PB Fintech Ltd (NSE: POLICYBZR) Q4 2025 Earnings Call dated May. 16, 2025
Corporate Participants:
Unidentified Speaker
Yashish Dahiya — Chairman & CEO
Alok Bansal — Executive Vice Chairman
Sarbvir Singh — Joint Group CEO
Analysts:
Unidentified Participant
Sachin Dixit — Analyst
Madhukar Ladha — Analyst
Dipanjan Ghosh — Analyst
Shreya Shivani — Analyst
Manas Agrawal — Analyst
Rahul Jain — Analyst
Nidhesh Jain — Analyst
Neeraj Toshniwal — Analyst
Sanketh Godha — Analyst
Srinath — Analyst
Presentation:
operator
Good morning. A very Warm welcome to PB FinTech Limited Earnings Call Quarter 4 Financial Year 2024 25. Today we have with us Mr. Yashir Daria, Chairman and Group CEO PB FinTech Mr. Alok Bansar, Executive Vice Chairman, PB FinTech Mr. Sarabh Singh, Joint Group CEO PB FinTech Ms. Santosh Agarwal, Chief Executive Officer Pesa Bazar Mr. Mandeep Mehta, Group CFO, PB FinTech and I’m Rasleen. I hand over to Mr. Yashish for his introductory address.
Yashish Dahiya — Chairman & CEO
Thank you Racine. Good morning all. So just sharing our update for the last quarter and the year. Our total insurance premium for the quarter was at 7030 crores up 37% led by growth in new health. With this the total insurance premium for the year was 23,486 crores with a growth of 45% in the new Core Online Insurance Premium and 48% in the new health and life insurance premium. I just wanted to make a little comment here as I look at our insurance revenue over the last five years. In 2021 we were 619 crores. 22 we were 984 crores.
And I won’t tell the go through the whole list but we are now at 2373 crores and I do the CAGR for five years. I’m talking about just the core insurance premium. Our CAGR for five years is 43%. The new insurance score premium for the quarter is up 21% year on year and we don’t feel very happy about that. However, if you exclude savings now for the last nine quarters we have been between 35 to 45%. And yes this is lower because it’s been pulled down by savings in this quarter and savings has come in below our expectation that we had at the beginning of the quarter also.
And the health business has surprisingly continued to grow. By now I would have expected it to slow down a little bit but now it’s been nine quarters and it’s been growing very very strongly and we have seen other parts of our business like motor two wheeler and travel returning to the above 30% growth which it wasn’t for some time. We continue to improve our customer onboarding and claim support in the insurance area and our CSAT is now consistent at above 90%. To be clear it’s actually 92.1%. But we are saying just 90% right now because we are revalidating that 92% because it just has gone up quite a bit.
And so we’re doing some more assessments around it. Our consolidated operating revenue grew at 38% to 1508 crores for the quarter. The core insurance revenue is up 46% year on year and the core credit revenue is down 21%. This brings our total operating revenue to just shy of 5000 crores. It’s 4977 crores for the year which is 45% up. I just want to take one second to remind people the year we went public this 4977 at that point was about 890 crores. The company is about six times larger in the last four years or so from 21 to 25.
And just to kind of keep that in mind, what we used to do in the whole year we’re now doing in every two months. Our trail revenue is now at 817 crores from 577 crores last year. In the same quarter 42% growth. This is at an ARR of 817 crores. And this is a key driver of long term profit growth as we’ve always said. And the delta between four consecutive quarters has consistently been increasing and that this will keep. This will keep going up and I think we have that number in our presentation. You can see how it’s been going up.
Our credit revenue for the quarter is 115 crores. We also had a management change during the quarter and that is why you are seeing Santosh here and disbursal is at 2,368 crores for the core online business do appreciate beyond. Beyond 115 crores there’s another 55 crores of revenue which is coming from essentially a POSP type business. In the credit side which is more focused on the secured side. We continue to strengthen our leadership in new initiatives which have been doing really well with a growth of 50% year on year and an adjusted EBITDA margin moving from minus 10% to minus 6% within the year.
And there is now a 4% positive contribution. PB Partners, our agent platform is now standing head and shoulders above any of the competitors and continues to lead the market in both scale and efficiency. We have moved the business increasingly towards smaller and higher quality advisors. We’re working a lot on that and it’s showing a very decided move in that direction and consistently so. We have the most diversified business across the various lines of business and we are now present pretty much everywhere. 99 of pin codes. We have a presence in our UAE. Insurance premium has grown 76% year on year.
And there is a bit of a positive surprise there. That business has both turned profitable and I feel confident it’s turned profitable kind of forever because you know, you, you usually can’t react to one month or two months but now it’s kind of steadily moving in that direction and I don’t think it’ll ever go back into the red again. And that’s a very interesting phase when a B2C business goes from because that means it’s kind of started making enough revenue to cover its fixed costs. And from there onwards life should be a lot better. Our Consolidated PAT for PB Fintech grew from 64 crores to 353 crores which is quite interesting but again it was quite anticipated as well.
And our margins have moved from 2% to 5% in full year. For the, for the full year our closing cash balance was 5,400 crores. And I think we’ve spoken about various things and you can see how the growth has been. There’s a CAGR of 52% for the last four years from 22, three years for 22 to 25. And the PAT margin has moved from minus 58% to 7%. But once more, while these numbers sound very good, minus 58 to 7% and they are, they were pretty much as planned. The only thing I would say which we think we should start to deserve some credit for this is a management that is delivering as per its plan or as per.
And that’s, that’s quite hard to do over a multi year period. So now you’ve seen about three, four years of us saying this is what will happen, this is what will happen and actually go ahead and do that. But with that I’ll open up the questions. Thank you very much.
Questions and Answers:
operator
Thank you Yashish. We’ll take a minute for questions together. Please raise your hand and wait to be unmuted. And we’ll take the question. We’ll take the first question from Sachin Dixit, JM Financial. Sachin, please unmute yourself.
Sachin Dixit
Hey. Hi Rasleen. Hey. I hope you can hear me now.
operator
Yes, very well.
