First question - want to understand again how is management thinking in terms of balancing between growth and profitability. Clearly, as Yashish indicated for last 7 quarters, we are seeing 40%+ growth in terms of core business. But when I look on a YoY basis, your core online EBITDA margin is largely flattish at 14%. Should we sort of look at this business that it's matured from a margin perspective and management is focusing in terms of growing at 30-40% odd percent plus going ahead. Or should we also continue to see a margin improvement plus the growth out here?
Q1 is actually fairly straightforward. Our focus for the time being is entirely on growth. Yes, we will deliver profits, but they will be an outcome. We are clearly not optimizing for profits right now. There will be a point when we will perhaps optimize for profits. I hope that is as late as possible. Don't get me wrong here, because this is not meant to be a statement of any sort. We are a profitable company. We will keep becoming more profitable. But that will be a natural course for a while. Of course, if we wished, we could have a lot more profit right now but our bias is entirely towards growth. So whenever there's a call we have to make on - can we make this investment and maybe there's a doubt that it will help us in terms of growth or not, we will more often than not make that investment and err on the side of having taken on extra cost, and not being able to deliver the growth rather than having the growth opportunity, and not being able to deliver because we did not take on a particular cost. So that's the state we are in . Now, just to specifically get into whether that's a sign of us maturing, or that's a sign of us being young , I think that's a sign of us being young. You could take it whichever way, because I think there's an easy part which is to deliver the higher profits which we can do at any stage. But it's clearly not the stage to do that. It's like a 14-year-old kid. Do I want the highest performance from him today, or do I want him to train and have a lot of protein so that he grows into the future and becomes a far stronger adult. I think we are in the stage where we are still growing into becoming a far stronger adult in the future. And that is why, when we talk about 2030, we start talking about a ₹1 lakh Cr premium, we're not talking about profitability, because for us, that is the North Pole goal that we want to achieve growth and we want to achieve a certain scale. Profits will automatically come.
Of late, there appears to be some increase in competitive intensity from some of the smaller players and platforms in the new initiative space. Wanted to understand are you guys seeing any competitive intensity and any impact of that which could be visible on the numbers?
I think you may be speaking about the POSP platform, so I'll just defer to Sarbvir on that. Sachin, I would say this has been a very competitive space all around. I don't see anything very dramatic that has changed over there. I think there's a whole bunch of people who've been competing and the basis of competition has to shift. We have to focus on more granular business and work with smaller partners and add value to them. I think that's the race. If you ask me honestly, it's no longer a competitive issue. It's issue of, can we add value to our agent partners, and how much so that we can all have better economics. Sachin, I just wanted to add there, more from outside in perspective. I believe every market with scale starts to become more and more real. So that market in a way started with any scale is equal and any scale is okay. I think slowly the understanding is coming within the investor community as well, that look, granular business is better, and business quality is important, and I think people are being able to assess that better. For us, quite genuinely, and me and Sarbvir were discussing this before our call as well. As the market matures towards reality, we benefit because in reality, we are actually a player that does the right things, anyway. I would say that's the kind of stated play. I think the market is becoming more and more real, and that plays to our favour.
Now that Health is done so well, and of course Term has always been doing well for you guys. What would be now your market share in these two products Yashish. If I were to take retail Health premiums overall in the industry, what would be PB Fintech's share, and also on the retail Term?
I'll try to but I'll state something else a little before that, because I've been thinking deeply about this. The year Policybazaar started, the total Health and Term business in the country for retail was about ₹200 Cr. If we thought market share at that time. Actually there was an investor that time, Suresh. I won't name them. But they said, "Listen, the total market is ₹200 Cr. If you guys are 30% of this market , that's ₹60 Cr opportunity. Why should we invest ₹20 Cr behind a business like that and so they left it out." Another investor did not know what the Health and Term market was, and so they did invest, and they kind of reaped the benefit. I think we are not in the market share game and I think that's a very important statement to make. We are in the "market creation" game. Since you asked the question the very specific answer would be, I think, in Health we would be (of the fresh retail business) somewhere about maybe 15%ish or so. And in Term we would probably be a quarter of the business in the country. But quite genuinely, we don't think in those terms. We just think in terms of our own scale.
You guys have done a very good job about your growth being at 36%. I know you guys have also been realistic, you believe medium term we should grow twice the industry, maybe closer to about 30%. The problem that I have got is that you're already 25% of the term market and I don't think the term market is growing beyond 15% and so should be Health. When you are already at such a high market share, and the industry growth rate itself is curtailed. It is becoming difficult to digest that you can even grow at 30% when the overall market growth is stunted to some extent. Is my assessment right or how do you look at?
