PB Fintech Ltd (NSE:POLICYBZR) Q2 FY23 Earnings Concall dated Nov. 07, 2022
Corporate Participants:
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Naveen Kukreja — Co-Founder & Chief Executive Officer of Paisabazaar.com
Sarbvir Singh — Director
Alok Bansal — Vice Chairman & Whole Time Director
Analysts:
Sachin Dixit — JM Financial Ltd — Analyst
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
Sagar Sanghvi — ADD Capital — Analyst
Adarsh Parasrampuria — CLSA — Analyst
Subramanian Iyer — Morgan Stanley — Analyst
Prateek Poddar — Nippon India Mutual Fund — Analyst
Nischint Chawathe — Kotak Institutional Equities — Analyst
Ansuman Deb — ICICI Securities — Analyst
Dhaval Gada — DSP Investment Managers Pvt. Ltd — Analyst
Arpit Shah — Stallion Asset — Analyst
Dev Jodh — Citigroup — Analyst
Rahul Jain — LionRock Capital — Analyst
Rishi Jhunjhunwala — IIFL Institutional Equities — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q2 FY23 Earnings Conference Call of PB Fintech Limited. We have with us today Mr. Yashish Dahiya, Chairman and CEO; Mr. Alok Bansal, Executive Vice Chairman and Whole Time Director; Mr. Sarbvir Singh, President – Policybazaar; Mr. Naveen Kukreja, CEO Paisabazaar; Mr. Mandeep Mehta, Group CFO; and Ms. Rasleen Kaur, Head, Corporate Strategy and Investor Relations.
[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Yashish Dahiya. Thank you, and over to you, sir.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Thank you. Hi, everyone. I will start by reiterating a few facts about our business. Once more, a majority of health and life insurance consumers in India do their research on Policybazaar. This leads to a higher persistency owing to the fact that when consumers research, they know what they are purchasing.
Our renewal revenue is now at an ARR of INR290 crores. We have the best conversion engine in the industry and continue to improve our premium per enquiry, which is now greater than INR1,500 per enquiry for the first half of the year, which is the highest we’ve ever achieved. There is continuous improvement in customer onboarding, service and claims support, which has led us in the last few months to receive more than 10,000 appreciation letters from customers every month and a CSAT of 86%. It is indeed a massive change in the number of appreciation that they’re receiving from consumers.
Higher customer disclosure along with strong data analytics and fraud detection mechanisms that we’ve developed over the years lead to better claims ratios, which essentially allow our insurance partners to settle a higher percentage of claims than they do through many other channels. We grew at 105% year-on-year and our existing business has now been profitable for the last three quarters. In the last quarter, our interest income exceeded our adjusted EBITDA loss. This is the first quarter that’s happened in the last couple of years.
From our existing business, our adjusted EBITDA increased by INR60 crore for the quarter and INR98 crore for the first half of the year. As some of you may recollect, in the last quarter call, I had tried to explain both from a layman perspective that look our adjusted EBITDA should keep growing at roughly about INR150 crores to INR200 crores every year. As you would appreciate, this INR98 crores in one half of the year is very much in line with that.
Our revenue in the first half of this year is about 5.3 times our revenue in the same period in the full year ’19. The reason I explain this is, because a lot of people ask what happened during COVID. See, COVID came, COVID went, now COVID is over. But these are two good years to compare this first half of this year with the first half of that year, we are about 5.3 times bigger.
Just by the way, I want to say that in a funny way, our valuation was about the same as it is today. So anyway, our core businesses, the insurance marketplace, Policybazaar and the credit marketplace, Paisabazaar grew at 55% year-on-year to INR410 crores. Of this revenue, the credit-linked revenue was INR101 crores for the quarter.
For our existing insurance business, we had an adjusted EBITDA of INR18 crore for the quarter. For complicated products like health or life insurance, we have been extending our customer connect beyond remote callings by giving consumers the convenience to have physical meetings at the convenience and in their local language. We are happy to mention that consumers have accepted this wholeheartedly. We’ll continue to extend this in 114 cities.
Paisabazaar continues to grow very well and has rebounded well since COVID. We are now at an annual run rate of INR12,000 crore of disbursements and 0.5 million credit cards issued on an annualized basis. Over 31 million customers accessed the credit score platform from 824 towns. 73% of all cards issued in Q2 were end-to-end digital, co-created products like step-up card, duet credit cards are gaining traction. And as we reported last time, we still expect our credit business to be adjusted basis, EBITDA positive by Q4 of this year.
To update on new initiatives, PB Partners, our seller aggregation platform, leads the market in scale and has the highest proportion of non-motor business and has started increasing efficiency as you will see from the numbers. Our UAE business has grown by 110% year-on-year.
We said our existing business — yeah, so while there has been a general slowdown in the retail protection sales, we delivered 34% growth in health insurance premiums and 29% in life insurance premiums new business. And just for any of those who are confused there is this the new and renewal for health are pretty much in line with each other, these are about the same percentage. So there is no games being played here in terms of disclosure.
This essentially means we have been growing at about 2 times to 5 times of the industry and we’re speaking about jus the core business, right? We stay confident of being adjusted EBITDA positive by the last quarter of this year. It’s actually pretty straightforward if you think about it. There is INR18 crores of profit in the core business and there’s 65 of loss in the new initiatives. The new initiatives will basically go down to 30 and the core will basically go up to 50, so you should comfortably be adjusted EBITDA positive. So there’s not much surprise there.
And for the next year, we should be full year PAT positive in 2023, ’24 that’s the hope. But I just want to point out one little thing there, which is actually quite telling. We’ll be doing that while taking on about INR310 crores of EOSP costs, charges, which by the way, a few years from then will not be there, so that’s pretty much telling you that even if nothing happens to our business at INR310 crores of profitability, they are pretty much in guaranteed manner. Of course, we’ll grow as well.
So with that, happy to take questions now. Thank you very much.
Questions and Answers:
Operator
Thank you. We’ll now being the question-and-answer session. [Operator Instructions] We have our first question from the line of Sachin Dixit from JM Financial. Please go ahead.
Sachin Dixit — JM Financial Ltd — Analyst
Hi Yashish and team, congratulations on great results. I think the topline looks good, EBITDA loss is narrowing. I had a quick question regarding the breakdown of premium. If you can help with that between, say, how much it is POSP and how much is renewal, if that’s possible.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Just give us a second here.
