, etcetera, persistency, renewal rates, everything. So in a strange way, the way the system is, like... So if you measure us only by commission, then, actually, it is a very different comparison. I would argue that policy with us commission and policy with our QM is actually almost the same because there is very little expense after that. So I I think think that's just one of the things to also think through as you, you know I think so. What what is saying is very important. If you look at a company's EOM, what do they have to do on policy bazaar's business?

43:27 Over and above what POLICYBZR has already done? The cost may be one to 3% at most at most. Right? And that is not taking into account the advantage policy with ours bringing in terms of lower claims ratios because of better underwriting, which which we are, you know, working together. Like, of course, it's the insurance company underwriting, but we are helping a lot inform those decisions. So I think we are a fairly unique player in that respect. And I think whatever solution we appear... We we arrive at will will also be, you know, reflective of that. Yeah. Yeah. It is what I was trying to come out, and you rightly pointed this point. Right? If if the gains... If we added a 65 core post this, the gains...

44:18 One of the ways is the gains get passed on to our customers, and then you offset that through volumes. Right? Because you become the the most attractive channel. A, is that regulatorily compliant in in in in a way? Or you did this... I know you keep innovating new products with your partners, but but have you had any initial discussions that something like that could... Can can be architectured around around that, a, that? And b, is is probably again going back to the manufacturing piece that that if you do decide to manufacture in its in its current structure, being being a distributor of all other products, do you think you'll be comfortable placing your own as well? The last... These last two questions from us.

45:08 Yeah. We will not be the most profitable channel for insurance. We are the most profitable channel for insurers. We have been for a long time. It's very rare that a manufacturer admits that to a distributor, and most of our manufacturers admit that to us very clearly that we are a very profitable channel for them and that admittance has been increasing over the years. I think everything that you are saying, Jayant, is is fairly obvious. Please also appreciate our constraints. We are a regulated entity, and, you know, whatever we say on this call is is also at the regulator.

46:04 So I think just appreciate our constraints. We cannot, you know, jump the gun here. We have to go step and step and the and the sequences, we and the regulator have to have the conversation before it comes here. It is not like we're trying to hide anything, but that is the sequence. And that is the... You know, you have to, as analysts, give us that space that, look, you guys do your conversations before you come to us. We can't, in advance of those conversations, come and announce them here. I'm gonna offer to you. I think it's not... I mean, I think we don't want to mystify this so much. At the end of the day, it's insurance companies call on what prices they want to keep in which channel. There is nothing, you know, beyond that.

46:50 And I think, you know, we'll work with our partners and they'll decide. I mean, at the end of the day, pricing is their call. They'll decide how to, you know, do some of these things. But all we are, think, trying to explain again and again is that there is significant value in the book that we are generating for our insurance partners, and we are serving customers well. I think it's very very important to understand that both things are happening together. And because of that, hopefully, you know, we will keep, you know, benefiting from that, and, you know, we'll do well in the future as well. And the and the thousand day number is a a very very important important number. It's it's it's a thought through number. Persistency, patience, engagement through this thousand days is very critical.

47:35 Let us see what comes out at the end of this thousand days rather than trying to say what comes out today. Yeah. I know that that's only fair, Ashish. I I I I do understand the constraints we have at this design. And like I said, this is work in progress, so we will be watching how how this plays out. The congrats on a great set of quarters, and and I'm sure there'll be some way to navigate this. All the best. Thank you. Thank you, Jayant. Next question is from the line of Shubit Sharma from. Shubit, you can speak now. Yeah. Hi. Hi,. Thank you for the opportunity. I hope I am audible. My first question is on the multiyear policies. I think we have been quite aggressively doing that piece of business, and we have been recognizing the revenue as the service aspect was completed. So what kind of discussions you are having with your insurance partner in terms of the commitments with regards to the payout, which will they do? Whether they will do the...

48:34 At the rate at which we have sourced that business, or it will undergo a change because of the which will come in? Secondly, if I look at the, last year, second half industry wide, there were some campaigns around insurance. Do you think it will help you in terms of moderating your own advertisement spends for the second half and if those kind of campaigns continue from the industry, that will help you in terms of maintaining your overall growth rate. And lastly, if I look at paisa, for this quarter number, if I look at core business disposals, are broadly flat on a sequential basis. So if you can help us understand how how are we going to speed that up and build that channel slightly faster going forward. Yeah.

