Zaggle_A platform to address pain points for enterprises

[Amardeep50]

On the first point regarding cross sell

Management mentioned if a corporate example,ABC use there one of the zaggle’s product save and use another zaggle’s product zoyer it comes under cross sell for them.

And same corporate ABC uses another zaggle’s product propel they won’t consider this as cross sell

And some of the corporate from start taking there multiple products due to brand visibility at that time also not considered as cross sell for them.And from past couple of years if you see many corporates initially took single zaggle product now there are taking multiple products at the same time due to there brand visibility.

[abhishek_singh11]

It seems like network effect and the dynamics of a platform company has started showing green shoots. If the execution remains robust specially with all these new aquisitions, this could be the best fintech story unfolding in coming years.

PS: Invested and looking for long term bet

[Lokesh_Setty]

Very good quarter in most aspects. I am really interested to know their market share the fleet management services. They mentioned they have signed the contract with Adani total gas and Megha city gas and are in talks with most OMCs and the gas distribution companies and there is a huge runway for growth.

Focusing on some other aspects, the management has maintained that in next 4-5 years their EBITDA margins will grow to 14-15%. In the post earnings call interview Avinash Gorkhindi, their CEO and MD indicated that they intend to grow to 1billion dollars in revenue in next 7 years. Assuming they finish the year on a 2000 cr run rate this would mean they will have to grow at around 26% to acheive that target. Also if they are able to meet their margin guidance even at a lower band (14%) their profits will grow at 30%. However this will be a mix of organic and inorganic growth and they will have to raise funds time and again to complete their acquisitions which most likely will result in equity dilution. Also compared to other platform companies Zaggle tends to overpay for their acquisitions, Will be interesting to see how they perform in the coming years.

Disclaimer : Invested

[anna]

1billion USD in 5-7 years would mean roughly mean 10,000 crores+ .. At that revenue EBITDA of 14% means 1400+ crore of EBITDA.. Last year the turnover was approx 1300 Cr.

Wish life was that simple.

As I mentioned in an earlier post , if they can get 7 out of 10 things correct, they can blaze a trail …. This is that kind of scenario.

If you look at acquisitions - Dice, Greenedge definitely good. Tax Spanner and Rio I don’t really understand properly. Tax spanner I think is a mistake anyway. Effiasoft is ok, maybe it will turn to be good. Mobileware is excellent but only an investment and doesn’t go into Rev or EBItDA, unless they take it beyond 50% - hope they do it.

But none are large. They possibly need one larger one (say 200 cr topline) with growing , EBITDA positive business and providing some synergy. If they get this right , they would have progressed immensely. With foreign investors largely absent , now is the best time to land such a deal.

Foray into retail credit card is uncharted territory. It’s a high risk element for me as of now, thought both promoters understand credit cards well.

Besides normal business they have a lot of risk from the regulator. Payments , cards are highly regulated, one decision from RBI can send you in orbit or pull you out of orbit straight to ground.

So still many a slips between the cup and the lip. Having said that , they have a chance at getting at it, with a high risk factor.

No reco. Invested. Cautiously optimistic.

[anna]

Rio Money or Rivpe Tech will be the vehicle for co-branded consumer credit card business.

They are talking of growing it into a 500 crore top line, 50 crore EBITDA business in 5 years with additional investment of 75 Cr by issuing a million cards to the end users of it’s other products.

Don’t think I like the sound of it. A low margin business, with long gestation period to mid to high single digit EBITDA, which is much lower than their guidance of stand alone EBITDA margins over comparable period.

Also the maths seems somewhat optimistic.

Why get into this B2C segment? What is that I am not able to see to feel excited on this?

[Chandan_Sharma]

Recent management interview after partnership with Visa

[anna]

Did a deeper dive into Rio. They have scaled up to acquiring 3k customers monthly 3 months back. Now targeting to scale to an annual run rate of 1L, which is approx 8.5k/month.

The key to profitability and keeping investment under control for them would be to keep customer acquisition cost low. Acquiring lots of customers and at low cost and keeping them active are the three key to success.

Zaggle seems to have bet on the first 2 using their reach to the enterprise customer employees and channel partners. This channel of acquisition can help them keep their CAC below 1000. If they achieve it, getting to EBITDA positive can possibly be in FY28 with maybe 250k+ customer base. They also have the Benett Coleman tie up for ads (which unless used judiciously can hit EBITDA).

Rupay credit cards are scaling like crazy presently, so there is immense tailwind.

The team at Rio is a very small one and they will need to add serious muscle there quickly.

Though I still remain somewhat skeptical, it is now at a reduced level. Q4 concall will be a good point to revisit this. Maybe management will also provide more details and lay out a roadmap which is more granularly quantified.

On the other hand, still no news on the “large” acquisition, which investors have been waiting for and the QIP money sits in FD, earning 5% and pulling down the ROCE.

Hope there is some movement in Jan.

[asardarsardar]

CAC for a credit card is very high, unless it comes bundled with client acquisition. Employee of the client is given the card (pre approved). today consumer has tons of CC options to choose from and managing many credit cards will be debt trap in the future.