Sachin Dixit
Yeah. Hi. Congrats Yashish and team on a decent set of results. My first question is with regards to the contribution margin expansion. Obviously, obviously you have guided towards it. So credits to you to have delivered on that. The jump was Quite sharp, right? QoQ 5 percentage points. Obviously we could understand some of the drivers. What I needed you to do probably is if we can break down those drivers maybe between, let’s say how Renewals, how much of the impact would have come from there roughly? Or maybe the change in new business premium with savings being lower health continuing to sustain the growth.
So if you can break that 5 percentage points jump between different segments, that will be helpful.
Yashish Dahiya
See if you think about it, we have margins coming from three, four different angles, right? And if you look at our business, we try to break it down and I’m not talking about just last quarter, but if you look at our business in general, there is not much change in take rates of any one business line. We have broadly three or four kinds of businesses. One is our core fresh health business. Second is our core health renewals business. So just kind of keep these two in two buckets or let’s even call it all renewals business, right? And of course the fresh health business comes and we are, you know, getting, getting sharper and sharper at defining.
This comes at a negative margin. It’s a negative margin of whatever, 15, 20% and the renewals business comes at a fairly high profitable, you know, clip. On the other hand, our overall, you know, if you think about our overall core business that operates broadly, if you leave out renewals and if you leave out fresh health, that operates at broadly a 20% kind of margin. So these are the two areas and you have Pesa Bazaar which is doing its thing and the new initiatives are largely at zero to a few percentage points margin. So a lot of things depend on how these move.
Now the structural shift is that renewals keep growing on a consistent basis and as they keep growing, your margins somewhat keep expanding. However, the core business, the core online business without renewals and without fresh health is not without profits. That also has a 20% margin and that also as it keeps growing, also keeps driving profits up. So if you ask me, about half and half is driven by the, of the profits is and the margins are driven by these two core online business and your, and that includes as well as well as your renewals growth.
Now the margin depleting part is actually your fresh health. And look, we, we struggle to explain this in, in many ways whenever fresh health grows that’s a, that’s a cause of celebration, not a cause of worry, but it will dampen your profitability and it will dampen it quite sharply. So a lot of the things have to do with those mixes. Now we have also we are at a stage where for the last three, four quarters we have been somewhat investing with an expectation of growth on all business fronts. And today if you think about it, maybe on the savings business, Front we have invested but we haven’t reached the rewards of that in the last one or two quarters.
And we’re thinking hard about it. We’re not at a stage where we think we will not have growth. We’re certainly not. And it is just one quarter. And you don’t, you know, make a strategy basis one quarter. But we are certainly thinking about diversification of products and figuring out how we do better in an ongoing basis in that area. So I think those are the pieces that are driving it. We haven’t got specific to.
Sarbvir Singh
Yeah, so I think Sachin, apart from what Yashish explained sequentially, I think your question perhaps was about the sequential improvement in the margin. That is because we were been investing in the call center side for in Q2 and Q3 especially and that investment obviously came down in Q4 because we, you know, we maintained the scale of our call center. So that is the other reason why the margin has expanded, you know, because now the growth in call center cost was lower this quarter as compared to the first three quarters.
Sachin Dixit
Got it, got it. Thanks so much.
Sarbvir Singh
Encourage you to look at it on a full year basis because you know, these things move up and down depending on what one is doing in any one given quarter.
Yashish Dahiya
Our business is, I agree a full year is a great way, but it’s always the 12 month rolling is a beautiful way of looking at our business because that takes away any form of seasonality and that’s why we specifically give that breakup of, you know, just look at it on a 12 month rolling at every given point.
Sachin Dixit
Right. Just a quick follow up on this one. Like earlier you guys used to mention in your presentation that renewal is 85 contribution margin this quarter. We noticed like you have changed the language to being 80 plus contribution margin. Any particular reason for that?
Yashish Dahiya
Yeah, we are also getting, you know, look there, there is, there is a science to it and of course we, you know, there’s a lot of allocation of costs. Right. So and I’ll explain what that means. Initially what we were looking at was the cost of doing the renewal in terms of payment, gateway costs, our calling costs in creating that sale. So because if you look at our cost base, there is marketing cost, there is sales cost, there is a call center cost and the sales cost has got a loading of management, etc. Right.
However there are costs beyond that also there’s customer service cost, there is claims management cost and we’ve been investing in those very heavily over the last two, three years. So some of those costs now there is no difference between the claims cost on a fresh business and renewals business. And if you actually get smart about it, actually the renewals come more in the renewals business than in the fresh business. So sorry, the claims support comes a little more. So we’re just getting smarter and smarter around these allocations. And I think at this point what I would say is it’s somewhere between 77 to 80%.
That is where we are. Of course some streams like life might be at 93 but overall it comes around at that point. So you know, as we learn more, we communicate more, but it’s just getting smarter around the allocations and little more what you call ABC kind of allocation.
Sachin Dixit
Fair enough. Really helpful.
Yashish Dahiya
And what we are doing now, Sachin, what we are doing internally, just to explain internally we are moving all our businesses to a fresh and renewals P and L kind of review earlier we did not do it to that extent because you know, of course that has an implication because the moment you get to that then the internal people, you know, force these allocations a lot sharper. And that’s what we’re bringing out in the outside world as well.
Sachin Dixit
Makes sense. My second question is on the OCF side. While we noted that the company turned OCF positive last year, last fiscal year, this year we seem to have reverted back to being negative with receivables being a major factor. Will be great to have some light on that as well.
Yashish Dahiya
So receivables have got multiple things but one of the big shifts that’s going to drive over the next few years and we should all keep that in mind is going to be the one by N which essentially means that, you know, while the business is happening there is a shift in how the, how the money is being collected. And that is because of the one by and accounting of the insurers. So this is something that will play out over a couple of years time. Yeah, especially especially for the first 12 months.
Sarbvir Singh
Yeah. So there’s one by N& the second thing is that in health we are selling a lot more plans on monthly mode. Till last year our business was largely on annual mode. Now we are selling a significant amount of our business on monthly mode. And that also obviously, as you can imagine, the, you know, the collection happens over a period of time. It’ll take about another 2, 3/4 for this to kind of normalize.
