7 insights into PolicyBazaar’s prospects for profitability from its IPO filings

“Absolutely,” answered a PolicyBazaar executive, when asked if the India-based insurance aggregator, valued at US$2.4 billion, was looking to attain profitability in the near future.

The only obstacle on the firm’s path to profitability at present is its “hyper-growth agenda” and heavy investments in geographical expansion and insurance penetration, the person told Tech in Asia on condition of anonymity.

PolicyBazaar employees during a Diwali celebration / Photo credit: PolicyBazaar

PolicyBazaar’s initial public offering could make a bigger splash than Zomato’s recent listing because the insurance broker has a clearer path to profitability than the food tech giant, according to experts tracking the insurance sector.

In its filings with the Securities and Exchange Board of India, Zomato had said that it expected costs to keep climbing and losses to continue for some time, given “significant investments” toward growing the business. The 13-year-old company had a bumper stock market debut last month, raising US$1.3 billion.

The food delivery giant’s first earnings report after going public revealed that its operating losses in the first quarter of the fiscal year had widened 3x from a year ago.

Interestingly, online beauty aggregator Nykaa, another Indian startup working on a plan to go public, is already profitable.

PolicyBazaar also turned profitable in the financial year ended 2018 but couldn’t keep the momentum going over the next two years, according to its co-founder and CEO, Yashish Dahiya.

PolicyBazaar co-founder and CEO Yashish Dahiya / Source: PolicyBazaar website

The insurance portal’s parent company, PB Fintech, recently filed its pre-listing prospectus with India’s market regulator, seeking to raise US$809 million via a public offering. The firm could also consider raising up to US$100 million in a pre-IPO round.

Tech in Asia dug through the filings to take a look at the insurance aggregator’s numbers, and here’s what caught our eye.

1. Profits may boomerang

Dahiya had said last year that he expected PolicyBazaar to return to profitability in FYE 2021 as demand for insurance products surged amid the Covid-19 pandemic. Though the company, which focuses on general and life insurance, was not able to meet this target, data suggests it is getting closer to its goal.

According to the filings, PB Fintech, which controls both PolicyBazaar (its insurance business) and PaisaBazaar (its lending business), has halved its losses to 1.5 billion rupees (US$20 million) in FYE 2021 from 3.04 billion rupees (US$40.9 million) in the previous year.

2. Narrowing operating losses

3. PolicyBazaar, the revenue driver

4. Reining in expenses

5. Branding is the key

6. More sources of revenue ahead

7. Looking towards Southeast Asia