Why is Policy bazaar running into heavy loses? Are they offering some heavy discount on Insurance premiums?
Are you talking about the business or the performance of the stock?
Here is the transcript of the latest conference call, if you are interested.
I’m not interested in this. All I know is other new age companies are losing money because they are offering cashbacks/discounts. I want to know if policy bazaar also offers CB or discounts on insurance premiums. If not why it is losing
A business may stay in losses for years, sometimes it may take longer time for the company to breakeven. The longevity and the direction of the business matters sometimes. Slowly the company decreases its losses, breaks even, starts posting profits etc. It may be investing in other similar or different businesses like Zomato, so there is no free cash. There are many many moving parts. Investors who believe in its longevity and growth will stay invested, some don’t.
And even if it is giving discounts, it could be to increase market share. And others who are giving more discounts may be burning cash just to stay in the game. So there could be many reasons.
But mature company with successive yearly losses is bad for investment.
It is possible that the entire sector is having problems. We see this happening to different sectors in different time periods. Infra sometimes, pharma sometimes, telecom sometimes, even FMCG occasionally. Of course, there will be a company or two which are relatively better than others.
But a company posting losses while others in the same industry and sector are posting profits means, there has to be a reason like debt.