That is a very fair way of thinking about it, and I wouldn't expect any outside person to think any differently but that is not how we have ever thought about. That's the point I was trying to make. When we started in 2008, the total business was only ₹200 Cr, and nobody expected it to grow very rapidly. I'll make one statement. I'm sure you have a market projection, let's say, of the next 10 years, for both Health and Term. Whatever that market projection is, our belief is Policybazaar alone will be bigger than that market projection over the next 10 years. But now that is the gap right. The gap is we are coming at it from - There is an opportunity out there; we feel we are better placed at solving that opportunity, and that opportunity is solved; the market will actually grow much faster. There are two parts to the market, and we believe we are a contributor to the growth of the market. So as we become bigger and bigger, the market actually does start to grow faster.
You are right now, 2% of the market but it's stuck around that for quite some time, right? And the growth has not been great here. I mean, that's an enormous opportunity, because 80-85% of the market is Savings business. What's wrong here, or what's getting stuck here as to why you're not able to do this at a faster rate?
Suresh, I'll just answer that question once, and then I'll hand over to Sarbvir. At IPO, we were point 0.4%, we're at 2% now. In these years, we have moved from 0.4% to 2%. I think Sarbvir is perhaps better placed at why we are at 2% and not at 15%, like Health, etc. Thanks Yashish. I think Suresh, it's a very difficult question to answer on an open forum. I would say that you have to look at it from a relevant perspective. If you look at ULIPs, if you look at the better-quality products that are sold, I think our share is more meaningful, and we always believe and in line with what Yashish was explaining on Health and Term, that in the end, the better-quality products will win, and they will become a greater and greater part of the market. And as that happens, our growth will also come. I think it's an enormous long-term opportunity. Like we have entered the Pension area in the last 12 months. I think slowly but surely we are building a very robust business on that side, and you would agree that Pension is a very big problem in India, and it is coming. It is going to be an issue for the next 10-15-20 years. So I think we are building such anchor legs. We are selling very high-quality products. I would encourage you to look at a slide that we have in the deck, which actually shows that some of the low cost products that we sell, on a cost basis, are lower than mutual funds. From a time when your ULIPs were discredited and there was a concern around cost structure, etc, to a point where they are now in the long run, actually better than mutual funds. I think we are moving. It will take time for these lower quality products to come through, and when they come through I think all these questions about market share, etc. will become less relevant. It's a game of patience, is how I would look at it.
Okay, thanks for that one. And the second question just wanted to check on the new initiatives contribution margin, which every quarter seems to be improving. Today, it is at 5.3% for the Q1. So can you give a bit of colour of this 5.3% broken down into POSP, UAE, and Corporate. Where this delta improvement in the contribution margin in new initiatives is coming from. Maybe if you can break this 5.3% number.
Sure. I'll explain. See, there are three aspects to it. I don't know if we want to give out all the specifics right now. UAE has become profitable, and so obviously that contributes to the to the margin. In fact, UAE and Corporate kind of balance each other, so they together become very close to 0. POSP has been improving in margins, it has been growing in scale and improving in margins. And it's just the quality of business they are doing, and they're constantly transforming towards smaller and smaller partners. I would say, look, if you want directionally, there's a likelihood that next year we should be very close to, numbers which have become meaningless from a profit or loss perspective both from a new initiatives perspective. But we don't want to hold ourselves to it. As I have always said we could end up being a bit counter cyclical in this, because we do want market share, and I don't think we will hold ourselves back for any short-term profit delivery target. We will always do what we think is best for the long-term strength of the business. So yeah, that's the sort of story there.
The reason I'm asking - this 5.3% can improve to, by end of FY27, to around 7.5%-8%, or you assume this number to hold up at the current levels?
I would say next year you should expect it to be about 0. I don't know, were you asking from a more short-term perspective than next year? Maybe a few percentage points. There isn't that much margin. I've explained this, and you know this very well, Sanketh. Please understand POSP business is basically a pass-through business. It's somebody else's business which you are providing them a tech layer for but your revenue accounting is essentially for the entire business. So you are getting a commission of, let's say ₹100 but of that ₹85-₹90 is going to somebody else. So eventually, as a percentage of revenue only about 10-15, whatever is staying with you, and in that you have to incur all your costs. So it can't be like the core business. But yes, it can deliver something, and I would say, let's see, we're not putting pressure on that but I would suspect, maybe something like a 5% should appear at some point but whether it happened by 2030 or 2029 or 2031, I don't know.