Yashish Dahiya
One one last thing I wanted to act Add while our Q4 call center cost, we did not grow it. But also in, you know, our annual the way we do most of our accounting we have some volume based targets and some volume based, you know, incentive targets, etc. We don’t account for them till they are hit. And so what that implies is a lot of them get backloaded towards the Q4. So you see some benefit coming from that also every year and depends. This year, to be brutally honest, we missed some of our targets in the savings thing and actually our revenue from savings would have been a lot higher than it was.
So that’s fine. You miss some, you get some. That’s the way life is here.
Sachin Dixit
Got it. Thanks so much.
Yashish Dahiya
You can’t predict growth too sharply.
Sachin Dixit
Great, great, great year and all the best. Thanks for the responses.
Yashish Dahiya
Yeah.
operator
Thanks you, Sachin. We’ll take the next question from Madhukur Lada from Nuama Madhukur. Please unmute yourself.
Madhukar Ladha
Hi. Morning. So a couple of questions from my side. We are seeing a lot of changes in the health segment with IDI saying one by n the whole method of reporting. And also there’s a lot of pressure and talks on deferring commission payouts for long term health. So I wanted to understand from your viewpoint how is that played out in those negotiations with insurance companies. Second, given the pressure, I was also, you know, hearing that there is probably going to be some reduction on renewal commissions as well. So, so that’s the, some comment even on that.
If, if there are any talks going on and if we felt anything on that side. And lastly, just on the expense structures, if you can just spell out how the expenses have been bifurcated, the employee advertising and the other expenses between direct indirect and existing and new initiatives for, for sort of our modeling purpose going forward. Yeah, these would be my questions. Thanks.
Yashish Dahiya
No, thank you very much for that question. I think first of all, we should not miss the wood for the trees. Right. I think health insurance and health, it’s a very simple area where the customer essentially pays a certain amount of money and he basically expects his claims to be settled. Policy with other phenomenal position there because we have done very good disclosure assessment at the beginning and it’s always comparative. Right. I’m not saying we are perfect, but we are much better than many of the channels in terms of disclosure assessment. And what that implies is our claims book is standing strong.
And what that means is the insurers are not getting surprises as much as they may be getting in some other channels. And thus we feel lesser pressure than maybe the market feels on both the claim settlement side as well as some of our payouts etc. Right. And I think one of the things is because over the last three years we have worked so hard on ensuring customers get their claims. Some of our own renewal claims ratios will also start to move upwards. Right, because obviously we were not able to put as much effort in that and we will be getting in the same range or maybe just lower, a tad lower than other channels because we are putting in that effort.
But that is coming at a much higher claim settlement than many other areas. And that is what is, in my opinion, allowing us to attract more and more customers along with our better sales training and better advertising, etc. So no, we are at this point not seeing. I’ll kind of defer that to Sarabh to kind of answer on those two, but that’s how I think about it.
Sarbvir Singh
No, I think Yashish covered most of the points. The only thing I would say which is probably not a surprise to you all is that clearly now, you know, health insurers, like any other general insurer, have focused on the combined operating ratio. And I think on that basis, our channel, if I were to summarize what Yashi said, our channel comes out on a fairly attractive end of the spectrum. And because of that, I think the pressures obviously will always be there for everyone, but I think those pressures are much more manageable and at least so far, we don’t see a change in our economic structure.
And the second thing I’ll just add is that we are actively working on this subject. So it’s not like we don’t understand what these issues are, how to make sure that long term renewal claim ratios are controlled, what else can we do, how do we segment the customer base better, etc. So we are working with our partners on these issues. So I feel quite confident that this whole economic model will continue for us.
Yashish Dahiya
I think the conversations have got very evolved around how do you maintain claims ratios into the future, whether that means add on products, whether that means lighter, higher, you know, cross sell, whether that means, you know, you work with different cohorts differently. And as Sarah said, we’re taking on a lot of effort and responsibility in that area. So we are clearly maturing. We are not where we were three years ago in terms of our processes for both fresh and renewal. Now you asked about the different costs and the contribution margins, etc. See our, if I look at last year, our core, this whole year, our core margin is about 43%.
That is very similar for both insurance and credit. It’s not, it’s not very dissimilar and it has stayed the same for both for a very long time. Now new initiatives of course have a very different. They are, they were at, you know, the beginning of the year they were at minus 1%. Then they kind of moved up a little bit. Last quarter they were at 4% but overall they were at a 2% positive. So I think that is the way it is. And if you look at the core business, the EBITDA is about 14% positive and it’s a 16% positive for the year.
It started at 14, ended at 22% but again for the whole year it’s about 16%. And again at the EBITDA level, if you look at new initiatives, we are at about minus 9%. Started at minus 12, ended at minus 6. But I don’t think you should look at either minus 12 or minus 6. You should look at it always on a, you know, rolling basis. Right now the 12 month rolling is minus 9%. So right now the, right now the 12 month rolling situation is core is at 16% and new is at minus 9%. But both are inching upwards clearly.
And I think that is what is important.
Alok Bansal
You know, just on your insurance company. And now they look at policy as a channel. See for insurance companies there three basic cost and a very, very high level in health claims, which is roughly 70% of the cost decision, which is roughly 20% of the cost and offense, which is 10% of the cost and a blended level as an industry. Now 20% is obviously a big cost, but it has to be seen in the context of 80%. Then any company works with punishment because of a very deep tech integrations. And all the OPEX requirements are very low relative to any other channel.
Similarly, the claims on a blended book continues to be lower because we provide a lot more new customers to them. So overall this is the most profitable and fastest growing channel for all of these insurance companies. And the way our discussions happen with them in terms of new product introductions, all the innovation that we can do for the customer, the claim submission part, everything continues to be very, very strong. So you know, practically short term, don’t see any specific issue on these.
Yashish Dahiya
Yeah, very simple data point there is the industry I believe is at 23%. The retail health industry is at 23% fresh. 77% renewals. Our fresh is still bigger than our renewals. So you know, I think that is a very clear indicator. And, and it’s. If you really look at the claims ratios of the entire industry. Forget us. If you look at the claims ratios of the entire industry, the fresh claims ratios are about 1/3 to 1/4 of where the future years lie. So we are obviously important in the profitability of the industry and driving new volume to the insurers, which is what the game is, I guess.
