Yashish Dahiya: Forcing Companies to Report Profits Early Will Destroy Shareholder Value: Founder of Policybazaar
The online insurance market closed the day with a market cap of Rs 54,070 crore, with the stock closing at Rs 1,202.90 on BSE, nearly 23% above the price of emission.
Yashish Dahiya, Co-Founder and Chairman of PB Fintech, said he was “quite struck” by the rating gain, which however seemed moderate compared to the 50% and 80% pops that Zomato and Nykaa, respectively, saw on their first day of trading.
“I don’t understand a thing (how stock prices jump). Never in my life have I invested in a single stock or a single mutual fund, ”Dahiya said during the opening day trade. “I only did one thing: the FDs (fixed deposits) and I paid my children’s school fees (fees) with these FDs. ”
Dahiya, who co-founded PB Fintech with Alok Bansal in 2008, told ET in an interview that a short-term focus on profit could be destructive to creating long-term value for shareholders and companies like Policybazaar.
He said the company was under no “pressure on profitability” after the IPO.
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New era companies like PB Fintech cannot be evaluated by what they are today, he told ET. “You appreciate them for what they can become in five to ten years. Let’s not be silly and force these companies to try and report their profits sooner. This will destroy long-term shareholder value… without a shadow of a doubt. ”
Dahiya’s comments stem from the skepticism of some investors that new-age startups are not profitable and that growth will not be enough.
“Yes, my stock market value can go up because some people can get excited (with quarterly profits) and there will be more. It’s stupid, I’m not here to deceive people. It’s not my job – I’m here to build a fantastic business, ”he said.
In keeping with the same philosophy, he said he told his core investors in pre-IPO conversations that it would be a “waste of time” to review the company quarterly. “That’s the kind of management we are as we build it for the next five to ten years. ”
The company’s operating income increased by more than 35% to Rs 237 crore in the June quarter of fiscal 2022 compared to the previous year. His loss for the quarter widened 85% year-on-year to over Rs 110 crore.
“We won’t be stupid. We built Policybazaar and Paisabazaar with $ 150 million. We’re not frugal, but we don’t waste it (either). I don’t think our behavior will change in the future either, and it will be similar, ”he said, reiterating the company’s long-term plans to continue growing and developing new businesses.
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Although selling insurance is its core business, PB Fintech hosts lending activities under Paisabazaar and is experimenting with expanding its business into markets like Dubai in addition to building an offline presence to attract more numbers. users. Dahiya said it was her new CEO Sarbvir Singh’s idea to log off and it was his mistake (to Dahiya) not to have done so sooner.
The offline presence would result in a much higher conversion of users to buy insurance, he said.
“We will continue to strengthen efficiency in key areas and continue to experiment. Our core business is already profitable. An easy way to do this is to stop all the experiments and we will be immediately profitable, but that is not good for the business and in fact, we will be doubling the experiments, ”Dahiya added.
According to him, these experiences will not create profits for the company now, but will add phenomenal value over the next five to ten years. But, he won’t go “berserk” over spending. “I am confident in profitability thanks to the renewal book. So the profits are already there, and you have to take a closer look and that’s what institutional investors have seen. ”
PB Fintech, in the future, will remain focused on two main areas: insurance and credit. “Paisabazaar already gets double the traffic than Policybazaar. So there is a lot of data access from there to financial products. We may or may not do something on the investment side, but we keep looking and that doesn’t mean we will, ”he said.
PB Fintech is also building a better complaints platform. Paisabazaar lends through partners and not through its own books.
“I think in the long run it will be stable (in terms of income) with Policybazaar and the growth rate will be similar because lending is an equally important opportunity,” Dahiya said, adding that credit is a relatively large industry. easier because more and more consumers are looking for loan products versus insurance.
While Policybazaar sells insurance products from all companies, the company may consider partnering with insurers to create new products for consumers. Policybazaar, he said, must find a way to create products.
“There is no way out of this. We have to find out how. We have to have the capacity to create products for our consumers, ”he said, adding:“ Whether our partners are doing it or we are doing it, we don’t know. ”
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