If you can give a premium breakup of POSP, Corporate and UAE. UAE we have but maybe POSP & Corporate if you can give. And second in new initiatives, revenue of ₹514 Cr, can you break it down into insurance and credit.
Yeah, Corporate is ₹430 Cr. POSP is about is almost ₹1,300 Cr. That much I don't have. Maybe Rasleen can answer that offline.
You mentioned 25% of your sales team is deployed in these 200+ cities. What would this similar number would have been, let's say, last year?
It's been growing. Maybe even 20%, maybe I don't know. See now, it is not growing at a very dramatic pace anymore. I think what is happening is it's deepening a lot more. So which city, what kind of people, what mechanism. So in some cities the call centre person is taking calls and also doing physical meetings. In some cities, we would have dedicated people who are only doing Feet on Street who get appointments. So it is a mixed model. What you can see is, it seems to have settled. On the assisted businesses, about 30% of our business is seems to be coming from physical meetings. This might grow a bit, I would say, if you look 3-4 years out, maybe it's 50%.
What was the receivable figure as on June. I know you don't share the entire balance sheet, but if you could just share this number.
Rasleen can provide that to you. But I'm trying to understand the question behind the question. So look there is going to be till September, a little bit of drag on cash flow from normal course. That is because the collection is on 1/n basis. This is a cycle that's playing out since last September; it will play out till September this year. The other point is, of course, our Health is growing very rapidly, and that is where this 1/n has some impact. But at our scale, it's not material enough. It's just being digested in the flow, is what I would say, but Rasleen can share the exact numbers.
And the profitability guidance that you have shared in the past, that assumes 8-10% tax?
Have you seen ever heard us change our long-term guidance? It stays exactly the way it is. Nothing ever changes. Please appreciate we don't give short term guidance. We usually give these 4 years or 5 years out. Let me give an example. Right now, we're saying we want to do ₹1 Lakh Cr of insurance premium in 2030. What if we do 95? Is that bad? Not really. If we do 105, if you do 110. Is that great? It's okay. The point is : we observe, we should be there, we put out a goal which is sort of feels good to everybody and we should be about there. Yeah, it's okay. I think then we feel confident that should be fine. There will be no challenge there. Now, if people in their own mind assume it's going to be much more than that and much less than that, that's their minds working. That's not us saying anything. Paisabazaar, in the year 2024 had a ₹64 Cr profit. They may barely hit ₹64 Cr in 2027. Now, when I put that out, obviously, I thought in my back pocket I had ₹200 Cr of profit from Paisabazaar. Because if it's gone from now, maybe the quality of that wasn't as strong, and that is why we are facing a challenge. But these things will happen, and we have always factored in sufficiently when we give our long-term guidance, for a few hits here and there. What I take heart from is not that gap on the Paisabazaar, what I take heart from is the quality of business is actually improving and now we have control over that quality of business.
First question is on trends on the Health insurance renewal take rates because we believe that as the vintage of the portfolio increases, the economics for that portfolio, for Health insurance companies deteriorates. So how do you think about the trends over longer term on the Health insurance renewal take rates.
Nidesh I will defer to Sarbvir for a more medium-term answer. I'll explain to you in the long term. In the long term, we are responsible for our business, whatever we say, whether we believe it, whether we don't believe it. At our scale, we will never be able to pass on even 1% loss to anybody, and that is not a reason why anybody should work with us. Our objective is to make sure we have a sustainable, profitable industry, and we want to work with all our partners in making sure that our business stays profitable in the long run and we will never shirk away from being partners with them and taking on that responsibility. What we also expect in the long run is that as we do that, we also have more and more control over our destiny in the sense if it is our customers, and we are in some way responsible for bringing down their claims ratios, then we should also be part of that; in making sure that we help in that, and we work in that direction. I think eventually the industry is getting more and more real. So, as I said, whenever the industry gets real that actually benefits us. Nidesh, I, 100% agree with whatever Yashish said. There's always tempting to make predictions for this year, next year, and all that but the truth of the matter is that at this point we have a favourable fresh to renewals ratio. Quality of our book is better than, I would say, average. We are actively managing the book, whether in the short run, in terms of disclosure, in terms of looking at different cohorts; how to manage that with our partners. The final thing I would say is that all that we are doing on the PB Health side, in a way, is going in that direction, that where we are saying that the industry will go more and more towards preferred networks, work more with providers who are providing a more efficient outcome both from a consumer perspective as well as from an economic perspective. I think over a period of time, we are part of the change that the industry is going towards, and the direction that the industry is going, and I think in that scenario we will get our fair share of what is what is due to us.
