@Sachiv_Tahil is right, they had given a higher guidance for FY26 before. Looks like they’ve reduced it now. Hope it’s the same strategy as FY25 - under promise and over deliver.
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Afaik, this is the first time they are guiding for FY26
Where did you find older guidance about FY26?
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To my knowledge, they haven’t previously provided FY26 topline guidance. However, they’ve repeatedly said, on earnings calls and in interviews - that they expect to double their revenue every two years. By that measure, they’re on track to significantly exceed that target.
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@Sachiv_Tahil @pranshukh , sorry I mixed up FY26 with FY27. They gave FY27 guidance as 50-80% growth over FY26.
Not on a higher base, plus the management is conservative and they have consistently beaten the targets that they have provided.
I expect PAT growth to be 60% plus for FY’26 so close to 140-150 Crores of PAT and this is just organic numbers.
They have money from QIP for inorganic growth which if utilised well can result in higher PAT.
Current PEG is 0.56 so definitely looks cheap.
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definitely looks attrative with the focus back on the margins and cash flows.
Also, the company talked about 3 acquisitions in Jan concall which was reiterated in March, all of which are bottomline accretive and good in size. Infact I am surprised that they havent yet announced any given their commentary. lets see when it materialises coz major alpha now would come from there.
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Can someone explain zaggle business model in simple language?
Zaggle generates revenue from three sources: program fees, Propel platform revenue/gift cards, and Platform fee / SaaS fee / service fee.
The program fee consist of interchange fees received when a transaction occurs on a prepaid or a credit card.
Propel platform revenue/gift cards: Revenue is generated from the monetisation (service fee, platform fee) of propel platform and redemption of propel points into a gift card.
Platform fee / SaaS fee / service fee: Income from various activities including user fees, platform fees, customization fees etc.
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What is the way forward now? I see they are delivering exeptional revenue growth but struggling to generate cash flows from operation. On top of this they have huge cash pile due to recent QIP.
Disc: invested (impulse buying)
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So, I’ll discuss both Zaggle’s business model as a refresher and then the concall points for Q4 FY25
Business
- Zaggle Prepaid operates in the fintech space with a focus on providing innovative prepaid solutions that include digital payment instruments and value-added financial services.
- They operate predominantly in the B2B domain with offerings like - Corporate Prepaid Cards, Employee Benefit Programs, Expense Management Solution, Rewards and Recognition Platforms.
Product Breakdown
- Zaggle Save: A platform for managing employee benefits and expenses. It is a multi-wallet prepaid-card platform that employers use to load and distribute tax-efficient allowances-meal, fuel, travel, wellness via one card.
- Zaggle Propel: Is configurable, gamified SaaS platform for employee and channel-partner incentives.
- Zaggle Zoyer: It digitizes the procure-to-pay lifecycle, automating invoice capture, purchase-order matching, approvals and payments both domestic and cross-border
- Zaggle ZatiX: Is a spend-analytics engine built on AI/ML to surface spending patterns, detect anomalies, and forecast budgets. It draws on transaction data from Save, Propel and Zoyer.
- Fleet Management Solution: is a prepaid-card and platform-based solution tailored for fleet owners and Oil Marketing and CNG companies
- Zaggle International Payments: is a fully digital inward-remittance platform that allows Indian businesses to receive international payments with transparency, low markup fees, and zero hidden FX margin
Revenue Streams
- SaaS Fees: Subscription-based services for platforms like Zaggle Save and Zoyer.
- Program Fees: Earned from transaction-based fees on prepaid card and co-branded card (interchange income) programs, including corporate cards and fleet management solutions.
- Propel Platform Revenue: Revenue is generated from the redemption of Propel reward points allocated to employees, distributors, or channel partners
- VAS Fees (From Lending and other BFSI products)
Competitors
Include Sodexo, Happay, Zoho Expense to name a few.