Madhukar Ladha
Understood. No, this is helpful. Just a follow up now given that our base has increased significantly and our market share also in this health fresh premium is, is pretty high. Now I know there’s no sort of, it’s a difficult, you know, question to answer, but if you were to talk about sort of growth going into FY26 and 27, maybe in the near term, then how should we sort of think about that? Any changes over there?
Yashish Dahiya
See, if I look at our last five years now, as I said, our core business has been growing at a CAGR of 43% which is ahead of my expectations. Honestly. You know, I thought we would be here from a revenue perspective. If asked me in 21, I thought we would be here maybe six months to 12 months later because I always think the, the revenue kegr should be about 30% or so. And that’s what we’ve always thought from a long term perspective, we believe 30% is the right kegr for us to sort of plan for.
However we are like, I’m honestly being surprised by health, but at the same time, let me kind of put it to you another way. We have a term business, we have a health business. And I think term as an industry is between is about one third of health. And for us, our fresh businesses in term and health are very comparable still. Of course, health is bigger, but they’re still comparable. So I think within our own setup, health has at least a doubling to go to catch up with term. And if you, I shouldn’t say this, but if you brutally ask me that, look, which of your teams do you think is actually sharper between term and health? I actually feel looking at the last three to four years, our term team was actually sharper.
And that’s a very, by the way, our health team is catching up very, very quickly and is becoming better and better. But we have a way to go and I think in health we have a natural right to win, which actually in term is far harder because in termination you can’t differentiate a huge amount in terms of claims, you know, settlement. But in health you can and we are doing that. So I think in, in health our, you know, right to win from a distribution standpoint is, is pretty, pretty clear. You know, actually I shouldn’t say that I, I almost asked my team, but why are there other channels?
Alok Bansal
So see one more thing here. We always maintain that our growth rates. Will usually be about 2 to 3x. Of the industry growth rate. Generally, that’s what we maintain. But in health we seem to be knowing it up to 4 to 5x of the industry growth rate on a overall basis for new business acquisition. Now see, the real B for P has been that the customers come to us right now, customers come to us when they see any incidents happening in their circle, whether it’s friends, colleagues, family. And the reality is for a lot of young people, the incidence of hospitalization is much, much, much higher. And a lot of people are coming to ask for these products now and they actually feel that this actually serves a very big need at that stage of their life when they’re, you know, 30, 35, 40 sort of age group.
So yes, health has done much, much, much better compared to other channels. And I was not, I mean we always expected two to three years, but this is short of growing 4 to 5x.
Yashish Dahiya
Yeah. If you’re just looking for some kind of broad direction on various things. See our health continues to do well and we’re feeling confident. In fact, I feel confident this will be so for the year or for a large part of the year at least, I think our savings business at this point is very challenged. We are struggling to grow and we’re thinking very hard on that. How do we grow? Of course as a pensions area, there is a child insurance area, we are working hard at it. I think the good news is a lot of our, if you look at the last five years, our motor two wheeler growth was a bit subdued, various reasons.
That is solidly back. So we are feeling confident. And if you really look at Policy Bazaar over the last, I would say even 10 years, it’s always three. Four of our businesses are firing. One or two are always struggling. That is the way life has been. But those 3, 4 do enough to kind of keep us above the 30% on a regular basis. And I think that’s what you should think about when you, when you kind of look at it on a. And then the good news is now we are also confident that the credit side is going to grow.
We are seeing good month on month growth. So we feel very confident that, you know, we should have a good future in the credit side.
Madhukar Ladha
Thank you and all the best.
Yashish Dahiya
Thank you.
operator
Thank you, Madhu. We’ll take the next question from Dipanjan Ghosh, City Dependjan. Please unmute yourself.
Dipanjan Ghosh
Hi. Hi. Good morning. Hope I’m audible. Just two small questions from my side. One, you know, obviously in the answer to your previous participants question, you mentioned that savings is challenged but you know, if you can give us some color on the savings contribution either to premium or top line or you know, how should one think of it for FY25 or fourth quarter that would give us some color on the trajectory that we should kind of forecast or think of going into the next year. Second, you have kind of given some slides on PV money and it looks quite encouraging.
So just wanted to understand your overall strategy from the next three to four year perspective on the PB Money side and how you can leverage that to maybe further milk the customer or achieve a better cross sell sort of ratio out there.
Yashish Dahiya
So I think Sarbil will answer the savings question and then we’ll move over to Santosh for the PB Money question.
Sarbvir Singh
So I think on the savings side if you see the industry also there was a sharp slowdown, you know, in the industry especially in February and March with negative growth on the retail side. Our business to some extent reflects that in Q4 and we think that based on what we can see that it will take a few quarters for this to move up or move away from where we are. So we are planning that probably the first two quarters of the new financial year will also be quite slow on savings. As Yasheesh mentioned, we are focused on building new segments like pension, we are focused on bringing back products that have done well for us in these kind of market conditions like our capital guarantee solution etc.
But I think it will take some time but X of savings as we, you know, showed you, we stay in that 35 to 40% kind of corridor and I think that should continue for this for the rest of or for the new financial year as well.
Unidentified Speaker
Satosh on the PV money side, see there are two reasons for why PV money is I think critical for a business like Petit. One, it allows deeper understanding of customers risk because of course over and above bureau you start getting data about the income of the customer and you can do shop underwriting and we’ve rapidly acquired customers on the baby money side that allows of course for you know, more curated products and better risk. The other bit to this is that I think savings is a large area. We do a lot of savings through insurance.
On the policy side there is an opportunity to do savings on the Pesa Bazaar side through bonds, fixed deposits, mutual funds. So that’s that opportunity exists and I think PV money will be the backbone to use the data to advise customers on how to manage money better and that should be a rapid area of growth for us this year.
Dipanjan Ghosh
Got it. Just one small follow. I mean what would be the monetization strategy? I mean it would be more product cross sell or you know, driving higher engagement and then trying to cross sell your existing product book. I mean what would be the monetization strategy?
Unidentified Speaker
So monetization largely will come from selling this year, largely bonds and fixed deposits. And of course it also helps indirectly in monetization because we have a better understanding of a customer’s credit and hence it will lead to growth in some of our, you know, unsecured areas, lending areas. So that is a, I would stay a shadow way of monetization. But of course direct monetization on bonds and deposits will, will exist.