In the presentations you have highlighted how the penetration of Life and Non-Life insurance is happening. And what we see is that the penetration has now dipped back to FY18 odd levels. What do you think is actually plaguing the Indian Insurance sector like how do we recover out of this? How do we actually play the insurance story in the long term?
Yeah, I think we can only speak for ourselves. And I would say, we are part of the solution. The solution is complex. It's never a straightforward solution. In India, it always looks like it's very straightforward. The moment you get into the 400 million Indians who are in that zone of earning under ₹1 lakh a year but they are the middle class, and they are the aspirational class; they want their children to do much better than themselves, so they invest in child education; they want to make sure that they have health coverage. All those things. The moment you speak about that segment. It is not a simple solution, because on one side they are seeing price hikes; on another side, they are seeing stress on claims. It's all been in the news. There's nothing I need to say there. That's the reality of the situation and they are looking for solutions, and that is where I believe exactly what Sarbvir said, that somewhere Policybazaar is coming out as their hand holder who can help at the point of claims, who can help at the point of issuance, who can give them the right guidance, who also keeps them on the right path in terms of disclosures and overall is part of the solution.
Just my final question on the healthcare foray side. We have not heard much, so any update will be helpful.
The work is going on, in terms of both creating the whole healthcare service layer, which includes hospitals as a physical part and a lot of other stuff from the tech solutioning, from the digital GP layer, from creating a lot of solutions which can keep patients outside the hospital. It's a slow build in that sense. It will take us another few quarters to get everything in place and that's when the real impact starts to come in. See, the way to think about any of these stuff that we do, whether it's PB Health or Garage network, or a lot of stuff that you heard about in the credit space that we are trying to do today is not to do immediately something which is going to impact in next quarter or two quarters. It's planning for next few years of how we see industry shaping up, and we need to be ready when that opportunity appears. So this will take time, I think in about a year time, you'll start to see some impact. You'll have to give us almost a year from now. And Sachin, just to kind of answer that question. We already have a consumer base. What should we be doing with our consumer base. People who are not very well, we should start working with them and trying to make sure they take the right steps to stay out of hospital. We should start to guide our people at the point of renewals towards narrow networks. We should start to guide our people/our consumers towards using hospitals appropriately in terms of different care pathways, at home care, day care, secondary care, tertiary care. I think you will see us acting on all those steps, which apps are absolutely integrated into making health insurance more viable for the same consumers, and giving them a great walk-in/walk-out experience.
On the indirect costs on the New initiatives?
I would say Madhukar, we are very acutely conscious that, especially in the PoSP business, it is a business where costs have to be controlled. Yashish explained, very well upfront, that it's a fixed business. You'll have to cut the cloth to what you have. I think over a period of time all other costs will be controlled, and will come down in any given quarter, it may have been up or down, depending on some investment in people, some investment that we may be doing towards something. It's nothing more than that.
On this Healthcare part where you mentioned that things are on progress. But more importantly, from an insurance point of view. All the partners of yours would be working along with you on this or how would this kind of pan out or you will need a special duration with the insurance company for product or would all your existing customers would get that option? How will kind of this thing move?
Prayesh, what is our responsibility as an industry. Forget Policybazaar, forget insurers. We have a certain base of customers. Policybazaar has a base of customers and there's a base of customers in the industry. Our job is to make sure these customers have trust. They have paid with their trust, and they've laid their trust in the insurance industry. That look at the point of claim, I should have a great experience. Not a great experience. Sorry, wrong word. I shouldn't have a poor experience at the point of claim. Now for that two things need to happen. Number one the incidence rate needs to go down. Now, the incidence rate is a factor of two things. One is people, maybe not taking care of their health, and I would give that or not doing the right things to kind of stay out of hospital. But the second is, in a fee-for-service model, there is an incentive towards over-utilization. I think the whole industry is coming together in working at this, some through narrow networks. To the specific question, of course, every partner in the industry is doing this. There is no doubt the entire industry is moving towards a narrower network, towards a more managed care approach. We cannot have as an industry, a conflict of interest with our suppliers. Our suppliers currently have a conflict of interest. They make more money, when we lose money. Essentially as an industry, whenever we lose money, our partners make more money. So that imbalance can somewhere only be corrected if you have some active role in that, and you'll have an active role if you're adding value to your customers.
