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Despite the quarter seeing relatively tepid insurance industry growth, PB Fintech reported a healthy 34.7%/55.4% YoY growth in core / new initiatives insurance premium. Meanwhile, loan disbursals grew 18.5% YoY due to the impact of unsecured disbursals slowdown. Consol. revenue reached INR 8.7bn, +7%/+43% on QoQ/YoY basis, with a marginal miss on JMFe (INR 8.8bn). We also noted expansion in adj. EBITDA margins by 915bps/293bps YoY/QoQ, primarily attributable to new initiatives breaking even at the contribution margin level. This was driven by the company’s strategic focus over the past quarter to onboard retail agents in PB Partners business. With INR 372mn PAT for the quarter, PB Fintech has delivered on the promise of PAT profitability with 9MFY24 PAT at INR 42mn with seasonally strong Q4 yet to be added. The management remains assertive of its guidance on INR 10bn PAT in FY27 and we believe there remains a strong possibility of positive surprises. We roll forward to Mar’25 and reiterate ‘BUY’ rating with an unchanged TP of INR 1,010.

Sustained growth in core insurance: Policybazaar’s online insurance premium grew at 34.7%/10.9% YoY/QoQ, with the company delivering 2-3x the industry growth rate. We noted take-rate dip to 15.4% (vs 16.9% in Q2FY24), primarily due to rising mix of lower commission, savings business. Contribution margin (CM) dipped by 90bps as higher share of new health insurance is margin dilutive in year 1, with strong NPV going forward. We expect CM would inch upwards in the coming year due to the renewals kicking in on the health insurance sourced this year. Management believes that there remains significant room for CM improvement on core business over the coming 6-8 years.

Credit distribution should stabilise in FY25: Credit disbursals on Paisabazaar have grown 18.5% YoY (-13.5% QoQ) to reach INR 35.8bn in 3QFY24. The company also enabled issuance of 560k credit cards on an annualised basis. Paisabazaar generated revenue of INR 1,450mn (36% YoY), while improving EBITDA profitability (~8% Adj. EBITDA margin) despite the sequential dip in revenue. While the management expects credit business to be affected by RBI’s tightening of capital norms for unsecured loans next quarter as well, it believes that the company is well positioned to deliver 30%+ growth in coming years.

PB Partners business achieves contribution-level profitability: PB Partners business has now reached 17,100 pin-codes with Tier 2+ cities contributing to 76% of the premium. This business is now break-even at contribution level, as the company has moved towards smaller and higher quality retail agents. While EBITDA margin in New Initiatives has improved sequentially by ~1230bps, we believe EBITDA profitability in this business to be at least 8 quarters out.

Maintain ‘BUY’, roll forward to Mar’25 with TP of INR 1,010: With Paisabazaar impacted and company focused on driving PB Partners business growth via retail agents, we tweak estimates to marginally lower revenue. However, we improve EBITDA margin estimates with New Intiatives at CM breakeven and higher renewals mix expected. Rolling forward to Mar’25, we maintain our ‘BUY’ rating along with an unchanged TP of INR 1,010.

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