Dipanjan Ghosh
Thanks. Just one final question before I kind of drop the mic. Any plans to go into broking or sort of entities?
Yashish Dahiya
We are. Okay, so not in the way you are thinking about it. But you know what we, what we just said, bonds, fixed deposits, these kind of things, pension products, nps. Not in the traditional trading sense. That is not how we are thinking about it. But yes, from a licensing perspective there may be some context to that. There’s no decision there. But yeah, there are conversations internally if you just you know, fair transparency. Yeah, they’re conversations. But again not from a trading perspective. It is, it is much more from a long term investment, long term savings perspective.
Dipanjan Ghosh
Got it. Thank you and all the best.
Yashish Dahiya
Thank you.
operator
Thank you. Deepanjan. We’ll take the next question from Shreya Shivani Clsa Shreya, please unmute yourself.
Shreya Shivani
Yeah. Hi, can you hear me?
operator
Yes.
Shreya Shivani
Yeah, good morning and congratulations on a good set of numbers. Thank you for sharing your views on what’s happening in the savings segment and health insurance segment. I wanted to get back to the protection segment. So the industry as such has been seeing very strong growth for the past two years straight. Now we the monthly data, the monthly summer short data indicates there was some moderation, not slow down but after two very strong years there was some moderation in growth in March on the protection summer front. So how, how what is our understanding of how things are moving? Is the, I’m not talking about you being slower but is the industry sort of moderating after two very strong years? That’s my first question.
Second, on your healthcare business, if you can give us what has been the updates we’ve seen the disclosures on the exchanges. How, how has our thought process evolved and third, I’m not sure if you’ve given your breakup of premium across. Okay, you’ve given those numbers but if you’ve given POSP and corporate. I know Dubai is 76% growth but. Yeah, that will be my last question. Thank you.
Yashish Dahiya
Why don’t you answer that?
Sarbvir Singh
So I think Shreya, the sum assured that you are reading in the industry data is actually not directly reflective of term insurance in the sense that a lot of the sum assured growth for the industry has come from attaching riders on ulips to make ulips more attractive. As you know, last couple of years have been about that. So actually what you are seeing, the reduction in some assured growth that you’re seeing in Q4 is actually a reduction in the growth of ULEIP rather than the growth of term. Term has largely both last two years in our opinion has been growing or not opinion based on the numbers that we know has been growing in a very similar ish, I would say 12 to 15% kind of range only.
So from a protection perspective, you know we are obviously growing multiples of that growth rate but we do and we are through this. I’m appealing to the industry also that all of us need to focus on driving demand for protection and growing the term market.
Yashish Dahiya
On the breakup you had asked for, you can make a note. So our core business is 16,144 crores for the year. P is about 5,000, corporate is about thousand. Dubai is a little more than 1100.
Shreya Shivani
Okay, thank you.
Yashish Dahiya
And, and also I’m sure this question will come next on the core. New is new and renewal continue to be at about 50, 50. They are about half an hour.
Shreya Shivani
Got it, got it. Yeah. And, and the healthcare, your thought process Now, etc,
Yashish Dahiya
What I would request on, you know, healthcare, it’s a very long drawn project. It will take a long time. Okay. And I would give it enough space. The, the strategy will not change on a daily basis. The strategy is very, very clear. As I said. I think these are just nomenclatures. You know, who’s an insurance company, who’s a broker, who’s a hospital. Eventually if we think from a consumer’s perspective, he’s saying a very simple thing. Yeah, give me ten thousand, I’m giving you ten thousand rupees. Whatever happens to me, take care of it.
That’s what the customer is saying. The customer has a lot of pain in that process. Right. See I always say when you think long term, think simple. And the customer has a lot of pain in that, in that, in that whole sequence. And we’re trying to solve that sequence with all our efforts. So Policy Bazaar is doing some work at the disclosure front and the hospitals will do some good work at aligning with the consumer outcomes. And in terms of, yeah, we’ve had the, we’ve had the round, we’ve had the money come in. We’ve acquired one asset we are looking at acquired in a sense we paid for it, we’ve taken it over and we are looking to do the same with maybe three, four other assets.
And I think what you should see is we’ll probably buy, if you look at the five hospitals that we’re looking at in ncr, we’ll probably buy two or three operating ones and two or three more like, you know, shells which we are going to convert rapidly into operating hospitals will be a combination of existing revenue and profits and you know, new from scratch builds. We’ve started bringing on doctors, we’ve started bringing on people who know how to build hospitals. But even today in our team there is more tech people and product people than healthcare people.
And that is also a reflection of some of the things we are going to do in terms of wellness, in terms of basically what all you think of yourself as a customer, you paid 10,000 rupees. Now you also said I’ll pay 20,000 rupees. Take care of everything, take care of OPD, take care of every damn thing. Don’t ask me for a bill, don’t ask me for a claim. Just if something goes wrong, just take care of it. And I should have no pain whatsoever in this, in this process, right? Of course the physical pain will be there but shouldn’t have financial pain in this process.
That’s what you’re trying to solve at a fundamental this is a big project and that’s why I said don’t expect sort of any rapid changes. Of course we are reviewing everything on a weekly basis but don’t expect any material changes on in a very rapid pattern.
Shreya Shivani
Got it. Thank you so much. This is very useful and all the best.
Yashish Dahiya
Thank you.
operator
Thank you Shreya. We’ll take the next question from Manas Agrawal Bonstein. Manas, please unmute yourself.
Manas Agrawal
Hi Ashish. Thanks for the candid answers. I actually wanted to ask two things on a medium term, long term strategy perspective. One is you’re talking about propping up savings in various ways. One clear way to do it is par and non par where you don’t operate and a large market in terms of tam. So one is thoughts on that. The second is slightly more philosophical on AI. It can affect both customer servicing and customer acquisition. Acquisition side we’ve seen Google say search is changing. SEO will change as a function of that how you guys are thinking about it.
And on the servicing side, we’ve started seeing some startups operate collections for banks using voice bots, replacing call center operations. So is that a threat? Is that an opportunity? Wanted thoughts on that?