The other question was on the mutual fund piece of the business. You mentioned that it's going to be a commission led model, not the direct one. First of all, is this a second attempt at mutual funds, if I recollect well? Paisabazaar earlier also had some mutual fund business and is this new avatar, or what is it? And second you have so much competition on the direct side with these discount brokers, giving all the tools for investing as well as advising. So what is the right to win that you would have to kind of grow this business?
Right to win comes from execution. Nobody's born with the right to win, neither are we born with the right to win. Yes, we have some ins into the consumer. And yes, we had a previous attempt at this about 5-6 years ago. By the way, that did not do badly. That did quite well, but there was internal conflict between management, because of which that group left, and that group set up a separate business. In fact, truth be told, I'm a small investor in that business. Very few things I invest in, but I'm a very small investor in that business. I don't believe they're doing a bad job. They're doing a great job actually. Now, Santosh believes in this, and I also believe in this. That through the PB money app that we have, we can get consumers, and our attempt is to give an array of offers, which goes from corporate bonds to bonds, to mutual funds, to some of the insurance products, and, yes, mutual funds also. But that said, it is very, very early days for us to comment on whether we will be successful, what is our right to win. No, absolutely, I think the fact that Mutual Fund is a large part of household savings for the country today. I think that gives lot of confidence that we should be in this area and PB Money is now far more mature as a business to be able to talk about savings as a holistic solution, and I think mutual fund sits very well as part of that solution. I actually see Paisabazaar now in a position where it will become a very, very strong player. I have a lot of confidence. Businesses don't succeed or fail because they are great businesses, they succeed or fail because the people are very aligned to building them for the long term, and those people are of great quality. And I feel more confident than ever that we have that alignment and we have that team now, which is moving in absolutely the right direction. We are in dumps right now, as far as Paisabazaar is concerned. We couldn't be in a worse position from a financials perspective, but we couldn't be in a better position from a team perspective.
Wanted to understand if there is any change in strategy at Paisabazaar since you've taken over. Clearly market, especially on credit lending on Unsecured, continues to remain soft. And I know you guys were exploring and focusing a bit more on Secured. So it would be great to understand from you broad changes in strategy since you've taken over Paisabazaar.
Three things. One, that we are growing the Secured area, and you'd see that Secured has actually come up well. From a disbursal overall perspective, we are growing YoY . I would say we have a lot of existing customer base, about 5.3 Cr customers are on our platform. We wanted to monetize our traffic for other products as well. So you'll see us doing savings, we've already launched bonds, we've already launched Fixed Deposits. You will also see us do mutual funds in a while. I think that is another area that we are investing in. And third I would say, is building a lot of alternate data sources to basically sharpen our risk ability. Our ability to underwrite better and help our partners underwrite better. That is one area we are heavily investing in. I think the sharpness in risk and being able to qualify a customer better for credit that is the third area that you will see us do a lot of work in. You will see us now doing collections, you're seeing us now doing bill payment, etc, a lot of that really builds up from a deep risk capability.
And in Savings you would be how much?
Maybe 2% or so. About 5% of the non LIC, maybe, but about 2% overall.
Just again, on that Health point. See, we know that underlying industry is not growing. So you delivered 65% growth in the current quarter. Is it fair to tell that large part of your growth was driven because you have a higher contribution to long-term policies, because that materially improves the growth for you? On that line just wanted to understand, given, you have chosen to take commission in a deferred way in the long-term policies. Is it fair to say that your take rates, because you are chosen to take in a deferred way, will be better when you recognize on upfront basis on revenue?