Sachin Dixit — JM Financial Ltd — Analyst
Yes, sure.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
So POSP is INR458 crores for Q2 this year. The core Policybazaar is INR2,026 crores. That’s what we disclosed. I already told you both the health and life business grew at approximately 30% on the new side and on the renewals, both.
Sachin Dixit — JM Financial Ltd — Analyst
Sure. Sure. Thanks for that. And I assume the core business also includes corporate insurance here?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Yeah, it does.
Sachin Dixit — JM Financial Ltd — Analyst
Right. Okay. Sure. And on the term side of it, which I think continues to look weak even now and some of the insurers have been commenting probably H1 — H2 will look better, do you have any views on how that’s shaping up for you in terms of the growth side of terms?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
So, the total premium for term insurance grew at 57%, but the fresh premium grew at roughly about 20% for the quarter. Is that okay?
Sachin Dixit — JM Financial Ltd — Analyst
No, no. I was asking like generally, do you have a view on how the term industry is functioning right, it continues to be weak. So do you see H2 being much better than now H1 have been?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Yeah. There is definitely a better growth now than the last quarter. If I remember correctly, the last quarter was lesser than this. It was about 60% of this growth rate. And this growth rate is at what we mentioned right now. And for the industry, there is — there were swings towards certain players, etc. Increasingly, those are settling down, but we don’t comment too much on individual players and who get market share. But on the whole, we think the industry has been about flat, so the numbers we have in the industry has grown — either declined. For the first-half, the industry has declined a little bit. If you look at the second quarter, the industry is probably flat to a little bit declined, but — so we’re obviously growing in that backdrop.
Sachin Dixit — JM Financial Ltd — Analyst
Sounds good. Just one final question on the cash balance side. We have this INR5,000 crore cash that’s obviously helping us with the interest income that we’re generating, but what’s the plan for this going forward?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
I think once we get profitable, once we deliver INR100 crores of profit, we will also discuss what we do with this cash. I think it’s too early. Let’s get there, let’s deliver at least the first INR100 crores of profit before we start concluding that this cash will never be utilized, so to say.
Sachin Dixit — JM Financial Ltd — Analyst
Sure, sounds good. Thank you. Thanks for your answers.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Yeah. So basically our cash plus receivable will not go down from here. It just will always stay about the same number. So we’re not losing cash, that’s all.
Sachin Dixit — JM Financial Ltd — Analyst
Great. Good to hear.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
[Indecipherable] so last quarter also, we have not lost cash, sir.
Sachin Dixit — JM Financial Ltd — Analyst
Right, right.
Operator
Thank you. We have a next question from the line of Nikhil Agrawal from VT Capital. Please go ahead. Mr. Agrawal, we are unable to hear you.
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
Am I audible?
Operator
Yes. Please go ahead.
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
Right. Thank you so much for taking my question. I just had a few questions about certain products. So there was credit line product that was mentioned last quarter. Is it still, after the directions that have been issued, is it still going forward, because as far as the credit line thing is concerned, we are not allowed to give a credit line without actually having the balance in the instrument? So is that product being continued, if there is any color on that product?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Sorry, could you just repeat the question once more. Naveen is looking at this business.
Naveen Kukreja — Co-Founder & Chief Executive Officer of Paisabazaar.com
That is different. We run the product with the bank. There is absolutely no impact on that product. It’s a credit line product, which works like a personal loan. So, as a consumer, if you want to draw out any amount from that credit line, this converts into a term loan. There is absolutely no impact on that product being issued by a bank. And our partner in that case is a bank.
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
And we just — so if I’m understanding is correct, we’ll partner with the bank and when the person or the customer takes the credit line out, it becomes the term loan with the bank. So the risk is with the bank and then is between the bank and the customer. So we don’t have any impact on us.
Naveen Kukreja — Co-Founder & Chief Executive Officer of Paisabazaar.com
Absolutely. And it was always — the funds are always going from the bank to the customer bank account; that continues to be the procedure.
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
Right. That is in line with the guidelines. Sir one more question about last quarter, there was this thing mentioned that our take rate had improved in one of the core businesses. So, can you please give us some color on which business that was and are we sustaining that? Is the take rate still high in that business? How is it contributing to the overall take rate?
Naveen Kukreja — Co-Founder & Chief Executive Officer of Paisabazaar.com
Yeah, it continues to be high. I think we didn’t disclose. We don’t want to go into take rate by business, but it’s a structural change in that business. It’s not that we did something in last quarter and it’s not continuing this quarter. Overall, it continues to be the case.
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
Right. Thank you so much sir. Just one more question about the investments in the new initiatives. So any trajectory on what kind of investments are we going to see in the new initiatives going forward?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
I think our — we would be subdued on any investments at least till we put a reasonable amount of profit on the books. I’m very focused on a single number, to be brutally honest. I am focusing on a single number, which is INR1,000 crores of profit in ’26-’27. To me, nothing else matters. And I don’t think we’re interested in making investments in too many [Speech Overlap].
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
New initiatives.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
No. I think we’re talking about new investments.
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
New initiatives. Investments in the new initiatives to generate business.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
We have stated in the past that our new initiatives investment for the current year is going to be somewhere near to our interest income. And that is due to hold, it’s come down from the last quarter and it will continue to become more and more efficient if we look at quarter three and quarter four. And I’ll just go back to the credit question that you asked. See, what you need to understand is, what we do as a credit business is just a marketplace. And since we are a marketplace, none of the new regulation, which came in last four, five months related to BNPL or SLDQ or lot of other stuff is actually not impacting us.
We do work with lot of partners, which are banks or NBFCs. And since we are marketplace, we only connect or provide a platform where the hand shake can happen. So that’s what the business model we had, had almost minimal impact or no impact from all that stuff that you see. And in the deck also that we have circulated, we have mentioned specifically about that regulation from the credit side this time, because those were — lot of action happening on that side from RBI and we wanted to very clearly state that our business model is totally, totally different. It’s not getting impacted at all from any of those changes.
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
Correct. Got it, sir. And sir, on the investment part that you mentioned, you said that it will be lesser than this or — so right now this quarter it was INR65 crores in the new initiatives. Going forward, it will be at this level or lower than that if my understanding is correct, right?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
So, as I clarified in my first opening comments itself, that our expectation is by Q4 it should be in the range of INR30 crores to INR35 crores.
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
Sorry, I would have missed that. I’m sorry.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
[Speech Overlap] on by the next two quarters.