49:19 Sure. So on... Shubhrant, on multiyear or any other very specific query, we will not be able to, know, respond to that right now. On the campaign side, we welcome the fact that, you know, over the last seventeen, eighteen years, if you notice, we have been more than half of the industry's marketing spend. And that means to some extent, we we push for that growth and bring in the new customers. So we really welcome when, you know, more contribution from other players comes into the marketing space because that expands the overall market. And, of course, we also see in marketing when you market some business, you get some business other people get. So that hopefully also has a positive rub off on us. So that's that's for sure. Pesa, I'll just let Santosh answer that.

50:16 So, Shubit, on Pesa, what we've seen is, you know, we saw opportunity in... Of us data, and we saw a lot of partnerships or suppliers that we could add on our platform, and that will help up... Us grow dispersal. So in fact, you see in our deck, we've mentioned a few banks that we've onboarded. And those, I think, will now play out in quarter three. Having said that, we've not been aggressive on the marketing side to grow our inquiries so much from quarter one to quarter two, and that's why this was also being muted. We wanted to, I think, add suppliers, strengthen distribution, and then go after growth. And I think that's why the quarter was flat. How do you think about second half, Santo?

51:02 Because it it really becomes important for person now to start contributing to overall growth for policy desire as a. So so what's your what's your near term aspirations as as such as of now? So before, Santo's answers, Pesla will contribute, but I don't think anybody used to assume that it is more important for Pesla to contribute than it was before. Look, We are being cautious in our statements. It doesn't imply that the confidence is even half a percent lower than it was thirty five days ago.

51:51 And I I would just leave that thought with you and to judge us at the end of thousand day period after the the day the regular... Final regulation comes out, one thousand days after that, judge us on the basis of what actually happens is is all I would say. I'm I'm standing here, and we will be here at the thousand day point. And, you know, it'll be... Please at least keep note of this number... This this this thing I said. After that, Santosh, please answer with no pressure that you have to solve the group's problems. I I... Yeah. I was not thinking it from this perspective. I thought we will always want to add value, and it's better it was passed on now. And you... Of course, we are doing all we can, I I think, to to build up? I think one thing I would say that has changed maybe, you know, over a period of time for is that what Ashish mentioned from our disc... Discipline on the policy side that we are always very, I think, cautious about the kind of portfolio that we are generating for our partners.

52:55 I think that risk discipline has definitely come in. And we're doing a lot on on that side and being extremely, I think, careful on the quality of book that we generate for our partners, and that that, I think, is showing up very well in our, you know, portfolio that we are building up. And think we're also in in a phase where we're adding a lot of new business lines. So we were largely a credit focused business. We've now gone into bill payments. So we do a lot on the engagement... Consumer engagement side, and we are also, you know, starting our wealth journey. So bonds, fixed deposits, etcetera are getting... You know, they're shaping up now. But some of them to add to revenue, you know, it's it's gonna take a while. So I would say that we are focused on being a meaningful part of the group, and I think everything for that to happen is happening at the moment. And, it was the same before and the same now.

53:46 Okay. Got it. Thank you, Santosh, for that elaborative answer. All the best to the entire team. Thank you. Thank you,. Next question is from the line of Deepakan Ghosh from GS. Deepakan, please speak now. You know, I I I wanted to refrain from making this statement, but I remember once we had an investor long ago and maybe about six, seven years ago, and I mentioned to them that many of your investments will be found. They're not wearing swimming trunks when the water goes down. And he said that, you know, who wishes for that to happen? But all I'm saying is sometimes a strong wait for that opportunity to display their strength.

54:38 That's all. So please go ahead. Yeah. Hi. Hi, Ashish and team. So firstly, coming to the cost bit, you know, if you can shed some color on three particular line items given the current scenario. And assuming the current scenario stays as it is, which might be a hypothesis. One is on the ESOP expenses and remuneration structures. Second would be on your brand spend, if you can quantify that. Let's say, five five twenty six, so how much scope do you have to kind of rationalize that? And third would be on PBP. I mean, how does the synergies fit in given, you know, the payment charges that you might be witnessing over the past few years? So that was on the cost bit. My second question, you know, if you were to kind of go into distribution of other product categories, can you kind of spell out the top two or three products which should be top of your mind, both from a opportunity perspective and also from a a scope or investments that you may need to incur to get into these businesses?

55:41 And my third question would be on your discussions with the regulator. I mean, based on whatever you discussed with the regulator and your own internal business strategies, do you see case where savings and especially your digital channel can probably go on to become a bigger portion of the pie, over the next few years. And one data keeping question, if you can give the PB partners revenue, for the quarter. With the PB partners, it's about 700 crores. PB partners revenue. See, we wouldn't want to, at this stage, specify how much our brand cost will come down by or anything of that sort. We will we will we will take a call as time goes.