Sanketh on the revenue part, I will defer to Sarbvir. I just wanted to answer one question, not just for you, but for everybody. When we say we've grown at a particular rate, our number of transactions has actually grown at faster than that. So that lays to rest all kinds of questions like, has ATS grown faster, have you done multi-year policies more than last year? All of those questions get laid to rest. I will answer one last thing which just came to my mind. It's not because one customer is buying three policies because that can also happen. It's simply because we are adding more customers than ever before, and our number of customers added is growing at a faster rate than our premium growth because this is something we obviously check. Sarbvir can answer the question on the commission side and the cash flow side. So Sanketh, as Yashish explained. I'll just reinstate simply, there are no games in this 65% number. This is based on number of policies going up, number of lives covered going up. Our multi-year share is roughly the same as it was last year, in fact, in decimal points here and there. If I were to actually answer your question, maybe the real question that you're asking as to what is driving this growth, then I would say that three things . One is, customers have seen the value that Policybazaar brings in terms of comparison, in terms of having more efficient products. They are buying those products. They are getting a better customer experience, both in the policy issuance process and at the point of claims, and that is in turn creating a positive word of mouth. If you see, our marketing is totally talking about how people are being benefited at the point of claim. I think it's a virtual circle right now, and as Yashish said right up front, I would say that our teams are doing an outstanding job. We have set up regional presence, we have Feet on Street team. I think every part of the business is firing, and I think that's why you are seeing the results. So far, it looks like it's a very robust performance.
Okay, so basically long term you believe this is a 5% adj. EBITDA margin business in that sense.
Let's see, let's see, but yes why not?
Just on the data keeping question you had given us the PB Connect revenue last quarter of ₹55 Cr. Have you shared the equivalent number for Q1? And my second question is on the ESOP cost. So, we were following a certain trajectory, the ESOP cost, which has come in at about ₹55 Cr. Can you help us understand what would be the outlook for the next 2 years probably? Now, my two main questions, apart from this is. First is on the non-ULIP savings business, and we had indicated that we are considering certain other sectors or certain other segments where we would want to expand into. Can you elaborate anything incremental on that? And my second question is, while I appreciate the part that you are prioritizing growth, and for that your expenses are up in this quarter. But what I see is that your expenses outside contribution has picked up faster than the expenses within contribution. So just wanted to understand, how does this pan out when you start the year?
Thank you. So PB connect is ₹43 Cr this year. So it was for ₹50 something, and there's a bit of seasonality in that. On the non-ULIP , we had an aspiration to grow into Pensions. Please appreciate Pensions was almost 0 last year , it's about 15% of our Savings business now and getting bigger. Of course, we have Child plans. When you think about ESOP charges. Basically, if the management performs which I think we are all working very hard, and we will; then the management must be rewarded. I have zero doubts there. Now the only thing we can say, and that's what came across in our ESOP thing is we will only get rewarded when over a long period of time, over a 5-8 year period, the stock price also does. Of course, we're getting rewarded in terms of our basic compensation but our ESOP compensation is largely linked to our share price performance over the long term. So we are aligned with investors in that respect, and yes, it will over time, increase and decrease. That's okay. But it will be associated with that sort of price movement. Then we have new initiatives. In new initiatives, because they are not yet profitable, the management team's long term incentive planning is linked to the profitability of those business, so the only number that matters to the management. But this is not from a short-term perspective, it's with an 8-year view. Their entire ESOP is, or whatever you want to call it Long Term Incentive Plan, is all linked to those businesses becoming profitable and significantly profitable, because that is when they make serious money. On expense planning, what you have as a contribution and non-contribution line. There's also brand out there, and sometimes in a brand one month we may do something extra one month, we may not do enough. But over the year the cost will not grow in line with our revenue. It will grow at maybe about 2/3rd of our revenue growth or so. Increments is something that hit every year, but they hit in the Q1. So when the increments happen, you can have some impact coming from that. That is how it is. But otherwise, if there's any detail, I'm sure Rasleen can provide that. But that is how the planning happens. Of course, before the beginning of the year, we do have a plan. Obviously, we don't just have a plan, we kind of have a multi-year plan usually. And we give out some of those numbers to the market, like we did about 4 or 5 years ago, about a 2027 profitability. Today we are broadly starting to talk about our 2030 premium numbers. But more than that, we don't put out in the market in terms of our short-term business plans, but of course, our intent is not to have our fixed costs growing faster than our revenue, of course not.
So just one follow up. So in this Pension product, there's a slide where you've mentioned how many partners you have in the Savings, and in Health insurance, etcetera. So almost all of the partners are offering the Pension product, or it's just at nascent stage, and you're doing it with some partners. It's not 14 insurance partners. Is that a correct way to think?
Shreya it's pretty much everyone. I think it's over 10 already, and whoever is left is slowly come on board. I think everybody sees this opportunity, and I think we are presenting an attractive way of accessing that audience.
