CITI hosted CEO of PB Fintech Yashish Dahiya recently where they discussed the medium-term outlook of their business and market share of Policy Bazaar. PB Fintech also recently announced they will invest Rs650cr in Policy Bazaar and Rs 250 crore in Paisa Bazaar.
Business strategy shifting to PHYGITAL model
CITI in their note mentioned that Policy bazaar is gradually shifting to physical plus digital model (PHYGITAL), which will be margin accretive according to the management. Digital channels will continue to be lead generators while physical presence would likely to improve their conversion rates further.
Strong market dominance
In their note they further mentioned that Policy bazaar has around 15%-25% market share in term insurance while around 5%-15% market share in new individual health insurance and around 2.5%-7.5% share in individual traditional savings NBP. They mentioned that the management believes higher ticket health and traditional saving will likely support marginal change in product mix over the medium term. This change in product mix will lead to higher revenue and better margins.
Point of sales person (POSP) margins to remain tepid
The note mentioned that the POSP channel will focus more on driving volumes in select products excluding motor segments. The policy bazaar is expected to invest more on increasing market share and retaining their employees and thus their margins will remain under 10% in the near future in this segment.
To turn EBITDA positive by 4QFY23
The management had recently mentioned they will turn EBITDA positive by the end of FY23 at a conference. The CITI note mentioned that the management has reiterated its EBITDA guidance of ~20% led by change in product mix towards high margin health, term and trading saving segments. Rise in their advisory productivity and pick up in POSP margins. They also expect a higher share of co-developed, credit cards issuances and renewal revenue to aid in higher margins.