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
Okay. Got it, sir. And sir, just one thing about the POSP business. So in that business, so we have two offline businesses. One is our own full-time employees, who work as PB Fintech employees and who help the customers with whatever issues they have. And one business is PB Partners, where third-party agents can come on the app and become agents and we share the commission that we get from the insurers with the agents, right? Sir, can you just give us some color on how the business is going on both the offline fronts?
Naveen Kukreja — Co-Founder & Chief Executive Officer of Paisabazaar.com
Sure. So, I think, as Yashish mentioned, we’ve also disclosed in the presentation, the whole point of having offline presence in the first part — I think you understood the model very well. In the first part, where existing Policybazaar customers have a choice to meet someone in person, that part is adding very well to our business. We have almost 1,000 people now deployed in that business. The AP per lead, which we disclosed, I think has been disclosed at over 1500 now for the first half. So this number has been continuously growing. So I think that part is doing very well, it’s increasing our conversion.
On the PB Partner side, as we said, we did over INR450 crores of premiums. The losses in that business or our investment in that business has continued to come down. We’ve actually reduced that over the last two quarters. The revenue from that business has grown significantly from Q1 into Q2. So I think even there it’s a healthier business and I think we’re moving very well in the direction that we want to do. One more metric in that business is that our non-motor business. So the motor business is very commoditized, the non-motor business continues to — now we are, almost 20% of our business is non-motor and that is the highest in the industry. So I think all the metrics, both financial and qualitative, both businesses look pretty good at this point.
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
All right, sir. Thank you. I’ll just leave with my last question. Can you please give some clarity on how…
Operator
Can you please come back in the queue, sir?
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
Right. I’ll just finish, this is the last question. Can you please give us some color on how the ESOP still work going forward? This is my last question. Thank you so much.
Naveen Kukreja — Co-Founder & Chief Executive Officer of Paisabazaar.com
Yeah. So on the ESOP part, Yashish mentioned earlier, the cost continue to come down every year. See, the ESOP grants happened in October last year and the first year impact basically spreads out over two financial years because of that. So six months of last financial year and six months of this financial year. And then it comes down for the next 12 months and continue to come down every 12 months.
So, the number that we have for this year is about I think INR600 crores plus-minus a bit with probably some new grants and all. But if you look at next year, this number should come down to somewhere between to INR300 crores to INR350 crores and then it continues to come down very drastically post that.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
So basically of the total grant, about 60% gets kind of expensed [Speech Overlap] no, I’m saying by March 2023 60% of it would have got expensed. So then in the next 3.5 years, you’ve only got 40% more to be expensed. So as I said, our objective of becoming profitable next year with INR300 crore, INR310 crores, the INR340 — whatever crores of ESOP grants implies that at some point in the very near future that ESOP cost will not be there. So you will obviously see that advantage.
Nikhil Agrawal — VT Capital Market Private Limited — Analyst
All right guys. Thank you so much, sir. Congratulations and best of luck for future quarters.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Thank you.
Operator
Thank you. [Operator Instructions] We have our next question from the line of Sagar Sanghvi from ADD Capital. Please go ahead.
Sagar Sanghvi — ADD Capital — Analyst
Yeah. Thanks for the opportunity. I have only one question. So if we look at the Slide 11 of your presentation, there is a mention of Bima Sugam. So if you can just help us understand what could be the disruption caused — can be caused by this proposed or discussion on Bima Sugam or something? And how would you plan to mitigate the same?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
See, I think if you make a correlation to the travel business which I used to be in a long time ago, it used to global distribution systems there, likes of Amadeus, Galileo, Saber, Worldspan, and those were very critical in powering the travel businesses. So if you look at Expedia, the recent Expedia went worldwide and could expand very rapidly was because they essentially had a tie-up with Worldspan, and Worldspan was giving them all the integrations and everything else.
So, to an extent I see that kind of role being played by Bima Sugam as an exchange, because that would be the UPI moment for the industry and that would make it help other distributors grow, whatever product they were selling, whether they were selling motor or health or home. So I think it will be a very positive move for the industry overall, and for us per se as well, because it would get us access to a lot of data layers, which we may or may not have access to today, because the Bima Sugam will have those. So I think it’s a fairly positive move for us.
Sagar Sanghvi — ADD Capital — Analyst
So, you mentioned you’ll have access to a lot of data layer. So do you plan to enter into KRA business that is KYC registration agency kind of business as you hand a lot of customer data or something like that?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
So, I’ll tell you I’m not trying to be cagey about it, there’s very little we can say, because we don’t have so much clarity yet. In fact, we have met with the regulator and we asked for clarity also at this point and that was with the distribution department. And there didn’t exist so much clarity in terms of us starting to get to think about it from an operational perspective, what does it mean?
But that’s the reality of the situation right now. But I guess, as it evolves further, right now there is a lot of conversation in the media, but that’s not what is flowing through operationally to us. So, we have to wait it out and see how it goes. But to me the analogy is the GDSs and the travel businesses which I used to run one of them which was Ebookers.
So I understand that analogy very well. And if you think about it, flights as a business has really moved on to GDSs, but hotels still stays somewhat out of the GDSs, packages stays out of the GDSs. So I think if these things take time, they just — yeah, so you get the story right, it doesn’t suddenly magically just happen in one month.
Sagar Sanghvi — ADD Capital — Analyst
Got it. Yes. And one more related questions to your financial. So, you are talking of about INR1,000 crore of PAT by 2026-’27 — FY ’26-’27, right. So that would also help throw a free cash flow o about INR1,200 crores-odd a year post that. And you are already sitting on a pretty large cash balance. Do you plan to enter insurance manufacturing, selling of insurance?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
No, we have no such plan. We have no such plan. In fact, to be brutally honest, we don’t have any clue what we will do with this roughly INR6,500 crores of cash that we will have at that stage. So, and that’s the reality. And I think we will be in a position where this question — see, right now, the question to us is, “Guys, become profitable. Tell us that you’re not making this crap up right, you’re actually going to be profitable,” that’s step one.
I think once we do that. The next question is going to be, “Okay, guys, what are you going to do with this cash that you have, now that you’re profitable, you’re cash flow positive and you don’t really want to make acquisition, what are you going to do with this cash.”