Yashish Dahiya
Sure. So I will request Sarabi to answer on the savings aspect. And of course we have a view on this and I think our view, I’m quoting somebody else, I think our view is very aligned to Mr. Sandeep Bakshi’s view sell good products and we have a view on that. And, and I have a huge amount of respect for the man and sorry for bringing his name into it, but I think our, when he changes his view, we’ll also probably change our view.
But I would say Sarabh, if you want to answer that more specifically and also the AI question because I know we’ve been having debates. So we’re on the same page on this here.
Sarbvir Singh
Yeah. So I think the best way to think of it is that every channel and every distribution, you know, platform has its own set of, I would say, characteristics. Our characteristic is that we get customers who come, these are informed customers in general and they’re looking, they understand the difference between products and they’re looking for transparent comparison. So actually if you see slide 41 in our deck, we’ve actually shown that the ulips that we are selling today are better than most mutual funds that are sold in the market. If you are willing to stay for the 10 years or the 20 years that the ULIP is meant to be.
So what? The products that we are selling today actually are extremely good products from a long term saving perspective, which is the role, I think, of these products. And we believe that as the middle class grows, consumers will need to save for their goals. Right. The goals could be children’s education, general retirement, their own, you know, personal sort of pleasures that they want to save for. And of course finally there’s a whole pension area where after you stop earning, you need to have enough money to live. So I think if you think about it, we are more focused on the goals rather than just the products.
And we believe that we have to sell efficient products because if we don’t sell efficient products then the customer who comes to us will be, will see through the issue and will be disappointed and will not buy more products from us. So at this point we are very clear. I don’t want to go into par, non par, etc. I think the main issue is products that make sense. And as long as the Products make sense, we continue to offer them. Right now, obviously we are largely a ULIP platform. We do sell non par because in our capital guarantee solution, one part is a non par and the other part is a ulip.
So I think that’s how that will continue and we feel quite confident. See couple of months here and there, I mean, you know, in the first half of last year we grew at over 100% in savings. So I think we should not forget. I mean a few months here and there is par for the course and you know, we’ll, our team is creative enough and we will figure it out again.
Yashish Dahiya
Absolutely.
Sarbvir Singh
As far as AI is concerned, you know, I think we are right at the forefront of all these use cases that you spoke about. We do a lot of our collections through AI bots, agents, etc. And we continue to, you know, I would say sort of stretch the boundary on this. We still believe that for sales it is especially in life and in health insurance, it is important to have a person explain the whole product in a very systematic and logical manner. Because you also want to elicit disclosure. Because if you don’t elicit disclosure, I think you will go down the wrong path.
And I think that’s what we continue. But I can assure you that we have enough experiments going on in every area to look at what is the cutting edge, what are people doing and how can we leverage that. And we firmly believe that in AI, what we call man in the middle is the right format where AI helps to improve the productivity and effectiveness of the person. And that’s what we’ve done. On the risk side, I mean, I won’t go into all of that, but if you see our last couple of years, I think a lot of work has been done which is leveraging the latest and greatest AI technology.
Yashish Dahiya
And just to kind of add to what Sarbir said already we have got what you call AI agents, if you would, who are doing initial warm up, initial calling, kind of across the group. That’s starting to happen. And when you think about AI, you got to think of it from what are we doing to protect the supplier, what are we doing for ourselves, what are we doing for the consumer? If you look at these three kind of buckets in a triangle, at least on a supplier’s perspective, risk is a very big area that we are working on.
We are trying to understand risk. And we are also, when you talk about ourselves, a big amount of the effort is both in terms of sales efficiency, reducing the non talk time because there’s a huge amount of time and at the same time empowering the agent with a lot of information which is coming in terms of prompts or supports. That is what largely is being worked upon.
Unidentified Speaker
And just to add, our technology teams are now using a lot of AI to do their jobs. I think technology costs can be saved in the future.
Manas Agrawal
Sure. Understood. Thank you.
operator
Thank you Manas. We’ll take the next question from Srinath, Belvedere Capital. Srinath, please unmute yourself. We’ll take the next question from Rahul Jain, Dollar Capital. Rahul, please unmute yourself.
Rahul Jain
Hello. Hope I’m audible. Yeah, you are. Yeah, yeah. Most of my question has been answered just two questions. Firstly, if you could share your thoughts on the increased receivable for this year. So any color on it and going forward basis, what is the sustainable level of investment that can go into. Secondly, which is just an extension of the previous question around AI. So what kind of headcount optimization? Purely from a call center perspective one should see is it safer to assume that irrespective of the scale of the business, the headcount growth would be much at a lesser clip than what has been in the last few year growth? On that part, those, those are my two questions.
Thank you. I think it’ll take. I’ll just answer your last question. I think things will happen, it’ll take time. Which quarter? Nobody can say. But if you look at it on a year on year basis, if I look three years out, a lot of things would have happened and I see no reason why that wouldn’t happen. The receivables is largely a one by n thing which we explained will have some impact for the next, you know, it’s already started having some impact and now it will have some impact for maybe a few more quarters and then some limited impact which will be limited to the multi year policies and all that stuff.
So this is a cycle that will play out. We, we’re not, we’re not too fast about it in the sense. Of course we are. We would wish it wasn’t the case but. But it is the case and we have to kind of live with that.
Alok Bansal
Also. Rahul, when it comes to the deep depth, as you mentioned, there’s an efficiency pattern. There is a risk part but within the efficiency as a company, anything that we do can impact three type of impacts, right? Either we can work on improving the revenue or becoming efficient on the cost or better customer service. The biggest impact of deep tech for everyone including us is on the customer service because that can be automated to a large extent. As we look for next one to three years, this include renewals, claim support, all sort of endorsements, all sort of service elements.
Sales specifically in insurance is a very involved process. There are some parts of it which can be automated over time but broadly that will remain, you know, very, very close physical contact with the customer all the time. If you look at the cost of sales operations as a total NPV revenue for us it is roughly somewhere around 20, 25%. So it’s not a very big bother yet. We’ll do whatever it takes in terms of becoming more efficient. But I think the bigger impact will come on the service side before it comes on sales side.