56:30 We have already explained our ethos. In terms of how much will we make from one particular business category or one particular ecosystem part or another, that's... It's not that big. We want to maximize all just like we have always done. It is not that if we are focusing more on term, that our health has to grow less, historically, I'm saying. And so it is not that, you know, PB Care Plus has to make more revenue. It has to make the maximum revenue it can, of course. And so each one is independent, and each one is running to their own, you know, objectives.

57:16 On PB Pay, it's it's a three month old operation, but, of course, it's scaling up fast. And the intent of PB pay was to be a solution for the insurance industry in terms of all the different payment formats that exist and and solve for the specific requirements. And that is what it will do. And, of course, it it should speed up as much as possible. And as I said in the in the opening comments as well, our efforts on the ecosystem side obviously increase more primarily because some of the management teams that we have will get redeployed here to focus on growing these businesses because there's a need to grow those businesses.

58:01 If your insurance distribution revenue is coming down, you do want to make other revenue formats, and the management being repurposed to other formats will certainly add to the focus on the business side of those. So far, maybe the focus was more on the operating side that would increase towards the business side. In terms of key product categories, we will wait for the final regulations to come up and see what all is allowed and then take a call on that. In terms of discussions on savings, I don't think any discussion has happened which makes savings a more meaningful...

58:49 A a larger category. I don't think any specific thing of that. So... I think probably, Ashish, what the Punjin means is that so far, we have sold insurance products in savings. And I think now that Pesa has built the wealth stack out in terms of mutual fund, bond, fixed deposit, I think we will have an opportunity to look at it together. Right? Say that, you know, if a customer is coming into the system, what is the right product for them? Sell multiple products to customers, you know, have a more elaborate sort of financial overview of a customer. I think those are all opportunities as one would imagine. As it gets allowed. Yeah. I think I think we have to wait. All the right. All story is, you know, clear. So, operationally, those conversations have begun, but we will wait for it to appear in the final regulations before we can do it.

59:37 Got it. Thank you, Ashish and Sarvi and the team, and all the best. Thank you,. We are conscious of the time. I would request next participants to only ask one questions going forward. Next question is from the line of Ashwin Mehta. Ashwin, please stand with your mic. Yeah. Hi. Thanks for the, hi. Thanks for the opportunity. So, Ashish, just wanna get a sense in terms of, the first year loss in selling health insurance, and the intensity difference in terms of either the call center or the employee cost between life and health. And in that light, given that we've, in the past, indicated that we make a loss in the first year, would you look at recalibrating health insurance growth if the commission regulations were to pass, or we'd continue to push for a shift in our favor?

1:00:38 So I think we will wait for the final regulations to come out. You are absolutely right. In the current framing, the renewals profitability from insurance distribution is extremely limited. And the the fresh payouts are also limited. I think our approach is gonna be towards growth, but our costs will align with with the the new net present values available. Also, we will need to see how much of that we can make up through non insurance activities.

1:01:24 There are a ton of non insurance activities that we have, which we will see how those expand and, you know, how we can kind of benefit from them. Also, Also, of the activities... You know, as we said, we do... In the four pieces that sort of we laid out, we probably do between two and a half to three and a half of the activities that insurers do. Maybe some of those activities, they can start doing in the future. So we will see. We will align with our partners, and we will see. And, Ashish, just... If I can squeeze one data question, the CapEx seems to have substantially grown compared to the last year. So what is the big driver for that? It's almost four x.

1:02:21 Expansion of the system computer. That's it. Sandeep, you wanna answer that? Yeah. I mean, we have spoken earlier about this that we have been building capacity. We have been ramping up on... And SP zero remains our growth. So this CapEx is largely towards supporting the expansion of offices as well as supporting some staff. So our approach on on that that front, as we've already explained, will... And has already started to take a shift. I think our October hiring was was, you know, a very, small fraction of what it might have been in the past. So those shifts have already started happening. And, of course, we will align with with the with the new realities.

1:03:17 Thanks, Ashish, and all the best. Thank you, Ashwin. Next question is from the line of Prajesh Jain from Multilab. Prajesh, hi. Hi. So, you know, just a couple of bits. One, you know, it's been some time that the consultation paper has been rolled out. Obviously, the calculations on IRS and then then PBs that you would be earning. And, generally, you know, we've been talking about the lifetime value of a customer that it brings. Any changes to what you would have thought earlier versus now that would have happened? And second bit is on... If you think about the investments in terms of AI which you have alluded to, how would you... How were you thinking, say, before the consultation paper, and how are you thinking today?