Sagar Sanghvi — ADD Capital — Analyst
Exactly.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
And I think at that point — so let’s get to that point first, right. We are in class one right now. Let’s get to class four before we take the exam of class four. So I think, this is the time for us to be head down and executing rather than thinking too far into the future about what we’re going to do with this beautiful amount of cash that we have lying with us. But yeah, of course, we will not waste it. So yeah, we’ll see, maybe we’ll return it to you guys.
Sagar Sanghvi — ADD Capital — Analyst
Okay. Thanks.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Back to the investors. I don’t know whether you’re an investor or an analyst, but we should [Speech Overlap]
Sagar Sanghvi — ADD Capital — Analyst
Both, investor and analyst, both. Anyway, so that’s helpful. And great set of execution in this quarter. Thanks. Thanks a lot.
Operator
Thank you. [Operator Instructions] We have our next question from the line of Adarsh Parasrampuria from CLSA. Please go ahead.
Adarsh Parasrampuria — CLSA — Analyst
Hi Yashish, Alok and team. Thanks for the call. Question is on the savings business. If you can just throw some light on what’s been done in the last six months and three months.
Operator
Sir, I’m sorry to interrupt. Can you speak louder please?
Adarsh Parasrampuria — CLSA — Analyst
Let me like try this. So I was — my question was relating to the savings business momentum this year was supposed to be a big year for savings. So if you can just…
Operator
Sir, it is still low. Can you use the handset please?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
We’ve understood the question. So I think, Sarbvir will answer.
Sarbvir Singh — Director
Yeah. I think, in saves — our momentum in the saving business continues, I think, in the same way that we planned both last year was a very good year for us and the first two quarters have also been very good. And I think the best way to think about it is that there are two things that have happened. One is that the premium is growing very rapidly and also there has been a structural shift in terms of the kind of products that we sell.
The main product that we sell is a capital guarantee solution, which ensures that the capital that the person has invested is safe. And we have an upside due to the market, so they’re having a ULIP upside. And in this solution has been really well received and with the fact that now we have offline agents also who are going to meet customers, we are able to increase the ticket size.
So, just to give you a sense, the ticket size offline is almost 50% higher than the ticket size online. So, as you can see, this business is benefiting from all these tailwinds. One is our business momentum; second, higher ticket size; third, the fact that offline is improving our conversion. So, I think in this forum that’s all I’d like to say. But this is one of our fastest growing businesses and now the economics of this business is also very good.
Adarsh Parasrampuria — CLSA — Analyst
Any ballpark number of premiums in the first six months?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Sir, ballpark and exacts is not very different. We obviously know the exact numbers, we decided not to disclose these here.
Adarsh Parasrampuria — CLSA — Analyst
Got it, Yashish. And my second question was relating to expenses beyond the contribution line and the ESOPs. Growth there that you would expect, Yashish, anything changing to make that growth or that’s going to be inflation-linked, you shouldn’t see a lot of very high growth in that part of expense which is beyond the contribution?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
[Foreign Speech] Naveen and Sarbvir, please answer. You are the guys with no cost if you grow cost, nobody else is going to grow cost.
Sarbvir Singh — Director
No, no. I think the — see, as Yashish said, the objective is very clear. We want to deliver profit. And I think we are focused on that. Those costs will increase as low — as low as possible is all I would say. The rest, there is an inflation in the market, there is natural increase in that, but the idea is to keep them much lower than our revenue growth rate.
Adarsh Parasrampuria — CLSA — Analyst
And sorry, I’ll just go back with one more question on that capital guarantee products. When you’re doing these products and they’re doing well, just wanted to check, are the take rates for you selling these products in the first year low? We get feedback from a couple of insurer that the guarantees are quite high in some of the products and their offset is basically partner not taking a lot of upfront premiums. So just wanted to understand your take on that.
Sarbvir Singh — Director
Yeah. So just to be very clear. It’s a combination of a non-par or guaranteed plan and a ULIP. And if you think about it, clearly the mixture is reasonably — see we are not a commission-first shop to begin with, right. So we are not trying to sell things which have the highest commission. We are trying to sell the best solution for the customer. In this case, as you can imagine, a combination of a non-par and ULIP has a better return, a better commission profile than just ULIP.
So I think that’s really the change that has happened for us. So it depends on where you start, right. So we were selling more ULIPs, now we are selling a combination of ULIP and non-par. So clearly the commission is better for that, but we are not, by any stretch of imagination, we’re not maximizing the commission in our savings business.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
On the previous one, I wanted to give you a straightforward answer. I don’t think we will see our fixed costs going up by more than 10% to 12% in a year.
Adarsh Parasrampuria — CLSA — Analyst
That’s good Yashish.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
[Speech Overlap] obviously Paisabazaar was coming from a COVID year when their operations were very small, but okay, that’s it.
Adarsh Parasrampuria — CLSA — Analyst
Perfect. Thanks, Yashish, Alok and team.
Operator
Thank you. We have our next question from the line of Subramanian Iyer from Morgan Stanley. Please go ahead.
Subramanian Iyer — Morgan Stanley — Analyst
Hi, thanks for the opportunity. I had a few data questions. So, one is basically you gave the number for co-premium, which is about INR2,026 crores. Can you please split it into new and renewal and also give the same numbers for the last year second quarter as well?
And the other question I had was, in the previous quarters, you used to give this number of credit-related revenues. So usually, you split your revenues into credit and insurance related. So if you could do this for this quarter as well and give it for the second quarter last year as well?
And I just wanted to understand the progress on basically your — on contracts with your partners on getting renewal revenues in the sense that you were an debt aggregator previously and you were not entitled to renewal revenue. So how is the progress on that?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
So, remind me if I miss any of your questions, okay? So first thing I picked up was, you wanted to know what is our new versus renewal split. It stays very similar to how it has been in the past. There is no real change in that, okay? It’s roughly half and half. So about 50% is new, about 50% is renewals, right? And INR101 crores of our core revenue was credit-linked. So you had a total core revenue of INR410 crore; of which, INR110 crore was credit-linked and the rest would be all — INR101 crores is credit linked and the rest would be all insurance-linked.
Is there anything I’m missing in your question? Sorry, because they came together. So I may have missed something.
Subramanian Iyer — Morgan Stanley — Analyst
No, that’s good. The third one was on the progress on renewal contracts. Yeah.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Renewal contracts, you mean in terms of in life insurance receiving more renewals in the future, etc.?