Yashish Dahiya
So we all have our own opinions and like you know my opinion is over a three year period you will see a lot of impact in sales as well. But my other opinion is I think consumer brands are very important in this and so AI okay. So my view is AI is commodity and basically consumer backed brands are going to be the differentiator because the human mind is still limited and of course we’ll have some impacts coming from this. But you know, as you, as you hear all of us have somewhat different views and that’s the way to carry on.
operator
Thank you Rahul. We’ll take the next question from Nadesh Jain, investor. Nadesh, please unmute yourself.
Nidhesh Jain
Hi. Hi. Thanks for the opportunity. My question is on credit business we have done extremely well on the insurance side on the credit business with the change in management team how are we thinking from this, on this business from a longer term perspective and how are we trying to build a right to win in this business over medium to long term?
Unidentified Speaker
Please see on the credit side I think last year was a year of I would say moderation based on what happened in industry. See as we now scale back up there are three aspects around this. One that we will go deeper in the secured area. Secured we started in the last five months and it was, it built up very rapidly. This year we will expand the secured area and we will do home loans, loan against property, loan against cars. So these are the areas we will expand in. We will also start savings area to deepen our understanding about a consumer and that also allows for better understanding of our customers risk and means sharper underwriting which will be able, which will then help in scaling our unsecured lending.
And the third area is collections. Collections is something that we will focus on and collections deep collections capability especially tech led will help us in again scale our unsecured side because that is you know as in we work with A lot of new NBFCs and FinTechs that capability is required so that should also help us expand our supply side on the unsecured lending.
Nidhesh Jain
Thanks Santosh. On collections will be we investing in physical collections also or largely right now.
Unidentified Speaker
Tech led and Delhi based collections. A lot of AI is going to get used in that area. We are not thinking of field on Peton street at the moment but again as we get deeper into it, you know that may change.
Yashish Dahiya
You know if you kind of think about Satosh from a last, you know, 10 years perspective, one of the things we’ve done is built a huge amount of risk capability in the policy bazaar franchise. Specifically on the life insurance side. And you know outside in it may or may not be visible but you know within the industry it’s quite respected and I think that allows our partners and our channel to be a little more profitable and a little more long lasting than many others I think. I believe that’s one of the things that Santosh also brings to this area.
And so she’s quite serious about thinking around risk and making sure you know that the right risk is picked up by the right organizations that they have decided to do. And one of the things in that is you understand risk better when you’re yourself collecting as well. So that’s one of the reasons we want to move into that area. And especially some of the early fintechs may not have a lot of collection capability and eventually in this business if your money is not being collected then there is an issue. Sure. And we’ve also been experimenting with FLDG in the past I think last few quarters.
Is there any thought process on that? See when we started FLDG we started from you know, giving some kind of guarantee but we did not really get into how we are differentiating on risk. I think that is what we are starting to do now. I don’t know Santos, if you want to answer specifically.
Unidentified Speaker
No, absolutely. I think fldg I think our confidence on doing some of these FLDG partnerships will go up because we are, we will unsettling. I think we are starting to understand risk better and that means responsible lending and wherever we need to have skin in the game to really go deep in this area. So there we are comfortable in doing these arrangements and I think that should be the right way of scaling our unsecured business.
Yashish Dahiya
And just to kind of explain our accounting policy on that because that can be a cause of worry. Our accounting policy is very clear. Whatever FLDG we take on, we write it off on day one itself we provide for it. Sorry, not write off. It’s called provide. So we provide for it on day one itself and then you know, as and when we eventually, you know, come out of the woods we we kind of start considering it but we start with a zero base.
operator
Thank you Nitesh. We’ll take the next question from Neeraj Toshnava. Neeraj ubs. Neeraj, please unmute yourself. You. Hi Neeraj, please unmute yourself.
Neeraj Toshniwal
Can you hear me now?
operator
Yes, yes we can.
Neeraj Toshniwal
So my question is on, on the contribution margin. The expansion contribution margin is quite decent. So wanted to understand has there been any you know, reduction in incentive pay for for the POSP agents in this quarter and which is held increase in contribution margin? That is first question. Second question is on the cost. Employee cost has gone down. So is advertisement while other expenses have, you know, increased significantly. If you can throw some light over there that will be helpful. Yeah,
Yashish Dahiya
See Sarab can answer more specifically. I would just say please don’t look at anything quarter on quarter because we should just look at it on a 12 month rolling basis.
That will give you a much better picture. Otherwise, you know, sometimes you will see the impact of incentives from other places etc playing up. And that’s what I always said. But Sarbi, if you want to specifically answer that.
Sarbvir Singh
Yeah, I think Neeraj explained in the beginning of the call that we have been growing our call center capacity or our sales capacity over the year and in Q4 obviously we kept that flat. So you know, that is one of the reasons why our contribution margin, apart from you know, some extra money etc that you may get at the end of the year. So I think that is the main reason I would again encourage you to look at it on a rolling basis. As Yashish explained, as far as the POSP part is concerned, I understand there was some media article on the issue that you are referring to but the facts of the matter are that we have always been very consistent in offering a very attractive opportunity to POSP agents.
But the real trick is not in terms of trying to reduce the margin. The real thing is to work with smaller agents whose incomes are getting enhanced by working with PB partners. And I think that is the journey that we are on and that journey is getting better and better and because of which the overall mix will also improve and our contribution will improve. So it’s not really about reducing payouts, it’s about you know, optimizing payouts and the right set of agents to work with. And I think that’s really where this whole thing has come from.
Neeraj Toshniwal
Sure. So this is structural. This will continue in the coming quarters as well.
Yashish Dahiya
I’ll explain. D it. There is, there is some structural aspect to it, there is some quarter aspect to it. But when I, when we speak about the POSP business per se, there is an easy way of doing posp. There is a hard way of doing posp. The easy way of doing POSP is you work with large POSP people who are themselves in a way, POSPs and you get bulk volumes. Right. And that’s why, if you notice that the one way to check for it is how many employees do you have for every business done.
And you do require people to manage agents also, however tech driven you may be, etc. You do require people to recruit agents, manage them, etc. Right. And that ratio is quite telling. The second way is to actually get small, small, small, small agents and get them to do more business for you and more types of business for you. And that is hard. It actually is not something you can do just through remote control. You do need to, you know, you can only manage a certain person, can only manage a certain number of agents and those people also need to be trained hard and trained well to do it.
