At the end of Monday’s trading, PB Fintech had a market capitalization of $9.8 billion. The share price has crossed Rs 1,800 – closing 8% higher at 1,819.90 on the BSE on Monday – compared to around Rs 1,000 six months ago.
Its strong financial performance, with two-quarter net profit, steady revenue growth and expansion in the new insurance premium collection business, make the Gurugram-based company an attractive investment option.
Return on investment in new biz
In the June quarter, the company crossed the Rs 1,000 crore quarterly revenue mark and reported a net profit of Rs 60 crore. our losses in agent business and corporate business have started to decrease which works for us,” said the chief executive of Policybazaar Sarbvir Singh. The insurance market, which is focused on building online business directly to consumers all this year, now has a network of 200,000 agents, from 60,000 agents active.Singh said that while the premium payments are continuing to rise, the growth in fresh business builds a strong pipeline for the future.
The company reported an annual income level of Rs 559 crore for its renewal business, compared to Rs 418 crore last year.
The June quarter presentation showed that new insurance premiums increased by 78% year-on-year. Insurance collections from new lines of business have tripled over the past three years.
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Going offline
After Policybazaar became an insurance broker in 2021, it invested in building three new business lines: POSP (point-of-sales person) business, corporate insurance and international business in the UAE.
Along with offline sales capabilities in the last two to three years, it has also built regional calling capabilities, to cater to consumers in regional languages.
Now the company opens around 100 physical offices from where employees can visit potential customers, show the insurance policy best suited to their needs and also help people in the settlement of claims.
About 25% of new health life and business will be done through this network.
“Insurance in India is still a very physical process, and the insurance market invests a lot to build a physical presence throughout the country, which shows the bottom line results and investors also find it interesting,” the insurance founder. The company spoke on condition of anonymity.
Benefits of scale
On the insurance side of the company, Policybazaar has expanded its operations rapidly. Currently the company provides approximately 30,000 clients with employer-employee and business insurance products.
“We are building expertise in various insurance products in the corporate space. I can see that Indian businesses are also waking up to different risk factors and seeing how insurance can protect them. We are using technology to address these issues and our brand is selling better, said Singh.
Interestingly, many startups are trying to get a piece of the country’s growing employer-employee insurance sector, but have enjoyed limited success.
According to senior insurance industry executives, most startups see the cost of corporate client acquisition too high, prohibitive for early-stage players.
“Big brands have an advantage in terms of negotiations and also the ability to gain access to large clients. This segment is heating up with InsuranceDekho also entering the space,” the executive added.
Profits are elusive
While the new initiative as a business segment is growing well, it is not yet a profitable business for the insurance distributor even though the losses have come down.
Industry executives quoted earlier stated that due to the large investment to expand physical operations and agent networks required in a competitive environment, there will be challenges in terms of profitability.
The current plan for the management of Policybazaar is to break new business initiatives in the next few years and the leadership is ready to pump in the extra cash required to stabilize this business in the long term.