Subramanian Iyer — Morgan Stanley — Analyst
Yeah.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Yeah. There’s conversations going on there, but nothing material to report in terms of massive changes or anything. But on Paisabazaar, there is a big renewal change, that is a positive surprise for us, because Paisabazaar historically never had renewals and it’s very heartening to note one thing, if you look at it carefully, Paisabazaar renewal rates have now hit — so trail revenue has now hit the same level as Policybazaar was in 2018. So you can see that, and they’re actually growing much faster than Policybazaar trail revenues ever grew.
So, there is an expectation and Naveen correct me if I’m wrong, our expectation is we would be doing about $700,000 by March, per month. So that — if that happens, there should be almost, in my opinion, if I was to look forward, that’s almost $10 million of renewal revenue next year, because there is growth and there is multiplied by 12 etc., which is a huge positive surprise, because that did not — so if you asked us what would be Paisabazaar renewal revenue sitting back and — about when you were going public, I don’t think anybody had any expectation of that.
Subramanian Iyer — Morgan Stanley — Analyst
Got it. Thank you.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
You’re most welcome.
Operator
Thank you. We have our next question from the line of Prateek Poddar from Nippon India Mutual Fund. Please go ahead.
Prateek Poddar — Nippon India Mutual Fund — Analyst
Yeah, sir, just one question. I noticed that your core insurance revenue, the take rates have gone up on a quarter-on-quarter basis. Can you help me understand how has that gone up?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
As we said, one of the products — it’s basically a product mix situation, and one of the products, the take rates have increased.
Sarbvir Singh — Director
So, I think it’s two things. One is that our life and health businesses are a greater proportion of our overall business than they were in the previous year. And the second thing is that we just discussed in one of our businesses in life, the take rates have increased year-on-year.
Prateek Poddar — Nippon India Mutual Fund — Analyst
And which is that business line item, sir, which — is it term, CD?
Sarbvir Singh — Director
We don’t want to disclose that exactly. But if you listen to the previous conversation, you would get a fairly good clue.
Prateek Poddar — Nippon India Mutual Fund — Analyst
Okay. Okay. And just one quick clarification. You’ve talked about absorbing a INR5 crore loss by the non-insurance business. This INR5 crores pertains to Paisabazaar, I’m just clarifying?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
It pertains to the credit business. That is — all of it is in Paisabazaar. So, Paisabazaar has credit revenue and insurance revenue. So all of it is in credit — in Paisabazaar. So, yes, you’re right. So INR5 crores is the credit business. So the credit business, see the disclosure is there, right? The INR101 crores of revenue, and there is INR5 crores of losses there for the quarter. So you can imagine this is — there is no way they’re not breaking even in the next three months, like of course there is some way, but they’ll have to be very special to do that.
Prateek Poddar — Nippon India Mutual Fund — Analyst
And Yashish, just on contribution margins for your credit business, is it very similar to what it was last quarter?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Yes, it’s very similar to what it was last quarter, but Naveen is doing a very smart thing. He is not telling his team to take the renewal revenue into account. So he is basically keeping the same margin and the renewal revenue is just getting added on. So there is a bit of an interesting thing he is doing from an operational perspective. Naveen, you want to explain?
Naveen Kukreja — Co-Founder & Chief Executive Officer of Paisabazaar.com
To your question, the contribution has remained similar, which is about 40% or higher. Yashish was talking about the trail revenue, which is increasing quarter-by-quarter. And if we execute the trail revenue well, then that comes at a very, very high contribution, as it starts to become meaningful. That comes at about 90% contribution.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
What cost do you have in that? It’s at 100% no? What is the cost that you have in that?
Naveen Kukreja — Co-Founder & Chief Executive Officer of Paisabazaar.com
These are servicing and indemnification [Phonetic] cost, is the rest, sir. So 99%, yeah. Okay.
Prateek Poddar — Nippon India Mutual Fund — Analyst
Understood. And sorry, I think you guys missed one of the previous participants was asking for Q2 FY ’22 the same period [Technical Issues]
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Sorry, what was that? You got disconnected.
Operator
Mr. Poddar, can you repeat your question please? I’m sorry, Mr. Poddar’s line is [Speech Overlap]
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
It’s okay. Maybe he’ll come back again, yeah.
Operator
Yes. We’ll take the next question from Nischint Chawathe from Kotak. Please go ahead.
Nischint Chawathe — Kotak Institutional Equities — Analyst
Yeah. Thanks for taking my question. Last quarter you mentioned that life and health were around 75% of the premium. What would be the ratio like in this quarter?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Slightly higher actually.
Naveen Kukreja — Co-Founder & Chief Executive Officer of Paisabazaar.com
Yeah, slightly higher.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
If I look at it, it’s getting towards 77%, 78%.
Nischint Chawathe — Kotak Institutional Equities — Analyst
And contribution of corporate business in the first half would be like how much, very approximately?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
There is nothing. Contribution as in contribution [Speech Overlap]
Nischint Chawathe — Kotak Institutional Equities — Analyst
I’m sorry, share of premium.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
That, I don’t think we disclose that here.
Nischint Chawathe — Kotak Institutional Equities — Analyst
But should be similar to what was there in the previous year, or is it kind of goes up, goes down, if you can kind of…
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Similar, maybe it’s a little lower.
Nischint Chawathe — Kotak Institutional Equities — Analyst
Sure.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Sorry. If you look year-on-year, it’s about flat.
Nischint Chawathe — Kotak Institutional Equities — Analyst
Okay.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
It’s about flat. There is no change in that.
Nischint Chawathe — Kotak Institutional Equities — Analyst
Sure. My second question pertains to ESOPs. Now, I was just trying to understand what is the exercise period for the ESOPs once they vest?
Alok Bansal — Vice Chairman & Whole Time Director
So, our ESOP policy is very simple, it’s five year into 20% per year, and about 80% of the ESOPs were granted last year October, 20% would be granted over time. And for the four senior people, including Yashish, myself, Naveen and Sarbvir, there was added clause that we can only vest once it crosses a certain — there is a threshold, but that doesn’t mean it would lapse, it just delayed the exercise, that’s all. So from practical perspective, you can just say five into 20% because that’s what goes into the accounts.
Nischint Chawathe — Kotak Institutional Equities — Analyst
No, no. But the point is that when you’re issuing ESOPs, there will be some period, right, window up to which you will get — you can exercise.
Alok Bansal — Vice Chairman & Whole Time Director
Five years. It’s a five year and 20% per year. So — okay for exercise, how long?