Company is trying to do many things in one go, i understand one needs to live with the speed but i am unable to see how they are structuring the execution.

one other side Happay is riding on the capabilities of the parent.

Can anyone help me understand how save helps in saving 20 - 30%, also propel is primarily a rewards catalogue which is a low margin business unless you commit numbers.

[radhakishandamani]

@asardarsardar

Company is trying to do many things in one go, i understand one needs to live with the speed but i am unable to see how they are structuring the execution.

The CEO said in an interview that before joining Zaggle his domain was retail credit cards and that it’s a very profitable business. This puts my mind to rest at least a bit.

[A.R_PAWAR]

Hi i didnt know there was a thread on zaggle too,
so in last couble of days i gone through the portal and will try to ans few quaries whatever i understand from the business hope it will help ( I am long term investor since 1.5 years my allocation is high and my average buying price is 315)

1-Why SaaS % Looks Low in Reported Revenue
Many people are worried its being promoted as saas company but why the rev is so small. does it really deserves high valuation ? here is the example
Imagine a client:

• Pays ₹5 lakh/year SaaS fee
• Spends ₹50 crore/year through Zaggle cards & rewards

Zaggle earns:

• ₹5 lakh (SaaS)
• ~1% on transactions = ₹50 lakh

In P&L:

• SaaS = 9%
• Platform/transaction = 91%

But without SaaS, ₹0 transaction happens

2- All small concerns, here is the clarification

A-Customer acquisition cost (CAC) for credit cards is high unless bundled.----Traditional standalone CC issuance has high CAC, but Zaggle reduces this via B2B2C approach. However, credit card economics still need careful execution

B-Employees already have many credit cards; additional cards could be debt traps.------- This concern relates to consumer credit behavior, but Zaggle’s cards are primarily corporate spend/payment tools, not typical personal credit cards. Value creation is in spend management, not consumer borrowing

C-Company trying to do too many things at once with unclear execution.-----Fast innovation and multiple product lines can strain execution, especially for tech & integration roadmaps. This is a strategic risk more than a model flaw.

D-Unclear how “Save” platform saves 20–30%.------- “Save” claims efficiency & compliance improvements which can reduce costs, but the precise 20-30% figure needs company data/metrics to validate

E-Propel” rewards catalogue has low margins unless volumes are committed.------Reward margins are inherently low; profitability depends on merchant partnerships and volumes. But bundled SaaS + interchange can offset this.

3- Indian Competitors – Revenue / Market Size

A-Zaggle Prepaid Ocean Services Ltd----₹1,510 Cr (~$182M) revenue; Market Cap ~₹4,108 Cr
B-Happay------ ~₹75–80 Cr (~$9M–$10M) estimated revenue
C-EnKash-----~₹70–304 Cr range depending on year

4-what PE does zaggle deserve as it is only listed company ??

Scenario	Suggested P/E Multiple	Rationale
Base Case	30x – 35x	Growth decent, business stable, industry median — fair valuation.
Growth Premium	36x – 45x	If growth >20% and profitability improves consistently.
Aggressive Premium	45x – 55x+	If Zaggle becomes a clear leader with strong SaaS + card revenue scaling, and market expands faster than expectations.
Conservative / Value Case	20x – 30x	If growth slows or competitive pressures intensify.

[anna]

Hi,

Good points.

On acquisitions

1. Look at Dice. - in 20cr turnover large part is SAaS. Now if they manage to put payment rails to even a part portion - what revenue can be realised from that? I would assume they would keep that software stack as is and just try to leverage the payment rails on top of it.
2. Green edge doesn’t require tech integration. It’s very low tech business and a different field.
3. Effiasoft is also different - POS mainly? What is the synergy?
4. Mobileware is just a large and great investment. It is not integrating. They have considerable synergy.
5. Rio anyway is a different - consumer credit cards.
6. Tax spanner is likely failure at this point of time,

For these acquisitions, one key aspect is quality of team that comes in and the continuation of founders for at least 3 years. How do they score on that?

On valuations. Do you look at historical TTM earning for PE or 1 year forward? Analysts typically look at forward. Analyst also look at free Cash Flows and ROCE and there lies the dilemma for traditional analysts for companies such as zaggle.

Too many things on plate , no doubt.

Little known about second line of management after the founders.

Very clued in startup space. Can find opportunities and have inroads in the investor space. In this fintech world growth by acquisition is better than trying to do things grounds up as time is of essence. Integration - tech, people, financial, cultural remains key.

As i said earlier , if they get 70% of stuff right, they can make it. A 100% success rate is fantasy in this strategy.

[Daljit_Singh]

I think greenedge is best among them.

U r CFO of a firm and zaggle through Greenedge is providing you free golf trips. Now you think twice before shifting away from zaggle because you are going to loss your own special perk.

It’s way of bribing top management.

This is kind of weird interpretation but it’s possible that management might be thinking on the lines although very slight probability.

[Bharat_Aggarwal]

Why has their employee expense reduced from 18cr to 16cr in Q2 FY26? Also, their intangible assets have increased. Does it mean that they are now capitalizing employee expenses also?
Also, how should one look at steady state depreciation number?

[A.R_PAWAR]

Intangible is increased as they are developing AI model where they included employees cost also