And we are very clear we are down that path. So we can’t answer for the whole industry. But you know, for us, we are, we, we only value that part. That’s the only thing we kind of look at now on, on the various things. Just look at it, you know, 12 month rolling and you should be fine. I don’t think you should see any material change from a 12 month rolling rolling perspective. Like of course, structural changes are there, as I said, renewals growing. See our health fresh, if I take a five year view, cannot keep growing at this rate, but our renewals can.
And so, you know, obviously the margins will come at some point. I’m saying five years. Yeah. Thank you.
Neeraj Toshniwal
Thanks.
operator
Thank you. Neeraj. We’ll take the next question from Sanket. Gouda Windows Park Sanket, please unmute yourself.
Sanketh Godha
Yeah, thank you for the opportunity. The way I understood it, just, just for a clarification, if you have sold a three year long term plan on health though the insurer is paying commission spreading over three years, you are recognizing three year commission upfront and that’s the reason why the receivable number has gone up. That’s, that’s the understanding, right?
Yashish Dahiya
Is that, that’s, that’s the understanding.
Sarbvir Singh
Yes.
Yashish Dahiya
Yeah, you’re right. Yeah.
Sanketh Godha
And, and just to follow up on that point out of the total health whatever we do how much portion would be contributed by long term?
Sarbvir Singh
I think we would not like to disclose that publicly.
Sanketh Godha
Okay, okay fine.
Yashish Dahiya
But that’s a pretty steady number. So. So it all I wanted to say was it was similar last year and it was a little higher than that. The multi year plans were a little higher than that two years ago. So it’s not. Our growth is not explained by that. That’s all I’m trying to explain. So you know, don’t get the wrong impression. But yeah, we don’t want to disclose that number.
Sanketh Godha
Okay, perfect. Perfect. And. And the second question was that the, the contribution margin of the new initiatives which improved. Is it fair to say that as you highlighted in the initial comment that UA UAE turned profitable and, and that contributed to the margins to improve or. Or biggest delta came from there or the posps. And, and the corporate segment also did relatively well.
Yashish Dahiya
See from profit perspective at this stage. I just want to be very specific at this stage UAE is quite not that material in the whole scheme of things. So. Right. UAE from a loss or profit perspective would probably explain 10% of the entire or maybe 20% at best of the entire piece. So I wouldn’t go there. Now it has the potential of. I would say if you take a 34 year view then it does have the potential of being a big determinant of profitability because that is actually like a core business. There’s nothing non core about the UAE business.
It is exactly what we do in Policy Bazaar. Our corporate business and our POSP business on the other hand are somewhat different. And what we are hoping is that in the next two years they get. And it’s again we don’t plan for these things but we believe they should come to somewhere around zero in the next two years. Years like from a breakeven perspective. And that’s a journey and it may happen one quarter but we are constantly on that journey slowly and I don’t think there’s any very quick aberration in that. Yes, UAE has surprised positively with its profitability but it’s not having a material impact on the overall piece yet.
Sanketh Godha
Okay, got it. And one data keeping question on the credit side. If you can break up that 7,652 crash crores and two 20,460 odd crores into new initiative disbursements and, and the core that would be useful. And lastly if you can spell out the adjusted EBITA margin for the credit business in the quarter.
Unidentified Speaker
See on the New initiatives. See, I think it was a scale up of the last five months. For the year roughly new initiatives contributed to 40% and Corus 60, 60%. That is for the year. For the quarter it will be roughly 70, 30. And see I think new initiatives is a largely pass through kind of business from a revenue perspective. So that is why you would see that though year on year the dispersals went up by about 38%, the revenue shrunk by about 14% and we don’t. That’s what is.
Yashish Dahiya
Just to be clear, our new initiatives in Pesa Bazaar is at a very, very early stage right now. And it is largely lumpy in the sense what I said right now. Easy posp, hard posp. Right now it is the easy posp. We want to be clear about it. Don’t assume we’ve got a hard posp done in Pesa Bazaar yet. We’re starting that journey now. The journey we started in Policy Bazaar maybe two years ago. Initially the first year we also had easy posp there. But after that the journey we took on two years ago and it’s been constant shift towards more and more granular agents.
That is a journey we’re just starting out right now. Right now it is almost zilch on on that front.
Sanketh Godha
Understood. And lastly, if you can spell out the adjusted EBITDA margin of the credit business.
Yashish Dahiya
Yeah. What is the adjusted ebitda margin? It’s 7%.
Sanketh Godha
Okay.
Yashish Dahiya
For the year.
Sanketh Godha
Okay, perfect. Thank you very much. That’s it for myself.
operator
Thank you. Samket. We’ll take the last question from Srinath from Belvedere Capital. Srinath, please unmute yourself.
Srinath
Hey guys, just wanted some qualitative feedback on persistency of the health renewal books. You know, if you can give some. Qualitative understanding as to how the older cohorts are doing and the newer courts are doing over a year on year. Basis or six month basis. Any qualitative feedback you can give on. Persistency of renewals, that’ll be great. Thank you.
Yashish Dahiya
So the qualitative answer is all is well. But Sarabheer will answer in a more specific manner.
Sarbvir Singh
Yeah, I think we are really proud that we are at all time highs. And we look at persistency in two ways. One is, I mean I think we look at it always on an NOP basis because that is the most important thing. The number of people who stay with us. The first year renewals we call R1, our R1 persistency is at all time highs. We have never been at this these levels and it’s largely structural because it’s driven by the nature of the products that we have been introducing. So over the last two years with our insurance partners, we’ve introduced products that have very high no claim bonus.
So every year your no claim bonus increases dramatically. So when you come for renewal, your comparison with the outside market becomes very different. Your current product looks very superior compared to anybody else because of the sum insured that you have. So our first year persistency has increased a lot and we are at all time highs. Our R2 plus, which is second year and beyond is very consistent. It has largely been very steady over the last few years. So overall, if you see our persistency is at all time highs both in terms of number of policies and even in terms of premium.
But I think the most important thing is the number of people who stay with us.
Srinath
Perfect. Thanks. Thanks a lot. Congratulations again guys. Great set of numbers.
Yashish Dahiya
Thank you very much. With that, we will close today’s session and thank you very much for attending and you know, look forward to interacting with some of you over the next few weeks. Thank you. Bye now.