Nischint Chawathe — Kotak Institutional Equities — Analyst
See, that’s what. I mean, if you don’t exercise, I believe, some of the ESOP expenses can be reversed, let’s say, in an eventuality where you don’t exercise the ESOPs.
Alok Bansal — Vice Chairman & Whole Time Director
So the question is the vesting schedule is five years, 20% each year and after vesting there is a period of five years for exercise.
Nischint Chawathe — Kotak Institutional Equities — Analyst
Okay. Okay, and the entire ESOP expenses, you will have to, I mean will hit the P&L at the time of [Indecipherable] essentially?
Alok Bansal — Vice Chairman & Whole Time Director
No, they’ve already — 60% of them has hit the P&L by March ’23, it’s done. See the rule in the India AS is very simple, the day you grant, based on the grant value and the share price at which it’s been granted at that time, there is charge for future P&L and the charge is structured in such a way that in the first 12 months 45.67% will come into your P&L for a five-year into 20% grant, because the way it works is very simple. I think in the past we have explained that in the deck also, first year, 20% you have to take 100%.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
First year is 46% in the first year, the second year is about 24%, 25%, then it is about 13%, and finally, it’s like 3% or something in the last year.
Naveen Kukreja — Co-Founder & Chief Executive Officer of Paisabazaar.com
Last year is 4%, but yeah, strong credit path, but the charges are decided upfront when you grant and it has to be taken from the grant date itself and I’m also willing to exercise.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Yeah, Naveen like to exercise. So I’ll give an example, right. Today, our share prices is below when we granted these ESOPs. So the cost that we are facing does not come down, neither would it have come down if our share price had gone up. It wouldn’t have gone up either. So everything is linked to the day they were granted. Now what is happening in terms of accounting is just the flow through.
Yes, if they are, as Alok said 80% were issued then or granted then and 20% maybe granted sometime in the future, those 20% will be priced on the day that they granted. So but that’s broadly it. I don’t know if you need more clarity. But if you want more clarity, one can have a separate session with…
Nischint Chawathe — Kotak Institutional Equities — Analyst
No, I think this is clarified. Thank you very much and all the best.
Alok Bansal — Vice Chairman & Whole Time Director
You’re most welcome.
Operator
Thank you. We have our next question from the line of Ansuman Deb from ICICI Securities. Please go ahead.
Ansuman Deb — ICICI Securities — Analyst
Yeah. Good evening, and thanks for the opportunity. My question was regarding the point of sale premiums of around INR458 crores that you set for this quarter. So, I remember this was more or less the same number in Q4 of last year FY22. So we are not growing this business, POS business too much now. It is more or less stable. I just wanted to understand that has the objectives been achieved what we started to do through this point of sale business, if you could share some of the competitive strategies around this business and whether we have achieved this target, and so now we’re focusing more on the premium — on the core business, where obviously our margins are very high as we are also the going very good, if you could just underline your POS strategy in line with the competition landscape.
Sarbvir Singh — Director
So, Ansuman, I’ll share what is possible to share on a public call. I think the first thing that we were very clear about was that we wanted to be leaders in this business. If you remember, we achieved that in January of this year. So within six, seven months of launch, we became the Number One company. That we have maintained.
The second thing that we want to achieve is that we want to build a sustainable business. And to us, building a sustainable business means that our agent partners, their income must go up by working with Policybazaar. We are on that path. One of the main ways of doing that is to ensure that they have non-motor products to sell and they are able to sell them. So that’s something that we are now — we are focused on.
As you rightly picked up, our premiums are not expanding dramatically now quarter-on-quarter, because we are focused on the realization and focused on making the whole business a lot more efficient. That is the phase that we have now entered in, I would say, in Q3 and Q4.
And we have — obviously we have lots more plans for this business, which we’ll share with you as we go along. But the idea is that first to have leadership, then to improve the economics and thirdly, you will see us doing things which will be very different from what other POSP players have been doing. Clearly, we are not in this business just to do what others are doing and you will see that coming through in the next financial year.
Ansuman Deb — ICICI Securities — Analyst
Right, sir. And lastly, I just wanted to kind of underlying the fact that this INR2,000 crore of quarterly premiums in the core business, it compares to that INR4,700 crore premium in FY21, right. So, in a like-to-like, that would be the right comparison?
Sarbvir Singh — Director
Yes, you’re right. Absolutely. I’m sorry, I should also comment on the core business that our focus has always been on the core business. We have separate management teams, which look at the core business and the POSP business. And I would say even at my level 80% of my time and energy goes on the core business alone. So, it has never been the case that we have focused more on POSP at the expense of the core business. And I think that is seen in the numbers as you can see the core business has been profitable for three quarters straight now and I think the premiums have been growing rapidly. So, I think the core business is our main focus and I think we continue in the — over the next five, 10 years.
Ansuman Deb — ICICI Securities — Analyst
Right. Thank you for disclosing this number, because that really gives us a very good picture about the growth in the core business. Thanks a lot.
Sarbvir Singh — Director
You’re welcome.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
You’re welcome. So as we go by, we will disclose more and more. Hopefully from April next year, we’ll be disclosing a lot, lot more than we disclose yet. We are still learning.
Ansuman Deb — ICICI Securities — Analyst
Fair enough sir. Thanks a lot.
Operator
Thank you. We have our next question from the line of Dhaval from DSP. Please go ahead.
Dhaval Gada — DSP Investment Managers Pvt. Ltd — Analyst
Yeah. Hi, thanks for the opportunity. So, just two questions. First is on the use of cash as you move towards profitability. I know you sort of responded that first you want to reach the target before thinking about utilization. But just if you could give some perspective of — initial thoughts that would be useful.
And so the background here is on inorganic, we’ve always been very cautious from a valuation standpoint and sort of chose to build versus purchase buy. So, just some perspective around use of cash would be useful.
And the second question is, I think, this was Subu’s question relating to breakup between credit and non-credit revenue for same quarter last year. Yeah those are two questions. Thanks.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
So, first of all, I’ll share something with you. I think somebody told me the markets react very quickly. So, I think I had internally thought that this question of what will you do with cash will become a very important question or become the main question for us in about April 2024, because we would have delivered a year of profits and that is when people would say okay now that that is done and we don’t have that question anymore, we would like to know what you will do with the cash. But you guys react too quickly.
