Proposed changes to our assumptions for PB Fintech model:
•Premium growth: Core online Insurance premium growth will continue to be string at CAGR of 35% over FY26-30E
•Take rate: Core Online revenue take rate has been revised down to ~10% in each of FY28E-FY30E, compared with our earlier estimates of 17%-16% over the same period.
•Discontinuation of POSP revenue and commission: We have assumed the discontinuation of POSP revenue and commission expense from FY28E onward.
•Total Group Operating revenue: Our revised estimates imply a reduction in Total Group Operating revenue of ~50% in FY28E- FY30E, compared with the previous estimates as we have removed POSP revenue
•Employee expenses: We expect Employee expenses to increase from Rs25bn in FY26 to Rs37bn in FY30E implying a slower CAGR of 10.6% over FY26-30E
•Advertisement, promotion and marketing: We expect Advertisement, promotion and marketing expenses to be at 12.3bn in FY30E vs Rs12.1bn in FY26
•Other expenses like Payment gateway, IT, D&A increase at a CAGR of 10-16% over FY26-30E
•POSP Commission costs are reduced to nil as we have taken off the POSP business from revenue above.
•We expect Paisabazaar and Other revenue to increase at 25% CAGR over FY26-30E.
•New initiatives revenue excluding POSP is expected to increase at a CAGR of 26% over FY26-30E
Profitability: Following the above revisions, our PAT estimate for FY28, FY29, FY30 comes out to be Rs8bn, Rs16bn and Rs25bn. Thus, we see PAT for FY30E to be 16% lower at Rs25bn vs earlier FY30 guidance of Rs30bn.
Key take away from PB Fintech managements call on 24th Sep’26:
•The company identified multiple cost rationalisation levers, including reducing digital marketing, brand spend, slowing hiring, and improving contact center productivity, while clearly stating there are no plans for mass layoffs
•Management expects lower commissions could reduce customer pricing, potentially driving 15–20% volume recovery through higher policy sales if insurers pass on the savings
•The company is actively pushing for an MGA (Managing General Agent) framework, which would allow it to participate in underwriting, claims management, and risk sharing, helping it earn for higher-quality business rather than only distribution
•As per the mgmt. the POSP business model is expected to become more challenging under the draft proposal, although management believes final economics will depend on regulatory clarifications
•For FY27 there will be no financial impact as implementation is proposed only from FY28 after the consultation process
Valuation and risks: We value PB Fintech using a DCF based approach where we decrease our Net profit for FY28, FY29 and FY30 by 37%, 13% and 4% respectively. This results in decrease in our TP to Rs1,560 from Rs2,080. The main risk to our rating is if the company is unable to reduce costs from FY27-30 as we have built. In addition, new platforms like Bima Sugam can also cause some disruption.