First, would it be possible to quantify the sort of sales personnel or Feet on Street really supporting that journey, and how that have scaled up over the past few quarters or years. Second on the POSP side of the business, if you can quantify the mix between Motor and non-Motor, and if there is a strategy to increase a non-Motor portion as your granularity of the franchise on the PB Partners side increases. Third is on the Paisa side. You have mentioned at the start of the call that you will be introducing mutual funds out there. When we see the broader space, it seems that most of the platform players are kind of converging towards the stage where the focus is on mass wealth advisory sort of a proposition. So would broking be on the radar for you guys.
Actually, Sarbvir is better placed at answering at least the first two, and then we will come to Paisa. So both the hybrid and the POSP. We have about, I would say, almost 25% of our sales team present in over 200 cities where we offer Feet on Street capability; about 30% of our business comes from there. Yeah, of our Health and Life; assisted business I would say. So I think that was on the FoS side. I think the second question was on PB Partners and granularity. I would just say two things on that. One is that the percentage of business that we are doing with smaller agents is growing, I would say every month and the contribution of them to the business is now almost 2/3rd or more of the business comes from people who are doing very small amounts of business every month, and that to us is the most important metric as we go forward. The second metric that matters is that what are other things that these people are doing. One of the powerful parts of a platform is for an agent to be able to do other things. So if they sell Motor insurance, which mostly people do on our platform, can they sell some Health insurance, can they sell some PA cover, etcetera? So I think that part of the cross-sale is also continuing to grow every month. Those are the two things I would say at this point, I mean wouldn't want to get into too much detail beyond this. For Paisa, I'll just hand over Santosh to kind of answer the question about mutual funds and more on that. On the Mutual Fund side, the industry is growing at 20% rate. There's still a lot of adoption coming. From a Paisa perspective, because, we have a very young customer and that customer needs both saving solutions and credit solutions. So, having both on one platform makes the platform far richer from an engagement perspective, solutioning perspective, and also that when these customers come to our platform we already know how much do they save. We already have a PFM product called PB Money. So we did have access to what was the money lying in the bank account. All we are doing is educating people - Why do you want to keep money growing at 2.5%-3% when you can invest in equity, especially when you're young and take benefits of the country that we are in and make money, at least 12-15% CAGR is something that this industry can generate for you. It is an extremely consumer centric product. Just with bonds being launched a month back, we are already a ₹1 Cr AUM without any marketing spend. I think that also raises the confidence that there is customer who's wanting to look at good saving solutions, and I think Paisa should be that platform. See, I think it's very, very early days. Paisa right now has dual challenge as I see it. One is they have a current quality of operations and a current quality of business which they are transforming very rapidly. And second is, there is a future platform that's being built. I would encourage some of you to spend time on the PB Money part of Paisa bazaar. It's in early stages. But you see account aggregator platforms have really levelled the playing field in terms of what you can offer to consumers from access to their own banking data and access to their own investing data perspective. And to some extent Paisa is leveraging that to build up a platform with its own consumer base without further marketing. But, as I said, early days, I think this is going in many ways - Corporate Bonds, Deposits, Mutual funds, there could be some Pension element here, the various pieces coming along. At this point. Not a major revenue driver, the big revenue driver continues to be Lending.
The other one was on tax rate. If you could guide, your tax rate is, I think, closer to 7-8%. So what sort of a tax rate would be for this year, and the next year. If you would give some guidance on that.
Yeah, Mandeep has got an opportunity to speak here. Hi Nischint. So our tax is, primarily, if you track Policybazaar, you will notice that we have accumulated losses, the carry forward losses benefit which is available to us right now. And whatever tax we are paying is largely on our investment income which we drive from investing our surplus funds. So otherwise, there's no special tax rate to us. This is normal nominal rate of tax which is applicable to all businesses. It's just a combination of business profits, other income and carry forward losses. But yeah, some where about 8-10% is, I think, the right number to assume for the next 18 months or so.
Can you also comment on the near-term trends that we have seen in the renewal take rates? Are they steady?
At this point we have not seen any change.
Second question is on Credit business - EBITDA margin and Contribution margin for Q1, if you can share that.
On the credit business, Santosh? Okay, let me try and do that. Rasleen, do you want to just say it? From contribution perspective , it will be closer to 30% ; on adjusted EBITDA margin basis, it will be -20%. I think till about July, August last year, we benefited because of very high approval rates in the industry. Today we are on the opposite side of that. We have bottomed out clearly. We are on a month on month growth course. However, this is an issue you will see somewhere with our Savings business and with our Credit business. We are being benchmarked with our high marks. Our high marks were last year, August, September, and of course those were great positions. But we've been now benchmarked against that, and that's fine. I'm sure next year we'd be benchmarked against these lows, if anything, these may or may not be lows, so I think we are good to take that, and we'll move in that direction. As I said on the Saving side, the great news is Pensions, Child plans becoming much bigger part of the of the channel. On the credit side, the big advantages we are now becoming very good quality partners with our suppliers. I'm increasingly hearing from our suppliers that listen on your old book, I want to pay less, but in a new book maybe we can pay a little more, and that's a great sign, because that implies they are more comfortable with the quality.