You’ve already assumed we made profit for next year and you started asking us that today. So give us a little more breathing time. But, genuinely, in the spirit of disclosure, I have asked to Mandeep to already start thinking about strategies for what to do with that cash. And at this point, our thought process is, we should return to the shareholders over the years to come one way or the other. We don’t know how. We don’t know the mechanisms, but that is for Mandeep to figure out, because that’s why he’s the Group CFO.
And I think regarding your other question, I think credit last year same quarter I don’t think we have those breakups. They were doing about INR50 crores of revenue. In credit, it is about INR101 crores now, broadly that gives you some answers.
Naveen Kukreja — Co-Founder & Chief Executive Officer of Paisabazaar.com
And also if you see the disbursal, always there is a disbursal Y-o-Y growth. It’s usually is a very, very strong correlation with the revenue. So our disbursals grew by 94% Y-o-Y for the quarter and 110% for H1. That will give you a good indicator of how the revenues have grown.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
But broadly they’ve kind of — the credit business has kind of done okay. They’ve almost doubled.
Dhaval Gada — DSP Investment Managers Pvt. Ltd — Analyst
Got it. Thanks, and wish you all the very best. Thank you.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Thank you so much.
Operator
Thank you. We have our next question from the line of Arpit Shah from Stallion Asset. Please go ahead.
Arpit Shah — Stallion Asset — Analyst
Hello?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Hi, Arpit.
Arpit Shah — Stallion Asset — Analyst
Yeah, yeah. Just wanted to understand what was the kind of contribution margins you’re all targeting in the new — these initiatives, because right now, if I see the contribution margins, in the core business, they are around 45% and there are of course more levers to pull over there. But if I see the new business initiatives, you think you’d be contribution margin positive by let’s say FY24 end?
Sarbvir Singh — Director
Yeah, absolutely. I mean, by FY24 end new businesses will be contribution positive.
Arpit Shah — Stallion Asset — Analyst
And if I heard it correctly, you have set FY24 PAT positive, even after the ESOP cost?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Yeah. After ESOP cost, yes. See, it’s a very straightforward thing. I’m not talking rocket science here. We will be adjusted EBITDA positive by the last quarter of this year. So already our interest cost covers our adjusted EBITDA loss already. Now, what do we have to do next year, our adjusted EBITDA would have broken even, because you can clearly see Paisabazaar headed it that way and Policybazaar is making more of — the core business is making about whatever approximately INR200 crores of extra profit this year compared to last year, call it, whatever, I call it adjusted EBITDA, call it, whatever margin.
So next year, that’ll happen again, right? And as that happens, that would take care of and you’ve got your interest income. So essentially what happens is your interest income this year was taking care to some extent of some of the new initiatives, etc. or we’re at that stage where the interest income taking care of new initiatives. Next year, the interest income has to take care of our ESOP cost, which is to be a notional cost, but I think everybody believes it’s a real cost. So let’s treat it as real cost, and yeah, we will cover it next year. They will be approximately the same, right, about INR250 crores, INR300 crores of interest income, about INR300 crores of ESOPs and the rest of the business will be adjusted EBITDA positive. So there is no difference between adjusted EBITDA and PAT for us in the real sense, as I see it here.
Arpit Shah — Stallion Asset — Analyst
Got it. So just wanted to understand you all are having close to INR5,000 crores, INR5,500 crores cash. And if I see the stock price, it’s INR400 level or so it’s around so this is just around INR17,000 crores of market cap. So you think this is a good market cap where you can actually prepone your buyback and go for a better capital allocation at current prices as and when your business is better and your stock price is better where your buyback would be at lot higher level, you think that is a possibility?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
All these interesting conversations are about post-April ’24. Let us deliver what we have to do, let’s not get ahead of ourselves. We are very confident of what we are building. I think — see, let’s be very clear, right. As we got into the area where the market was much more focused on profits, we as a company did not kind of bulk under that pressure or whatever you want to call it, we actually started new initiatives, which if we hadn’t done, we would have been profitable right now.
But we actually started new initiatives and all those losses that we’ve taken this year have actually been because of — because they were the right thing to do for the Company. So we will continue to do what’s right for the Company. And at the same time we are fairly confident of the core strength of our business, and I say that with a lot of conviction, because I have seen our operations and how difficult it is to do something like we are doing. Yeah, we feel good about it, but let’s not get ahead of ourselves, let’s deliver it. Confidence needs to be replicated with execution.
Arpit Shah — Stallion Asset — Analyst
Got it. Got it. And let’s say the ESOP cost by FY — hello?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Yeah.
Arpit Shah — Stallion Asset — Analyst
Yeah, the ESOP cost, let’s say, by FY25-’26 would be reduced to a minimal, let’s say, INR100 crores to INR120 crores or so. So, you think the PAT of INR400 crores to INR500 crores by then is a good number to look at?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
’26-’27 is the only number I’m aiming for and that’s INR1,000 crore PAT.
Arpit Shah — Stallion Asset — Analyst
Got it.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
And I’m like — I’d love to do a double or quits with anybody on that on my entire equity held in Policybazaar. Anybody who wants to have that conversation, I’m very happy to have that conversation.
Arpit Shah — Stallion Asset — Analyst
Got it. Got it. So just wanted to understand if let’s say your PAT goes to INR1,000 crores, what would be the path of that? Let’s say, you’re seeing EBITDA positive by Q4 FY ’23 PAT positive FY ’24. So what kind of revenues you are targeting, because your strategy is the current run rate, we are at around INR2,000 crore plus run rate on the…
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
[Speech Overlap] we’re fairly straight forward to predict all the analysts have done all of that work very well. They are not very far off from what we believe, somewhere around INR6,000 crores should be the number. But it’s okay, let it — let us get there. It’s too far right now to get into exact details, right? And we don’t usually — yeah, I just want to lay out our ambition, right, our ambition or our thought process.
Alok Bansal — Vice Chairman & Whole Time Director
See, if you look at our last four quarters’ numbers, the delta has been INR50 crore plus per quarter from the year before. And we’re talking about 20 quarter from now. And obviously there are different pieces, there are core business, they trail income, their experimentations becoming more efficient, the offline thing hybrid model that generate. So, lot of these will start to come together, but my am is that the delta over last year for every quarter continuing the same way in some form and that itself will answer your question.
Arpit Shah — Stallion Asset — Analyst
Got it. Thank you so much. Best of luck.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Then there is [Indecipherable] and God. So, I don’t know what else will happen in the world. So, it’s okay, but as far as the controllables are concerned, I think we should be fine.
