PB Fintech will take corrective measures to bring down operating costs at its financial services arm, Paisabazaar. Steps may include reduction in workforce, as a slowdown in unsecured loans has impacted its growth.
“We did not anticipate the slowdown (in unsecured loans) to last this long. We will be taking some corrective actions on the operating cost front,” Yashish Dahiya, chairman and CEO of PB Fintech, told analysts during the Q2FY25 earnings call.
“We realised that we do not need as many people. I still believe that is the case. I think this gives us an opportunity to reduce and not come back on actual manpower costs,” Dahiya said.
PB Fintech, parent of Policybazaar and Paisabazaar, reported a 44% year-on-year increase in revenues to Rs 1,167 crore for the second quarter of the current fiscal, with the net profit rising to Rs 51 crore, compared to a Rs 21-crore loss in the same period last year. Revenue growth was largely driven by new health and life insurance policies sold on its insurance marketplace Policybazaar, with premium collections rising 57% to Rs 5,450 crore.
Paisabazaar, however, reported an 8% decline in revenue to Rs 143 crore, with loan disbursements remaining steady at Rs 4,237 crore. The company primarily offers unsecured products, such as personal loans and credit cards, in partnership with banks and NBFCs. Unsecured loan disbursements account for around 70% of revenue of the credit marketplace, followed by credit cards (20-25%) and secured loans (10%).
The slowdown in unsecured loans stems from banks’ cautious stance due to rising bad debts and an RBI directive to curb rapid growth in the segment. According to ICRA, the growth in unsecured loan is expected to drop to 19-21% in FY25, from 38% in FY24, amid concerns of over-leveraging among lenders.
Dahiya sees the slowdown as an opportunity to expand margins. He noted that prior to Covid-19, Paisabazaar’s margin contribution was zero, but has since risen to 40%.
On PB Fintech’s entry into healthcare with a new entity, PB Health, Dahiya clarified that the venture will not be a subsidiary of Policybazaar. “Policybazaar will not set this up, but the company will benefit as it will improve the claims experience, encouraging more customers to buy insurance.”
When asked whether PB Fintech would be a founder-promoter or a minority shareholder in PB Health, Dahiya said this would depend on the board’s decision. “We haven’t even approached the board for approval yet,” he said, adding that the entity could be operational by the end of the current fiscal.