TAM
- Fleet Payment Solutions: The fleet solution space in India is a substantial market, valued at approximately ₹79,000 crore, according to Government of India data
- IMARC Group expects the market to reach $2277 Billion by 2033, exhibiting a growth rate of 30.1% CAGR during 2025-2033
- Overall estimated market revenue (2027) for Payments in India : Rs 1750+ Bn
More points
- The company serves over 3455 customers and maintains a churn rate of less than 1.5%, indicating high client stickiness and satisfaction. They have 3.28 million active users using Zaggle power cards and platforms software
- They plan to expand geographically into the US markets as part of their growth strategy.
- Risks include regulatory changes, client retention, competition pressure, dependance on partnerships and inorganic growth quality
Videos to understand the business:
One risk which seems to be playing out is -
This mentions exemptions for Leave Travel Allowance (LTA) and House Rent Allowance (HRA) are no longer available under the new regime.
This will have reduced Value Proposition for Tax Savings for Zaggle since tax-exempt benefits like meal vouchers, LTA, fuel, and other reimbursements become taxable under the new regime so for people in new regime, they don’t get any benefit of Zaggle Save’s incentives.
Some people I’ve interacted with also mentioned about this tax risk. I wish someone clarified this in latest concall. Maybe it’s already asked, if someone can clarify.
Concall Summary Q4 FY25
- Their main strategy is to grow inorganically and have a long-term objective of scaling to 1 billion in annual revenue.
- Recent acquisitions and investments last year which helped them serve clients in areas like taxes, UPI payments:
- Acquired Taxpanner: expect much faster growth (60-70%) this year compared to last year which was a consolidation year
- Invested in Mobileway Technologies (38% shareholding): signed marquee customers like IDFC Bank, Easebuzz, Catholic Syrian Bank, and Campspay,
- Board Approved Investment in Soft Private Limited
- Launched JUGS (Zaggle Unified Gig Worker Savings): a tool specifically for gig workers to easily file their taxes themselves (DIY) with support in multiple languages, helping them claim their refunds.
- Continue to explore M&A opportunities in adjacent spaces in domestic and international markets with a focus on opportunities in payment solution, loyalty management, kitchen card software
- Signed a preliminary agreement MOU with Mesh Payments which uses AI to manage travel and other expenses which gives a boost to their international expansion plans.
- They are transitioning to be a true SaaS company powered by AI. They are piloting Zaggle Co-pilot a new AI assistant to help finance teams (in testing phase).
- Guidance:
- They project a FY26 revenue growth between 35% and 40% for their standalone business.
- Aim for an EBITDA margin between 10% and 11% compared to 9-10% last year
- They aim to achieve an EBITDA margin of 12% to 15% over the next three to four years.
- Collaborations:
- Signed multiple marquee clients including IndusInd Bank, Mamaearth, Fossil, Marshall, Truecaller, International ASTM Healthcare
- Cross sold to a number of clients including Tech Mahindra, Neuralia Health, Physics Wallah, Zepto, and Wonder Home Finance
- Partnered with Gift City, creating a special prepaid card together for the people to make payments easier for city services. Also, implementing a software system to manage visitors to make administration more efficient.
- Teamed up with the travel company Thomas Cook.
- Working with Redington Limited (collaboration with Google) to create a new solution Smart Employee Purchase Program (Smart EP) which is a benefit program for employees.
- Empaneled by Bank of India as an authorized issuer of prepaid cards
- Received the TPAP approval from NPCI, facilitating UPI-based payments directly through their app and platform
- Expect Program Fees to grow at a rate similar to their overall standalone revenue guidance
- Expect Propel’s margins to stay in the 6% to 7% range on a standalone basis
- Customer acquisition cost was around 360 crores last fiscal year
- They are deliberately focusing on profitable growth, aiming to increase overall margins and improve cash flow in their Program fee (which saw q-o-q growth of 15%) by reducing the incentives
- Reasons for sharp increase in Other Expenses:
- Due to business promotion and advertisement spending, including costs for multiple conferences.
- Network charges and switch costs that occur when they integrate new clients.