1:04:07 And what kind of cost savings that can be brought across. And probably, you know, at the initial stage, that would require some some investments before we... They kind of start giving you benefits out of it. The lead time would be there. So how do you think about these aspects? Yeah. I think, Sandeep, we already mentioned that we have been investing in AI for the last multiple years and last eighteen months. There were a lot of experiments, lot of projects, and many of them would have come to some level of fruition on their own, and that will keep happening. It does not... Of course, it it brings the focus on cost cutting opportunities stronger than before. We clearly...

1:04:52 You know, if you think about it from a marketing perspective... Let me give a very simple example. Right? Suppose you advertise in a particular space. Suppose you do a particular influencer campaign, and basis that, you get 10 sales. Did all 10 of them come only because of influencer campaign, or could some of them have come to you anyway? So those kind of analysis obviously get sharper around these times. And a a small fraction of our total sales comes from our, you know, what you would call the active acquisition marketing spends. Now at the same time, there are two things which from a thousand day perspective, we do not want to step back from.

1:05:43 Number one is customer proposition. See, if there is a customer proposition that says, if this customer proposition is provided, there is not enough money for distribution. Like, let us take the example of the maternity cover or something of that sort. Right? We used to give maternity cover. We actually made zero commission on day one. That's a good customer proposition. It's not very profitable to us from a one year perspective. Right? Much below the current prescribed remuneration numbers. Are we gonna back off from that? No. Of course, no. So customer propositions, we will not back off from. We would, in fact, like to push those forward. What we don't want to back off from is our ability to convert and generate inquiries.

1:06:30 At the same time, assessment of where there be... Maybe an iota of non requirement will obviously be sharper. That goes without saying. If the... If at the marginal level... If your NPV was x, if at the marginal level, you were able... Marginal level, you were operating at x in terms of cost, if your NPV becomes point five x, then marginal level spend will be point five x. There is no reason why you will spend x 4.5 x of business on a net present value basis. And and that's at the marginal level. So there's, of course, a lot of business that's happening from from direct traffic, and there is always gonna be that because of the brand that's been built over seventeen, eighteen years.

1:07:18 And there's good customer service that's been built over the last multiple years. And, of course, there's an advantage to having built that customer proposition. So, yeah, I guess, we we do have that part. But, yes, of course, at the upper end of the marginal cost, some things will get cut up. There's no doubt about that. Got that. Any any alterations to your NPVs or IRRs that you would have observed then versus now? Look. Look. Let's let's wait a bit. Okay. It It would be, I would say, unfair to expect that the management would not have worked on the current, you know, proposal and seen what it means for it.

1:08:08 I think if that's the case, then, yeah, it's it's pretty sad anyway. But... No. Of course, we have spent a lot of time on that, but we are still waiting for full clarity. We we do see, you know, where we are, and let's see let's see where we end up. And, of course, we are... It will also be imprudent to expect that we wouldn't be speaking to all our core partners and seeing how things shape up in the future. But at the same time, see, those constraints are very clear. No backing off on consumer proposition. No backing off on focus focus on on growth and quality, and doing everything with a 100% alignment to the regulator.

1:09:00 I think those three guiding principles are very clear. Got it. Thank you. Thank you, Praj. We will now take our last question from the line of Shia Shivani from Nomura. Shia, please unmute yourself. Yep. Yep. Yeah. Hi. Thank you for the opportunity, Mohit. So, sir, I wanted to get the trends of October, actually. The equity markets week. I hope I'm audible. Yeah. You're audible, Shreya. Yeah. Okay. So I wanted the... Some of the trends in October from both POLICYBZR and PESSABZR business. So in POLICYBZR, the trend on EULIPs, what are... What efforts are we making to push term and health sales given that it's a high base now from October onwards? And on Pesa Bazaar, what I wanted to understand was that the lending ecosystem might be looking at slightly rougher macro environment in the second half of the year or so given the droughts and all of those issues that's going on. Has any of the banks or any of your lending partners tightened their underwriting on the Pesabazar portal? Are you guys tightening anything anywhere?

1:10:17 Any color on... In the trends on October and the second half from these two platforms? Thank you. Oh, thank you. I think first and simply on Pesavazar, we haven't seen any change from September to October or from August to October in terms of any partner. In fact, some new partners have come on board and expanded. I'll I'll leave that. Of course, immediately post seed, we have to understand one very important thing about what happened at GST. There was an 18% reduction of GST, and that that was passed on to the customer. This is a very important data point for for informing everyone. And for the first six months, we saw an incremental 18% growth in the industries.