Just one more clarification on the PB Money. So the mutual fund that we will be originating, is it a fee earning mutual fund, or its direct plans?
Its fee earning.
My question on this is on the contribution margin side for core business, we have seen a YoY dip. Obviously, there are factors which you highlighted that you have been investing in things. Can you give us some drivers or some pointers on to what is driving this dip, because at least on YoY basis, renewal income should have come from last year, and also there should have been slightly upward trajectory is what we are anticipating.
In a very simple terms our renewal business has grown but equal amount is our fresh Health business and our fresh Health business has grown faster. Our fresh Health business on a 1-year EBITDA basis probably operates at -20%. Our renewal business probably operates 75-80%. So obviously, there's a trend upwards, and this trend downwards. Clearly, that is the reality. It is just that the trend which is coming from fresh Health growth. The second part is Credit. Sorry if you're looking at the core business because I was talking about just the insurance part. But if you're looking at the credit business, I think the insurance part is stable. I think it's at 43%. It's the credit business which is on the on the negative and that is what has caused the problem. The credit business has lost about 15% on the contribution margin.
First if I calculate the core insurance renewal take rate. I'm not seeing any improvement over there. I would have expected some improvement over there, given that over the years we've been selling more Health. So, what exactly is causing this drag. Second, if I look at the indirect costs of the new initiatives, that have grown pretty sharply in this quarter. So, my calculation suggests that's grown about 41% YoY. I wanted to get a sense of what is driving this and on a continuing level, what should that sort of number be? Third Health business is growing really well for us and we're saying that new business Health growth is at 65% YoY. I wanted to get a sense of what is the porting business over here and how much of the porting is from within our customer base opting for a new sort of insurer? How much of the porting is from outside our customer base who are coming to us?
On the renewal take rate. FY24, we were at 6.5%; FY25, we were at 6.7%; now, we're at 6.9%. These are not going to change dramatically, but they are sort of on the way up, if anything, and that is reflective of the fact that Health is becoming a larger part of the renewal base. In APE terms, it remains pretty stable, because our renewal rates of Life are also very high. And what happens is that Health, the vintage renewal take rates are obviously lower than the first-year renewal take rate. So actually, there are lots of puts and takes Madhukar. I think you're going to a level of detail which is hard to model from the outside. So that's the only reason, otherwise as Yashish said, they have inched upwards over the years. First of all, for our own base, we don't port. We do not encourage customers to renew with another insurer. That's why, if you see the same insurer renewal rates in Health are extremely high. We do not do any kind of porting at that level. Number two on the fresh business, I can give you an exact number: 82% of the business that we did was from "New-to-Insurance" customers. They may have had a corporate policy, but they did not have a retail health insurance policy. I think that should give you a sense and this number, actually, if anything has grown. We have less porting now externally, than we had last year.
Can you give us the renewal premium breakup of POSP, UAE and Corporate?
Yeah, sure. POSP would be about ₹180 Cr . UAE would be about ₹111 Cr and Corporate is a huge ₹292 Cr. That's the beautiful part about the Corporate business, and I think that's where I'm taking a lot of heart over the years. Our renewal rates are very strong. So ₹292 Cr of renewal. Just to kind of put this in perspective, if you look at our total business last year, same quarter, from Corporate is ₹272 Cr and we've done ₹292 Cr of renewals. So, if anything, our premium from the ₹272 has grown, which is a signal of how the Corporate business kind of is edging and it's largely built on renewals.
On the loan part, for the core online business, where do you see it bottoming out and when do you expect it to kind of start picking up momentum again?
I think Q3 is when we see things really turning. I think the first two quarters we are taking this time to build our back-end operations, build product maturity, do a lot of integrations where we have a lot of digital solutions and not do lending in the traditional way. I think we're building a beautiful solution where for every consumer who comes to our platform, what is the best chance of approval. A customer has to get a loan and at the best possible rate, we are building that solution. I think Q3, all of this should come together, and we should see healthy growth resuming from Q3.