- Capex Breakdown
- Product development for new products were previously tracked as intangible assets being developed and have now been finalized and capitalized on the balance sheet.
- Standard increases like costs associated with their new office building they moved into.
- They plan to reduce DSO which will make cash flows more positive.
- The jump in Propel’s margin this quarter was expected because of overriding commissions they were owed for sales generated over the previous nine months
- They mention Q4 is typically a high-growth quarter for them, but margins are usually a bit compressed in Q4. Their business sees lower revenue in Q1 and Q2, with higher contributions in Q3 and Q4 (42-58 split).
- If all the planned acquisitions are completed before September, they expect these acquisitions to add roughly another 40% to the growth.
Disclaimer: Studying and Tracking.
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Zaggle Concall Highlights
Acquisition of Taxspanner, Mobileware technologies and approval for Effiasoft received.
Guidance is to grow at 35-40% standalone basis. This excludes the growth from the planned acquisitions in FY 26.
EBIDTA margin to increase from 9-10% to 10-11% in FY 26.
Positive commentary from the Management and the growth will continue.
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Zaggle to acquire 100% of Dice Enterprises for Rs.123 Cr, expanding product and customer base
Last three years’ turnover:
(Amount in Crores)
FY 2021-22 : 1.39
FY 2022-23 : 3.87
FY 2023-24 : 6.32
This seems to be a obnoxiously overvalued acquisition. They haven’t disclosed PAT figures and FY25 sales, but around 20 times multiple on FY24 sales seems to be a lot.
Even if you take 10 Cr as FY25 sales (58-60% growth from FY24) and a PAT margin of 7.7% (Same as Zaggles PAT margin), then PAT comes out to be around 70-80 lakhs, and the PE comes out to be 158.
Would like to hear if you have different opinions.
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Looks like there is other acquisition also and it seems Prices might have changed while documenting. This twitter explained better
https://x.com/BullvsBear_10/status/1930675709850054792?t=x6Bhcscg-hOIBh3rA1XzqQ&s=19
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Wherever the data is from,one should also take into consideration other aspects like:
Daily average user,growth of subsciption ,Revenue per active usersand and future revenue opportunities.
The Twitter account does not give any sources for the FY25 estimates and PAT margins.
Greenedge Enterprises runs https://www.golftripz.com/ and the 19.82cr figure for FY24 is almost certainly the GMV of the packages sold on the website.
Most likely, Golftripz cut is somewhere in the region of 5-10% so 0.99cr to 1.98cr in net sales.
As for valuations, one should view these as early stage startups rather than mature companies.
For each of these two companies, Zaggle is acquiring not just a revenue stream but a product, a team and they obviously think that they will be able to boost the revenues significantly, something like 10x, by cross selling to their existing customers.
Whether they are actually able to do is anybody’s guess - it all depends on how much faith you have in the management’s execution. But valuing these companies as if a private equity firm is acquiring them isn’t correct IMHO.
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True. One good point is they are acquiring companies which operate in similar areas, but with diff products/services/customer base. Hopefully these can extend their reach into new offerings and/or new customer groups.
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Yes many acquasations in the past by companies like , suzlon, Subex ,3i almost finished those companies and management at the helm just walked out destroying shareholders wealth. With easy money from prefrenial offer available this spree of acquisations.
I am very concerned about the Drive of inorganic growth. Feels like this is a company which IPO’d to give exit to promoters of multiple small companies.
All this will happen through share swaps, increasing the outstanding shares and putting pressue on the stock price.
Market cap might increase but existing retail shareholders won’t profit.
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Company is on acquisition spree. So many acquisitions certainly raises a question mark. Moreover they appears to be overvalued. Management must convince all stakeholders at the earliest. Going has been good for the company so far, but one should not take it for granted. It is will known that inorganic route is the quickest way to grow but that comes at a cost. And very few companies have proved themselves in case of acquisitions. But with so many acquisitions, I am convinced that at least few will fail. So one should be circumspect and bite as much as one can chew.
I have a small stake and have been profit booking on the price rise. Not in a hurry to add more.
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