1:11:08 And so what that means is with a six month time frame, our price elasticity for the consumer for health insurance is about one with a six month time frame. However, that time frame is over now, and that growth is no longer there. So the interesting part is with that 18% benefit, year on year for the industry, my assessment is q four over q four for the industry may not even be a growth quarter, but let's let it get there. And specifically from a new customer acquisition perspective, I that immediate part after GST was a very interesting area.

1:11:57 And there is no way that wouldn't have a short term impact on the visible growth numbers for POLICYBZR as well. What I would request you all to do is evaluate the two year growth rate Okay. Which I believe should stay similar, specifically as we go through this phase of the, you know, next one or two quarters, I think the GST impact had largely gone away by about March. And now we are, of course, facing the the reverse of that in the sense. Yeah. But the but the good news is the people who bought during GST, immediately after GST, the renewals are continuing, and that is the the positive part of it.

1:12:46 Right. And and just on on the ULEP sales bit, I mean, I... That will still surely be under pressure, but our new products on retirement and children, how well is that panning out in October? Any pickup or any any trends on that? I think, Shay, it'd be kind of unfair to talk of monthly trends. You know, we'll we'll kind of go with... You know, I... All I just want to tell you is that we have been on this journey of waiver of premium products where we've explained that EULICs are the best instrument for protecting your long term goals. Your serious goals require serious investment over five, ten, fifteen years, and you need to be in the market. And waiver of premium means that if something happens to you, your, you know, goals remain protected because the insurance company will pay the premiums on your behalf. So I think that's the story we've been sort of very, very determinedly driving, and I think that's doing very well. The rest, you know, obviously, monthly trends are kind of probably not not worth spending too much time.

1:13:48 And this is... You know, just just because I'm sure it is important from a shareholder's perspective, I think there was for a brief moment a a that maybe policy was our... Was in a sort of... Was seen a little unfavorably from a from a regulator's perspective. We we had a... You know, we've had multiple meetings with the chairman, sir. We've explained in detail because there was some confusion also created because we have a POSP business. We have a core business. We have various parts of our business. So just simply put one data point which I can share with you.

1:14:36 Our HealthFresh rate was twenty four percent. Our motor fresh take rate for third party was thirty one percent. And that obviously was a reflection of the POSP business. Some of these things have been clarified. And I think the outcome of those conversations is a very... A much better understanding of the POLICYBZR core business and how it helps the customers be more informed in their decision making, be able to solve the customer's claims problems when they occur, and be able to stand that ground with, you know, without being tied to any one carrier. So I think that is where we are right now. We we still have more conversations, I'm sure, and we, you know, expect those to carry on.

1:15:30 Now before I end, there is also one... As they say, left matter from last time's call. I had made a comment about media, which was little a harsh. And I specifically want to, you know, take this opportunity to apologize to to p d because I had reached out to them and I had spoken with them about various matters. But we discussed a lot of matters, And my comment was more about, you know, media at large rather than any one specific player. So I think I owe that, know, apology on the same platform that I made that comment on, and thus I'm, you know, clarifying that here.

1:16:24 I think they they did engage with us, and we also, you know, did engage with them. But that point about insurance, you know, being in a very bad spot was one of the points made, not the only point you made. Thank you very much. Yeah. I think before we finish, I want to say one thing. I know, Ashish, normally at the last word. But see, I know the entire one hour and twenty minutes was about what may happen in the future. But I just want to say, you know, many people from our team will be listening. I just want to tell them that they've done a great job. And, you know, our market shares have gone up in every segment that I can see. We are growing faster in protection. We are growing... Actually, if you see the spread of businesses in q two, almost every business has outperformed the market by at least two x. So I think the team is doing a phenomenal job.

1:17:13 The outcome that the regulator has laid down are the outcome that we are delivering. Our NOPs are growing faster than our, you know, premium. Our persistency is higher. Our renewal rates are higher. Our misselling is lower. So I just want to tell our team that they are doing a great job, and I think even for our shareholders. See, many people can make tall promises about the future, but I think one should also sometimes look at the results. So I would urge you all to also look at the results. I think, you it's know, very easy to just say that 40% growth is taken for granted. But I think in today's insurance world, at least, delivering this... These kind of numbers is exceptional. The 14 quarters. So I just want to, you know, congratulate our team. You know, they are the ones who have delivered, and, you know, we want to make sure that they they they are are appreciated.

1:17:58 I mean, not only you all say it, but, really, I thought I should say it. Yeah. And and for the future, our intent is no different in terms of growth and in terms of consumer focus within within the bounds of regulation. Thank you very much. We'll we'll end the call.