Arpit Shah — Stallion Asset — Analyst
Got it. Got it. Thank you. Thank you so much. Thank you.
Operator
Thank you. We have our next question from the line of Dev Jodh [Phonetic] from Citigroup. Please go ahead.
Dev Jodh — Citigroup — Analyst
Hi. Thank you for taking my question. Just one question from my side. So you mentioned the number of employees in the offline channel, so it’s about 1,000. Could you share the similar number, like for the POSP agents and the other advisors that we have?
Alok Bansal — Vice Chairman & Whole Time Director
I don’t think we want to go into this level of detail, I mean these are…
Dev Jodh — Citigroup — Analyst
Okay. No issues. Thanks and all the best.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Yeah, we have more than 100,000 POSP agents now. About 100,000 POSP agents. But it’s, really not a relevant number, because what’s relevant is how many of them are doing — so let’s not get into that level of granularity. Let that be with the management, but yeah, we have about 100,000 agents on the POSP.
Dev Jodh — Citigroup — Analyst
Okay. Thanks.
Operator
Thank you. We have our next question from the line of Rahul from LionRock Capital. Please go ahead.
Rahul Jain — LionRock Capital — Analyst
Hi, this is Rahul here. I just wanted to talk about the Bima Sugam initiative little bit more detail. The way I look at it, I know you guys mentioned that it could be the UPI moment. But on the flip side, a UPI movement has led a lot of payment companies to just do a lot of volume, but little revenue and the regulators talked about reducing a premium while transacting through Bima Sugam and making it a marketplace. So I’m just curious from a market opportunity perspective, how this could impact the business.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
I think, as I said, we see it — there are two things, right? I think from a positive perspective, it would be a GDS — a distribution system. What you speak about is, in my opinion, a very remote possibility. Of course, everybody has their opinion on this thing right now. But I don’t think that as a conclusion. The payment ecosystem as a conclusion as in, let’s say, three players having 90% of the market. I don’t think that is a conclusion that the regulator is going to prefer.
You can think about what that would do to agency, what that would do to, of course, there are three, four players in the market who have the ability to take that route. And of course we are one of them, there’s no doubt about that. But I think I’ll leave it there — I think between my line — you do realize this is a regulatory matter. I don’t want to speak more than a certain amount on it, but I think that is not a conclusion that the industry, the regulator is hoping for with three players having 90% market share.
Sarbvir Singh — Director
And I just — I also just want to add, if you see some of the things we’ve been doing and I think we’ve spoken about them today, one is the service experience that we seek to deliver. Insurance is a complex product. Payments are slightly simpler product. So the experience that we’re delivering, whether it’s in terms of post-purchase experience, whether it’s in terms of claims, I think that’s a big — that will be a big difference.
And the second thing that you also have to remember is that, we are in the risk business, right. So the channel which can bring better risk to the insurer, which always have a certain advantage and perspective. So I would just leave you with those two thoughts. One is customer experience and secondly the risk. It’s not — the same person is not the same person, right, in insurance as in payments it doesn’t matter who I’m sending the money to.
Rahul Jain — LionRock Capital — Analyst
Just a quick follow-up on this. Like I understand the retailers are very few and I completely get your point like not everything done by government UPI. Just a quick follow-up here is that when I think about Bima Sugam the way the communication has been from the regulator, from the government here has been that they want to create a platform on which anyone can come on and buy insurance products, and even kind of act as an online repository where even the claim processing has to be done.
So I’m just curious like who would be the counterparty dealing with the customer? Would that be like if you are part of the Bima Sugam, would the customer be dealing with you or let’s say HDFC Life or someone else is on the platform and insurance manufacturer is there. So who would the customer be dealing with even if they are going through the platform, the Bima Sugam platform that’s one last clarification I had?
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Let’s take — at this point given everybody knows a little bit, let’s take the analogy of any of the two right. Let’s take the travel industry analogy, where we are talking about GDS or let’s take the UPI analogy, the customers deal with UPI via the large payment, via Google, via a PhonePe, via Paytm etc., right. So yeah I do — if it absolutely becomes the UPI, there still there are players who are doing the front-end interfacing. So let’s see.
I think it has a lot of evolution ahead of it. There are — I think there is a lot of positive it can do to the industry. And remember the eventual objective of the regulator is to increase insurance penetration, and if you keep that at the back of your mind and think about what’s been increase insurance penetration, I think it will give you a lot of answers.
Rahul Jain — LionRock Capital — Analyst
Okay. I’ll leave it there. I think, probably we can have a lot longer discussion, but I’ll leave it here for now.
Operator
Thank you. We’ll take our last question from the line of Rishi Jhunjhunwala from IIFL Institutional Equities. Please go ahead.
Rishi Jhunjhunwala — IIFL Institutional Equities — Analyst
Yeah, thanks. Just one quick question. Our ESOP expense for FY ’23, can you give some estimation? I think 1H we have already done INR340 crores. So, could it surpass INR5,500 crores or even higher?
Sarbvir Singh — Director
So, Rishi, basically as we explained, that charges for these grants started from October last year. So, first six months of this year was the half of the first year charge, which is roughly 23% of the total. The second-half is going to be half of the 26%, so 13% of the total. So we have — there may be some new grants, but those are relatively small numbers which will happen. But you can just see, first half 23%, second half 13% in that ratio 23% versus 13%.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
And just to give you an example in this quarter, we have had ESOP expenses of about INR173 crores. In the next quarter, this might be just a shade above INR100 crores.
Sarbvir Singh — Director
So that come to INR550 crores.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
That basically will give you the indication that it has started to decline quite rapidly. If you look at ’25-’26, the total ESOP expense for the year might be close to INR100 crores. And in ’26-’27, it might be about INR50 crores, INR60 crores.
Rishi Jhunjhunwala — IIFL Institutional Equities — Analyst
Yes. Yes. Understood. Thank you so much.
Sarbvir Singh — Director
Welcome.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Welcome.
Operator
Thank you. I would now like to hand over the conference to Mr. Yashish Dahiya for closing comments. Over to you, sir.
Yashish Dahiya — Chairman, Executive Director & Chief Executive Officer
Thank you very much, everyone, for taking time out to attend our call. We really appreciate it. And thank you all for your questions. I hope we were able to answer most of them adequately. Thanks very much. And we’ll improve upon this as time goes. Thank you. Bye now. Have a great day.
Operator
[Operator Closing Remarks]