We delayed profit by design: Yashish Dahiya

MUMBAI : PB Fintech, the parent company of online insurance aggregator Policybazaar, clocked its first ever profitable quarter for the period ending 31 December 2023. The company clocked a profit after tax of 37.2 crore as against a loss of 87 crore a year ago. This profit came on the back of a 43% revenue growth to 871 crore. The company saw its share price cross the initial public offer (IPO) price of 980 a share on Wednesday. The company, while delivering strong premium growth amid lower commissions, is expected to grow on the back of its online sales which grew more than 39% year on year for Q3FY24.

The new initiatives of the company will increasingly add to the bottom line but it is the core business that is likely to drive its growth sustainably, said Yashish Dahiya, cofounder and chief executive of PB Fintech in an interview. Edited excerpts:

You have managed to turn a profit. How did you do this?

The only thing painful in all this is that people think we have done something differently to have achieved the profit. The profit was inevitable. What we did was we delayed the profit, by design. And why did we do that? We built out new initiatives during the IPO. Before that, in 2021, we didn’t have anything like new initiatives. In FY 2022, 2023 and 2024, we have launched new initiatives, and even in 2024, we will have 170 crore loss from new initiatives which did not exist in 2021. So, all we have done is got into new business which created incremental losses. Our core business, by the way, was almost at breakeven at the time of IPO itself.

The second thing that happened was we awarded employee stock ownership plans (Esops) which for the last two years had cost us around 650 crore, this year it was 330 crore and next year it will be about 150 crore and the year after it will be about 50-60 crore.

It’s those pieces that pushed the profits behind. Now, why was profit inevitable? Because the core business was going to turn significantly profitable. It was new initiatives and Esop charges. So, as the Esop charge allocation has become more real and as the new business grows, the core business profits have grown so that they have now started dwarfing the new initiative losses and losses have also been coming down.

So will the new initiatives become your growth driver, going forward?

They are important for us, not just for growth, but also strategically scale is important. They have now added 33% of revenues. They are a significant part of our revenue and growth, and will be in the future as well. These new initiatives are majorly the new agent aggregator platform that we have added.

Your credit business is facing headwinds. What is the strategy to wade through this?

Look, the RBI put out a guidance asking lenders to be more careful on unsecured credit, especially the low ticket unsecured credit below 50,000. That is only 5% of our business anyway. And credit itself is 15% of the total revenues, so you can appreciate it’s like 0.6% revenue right, so it doesn’t bother us too much.

A lot has been written about the disruption that Bima Sugam by IRDA is going to create in this world of online-first sales. How worried are you?

See, if the regulator says it’s a day, can a regulated entity say its night, even if it truly is a night? No, right? So, it’s a day.

Between the three businesses under PB Fintech, which is expected to grow at a faster clip over the next 24-36 months and why?

I think all three will be growing at pretty much the same rate as today. Be it credit, core business or whether it’s point of sales business (POSB), over a three-year period, I expect all three to pretty much grow at the same rate.

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Published: 01 Feb 2024, 12:46 AM IST

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