Bought 50,000 more shares on 19th May
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another 30,000 shares purchased on 20th May
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Promoters buying pocket change worth of shares to distract investors from the real issue. The biggest issue is cash flow. Operating cash flow was still around negative ā¹6 crore standalone, even after strong revenue growth, which means the business is scaling without yet converting that growth into consistent cash. Trade receivables also rose sharply from about ā¹40 crore to ā¹129 crore, showing that money is taking longer to come back into the business.
A second concern is Propelās economics. Propel revenue crossed ā¹1,000 crore for the first time, but it is still a cash-heavy engine and Q4 margins in that segment fell from about 10% to 4% as the company shifted away from some redemption models. That helps stickiness, but in the near term it tightens working capital and pressures margins.
The third pain point is integration risk. DICE was still loss-making in FY25 and is likely to remain loss-making in FY26, while TaxSpanner is being reset with a new brand and AI copilot strategy. On top of that, the US launch has slipped to FY-end and UAE expansion is being delayed by geopolitical uncertainty.
So the real issues are cash burn, receivables build-up, margin pressure, and execution risk. The growth story is intact, but the numbers show that profitability quality and cash conversion still need to improve.
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Letās talk about Zaggle once again at ā¹200 and a ~ā¹2700 Cr mcap.
First, letās talk about why it got hammered badly.
It all started when management did a QIP at the peak of the bull run at an issue price of ā¹523.20 per share, and management was spot on to cash in to build a good cash reserve to acquire the opportunities available (institutional holdings reached ~23%).
But FIIs are exiting: Not only did the percentage drop drastically, but the absolute number of Foreign Portfolio Investors holding Zaggle stock dropped from 74 to 52 during the March 2026 quarter. This indicates that 22 foreign institutions completely liquidated their positions.
DIIs also actively trimmed their stake from 14% to almost 7%.
Who is holding strong?
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Promoters: Have not diluted. They actually marginally increased their stake from 44.13% to 44.29% after latest buy from open market.
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Ashish Kacholia: The prominent ace investor has kept his stake steady at 2.23% (holding over 30 lakh shares).
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ValueQuest Scale Fund: Continues to hold a 1.71% stake.
There could be numerous reasons FIIs and DIIs might have sold, but this selling pressure is not getting absorbed by Retail, HNIs, or family offices. Why? I found these reasons:
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Cashflows are negative and ROCE is just 13-14%.
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Why did they acquire Dice at ā¹123 Cr? (The Dice Acquisition Margin Drag)
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AI fears that it will impact the SaaS business and the IT sector was not performing.
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Why is management over-promoting their stock on TV channels?
Letās talk about each concern and check whether the investment thesis still holds good.
1. Regarding cashflows and ROCE - The main culprit is Propel, a low-margin business just generating ā¹45 crores of net revenue while trapping hundreds of crores of working capital on the balance sheet, which severely suppresses the companyās Return on Capital Employed.
Then why are they not closing it, since they will automatically become cashflow positive? At least thatās what most analysts think. But here is the catch: 90% of the spends that happen on the Propel platform actually occur via prepaid network cards. The income generated from these card swipes is highly profitable, but due to accounting rules, it gets recorded under the Program Fees segment, not the Propel Points segment. Only the remaining 10% of reward points which users redeem directly for brand vouchers gets classified as Propel Points revenue (which generated that ā¹45 crore net figure).
If Zaggle closed the Propel platform to save working capital, they would instantly kill the primary engine that drives 90% of their highly lucrative Program Fees.
Propel acts as a massive feeder business for the rest of the company. Managing channel rewards is a complex problem for corporates. By solving this with Propel, Zaggle gets deeply integrated into the corporateās operations, creating incredible stickiness. Once the corporate is locked into the ecosystem, Zaggle leverages this relationship to heavily cross-sell and up-sell its other high-margin software solutions, like Zoyer and Save.
What most people fail to understand is: is their cash getting stuck, or are they getting it back? Itās just the timing is like that so it gets recorded as negative. Letās say this year they slow down or stop the Propel business will they get their cash back? Unlike other stressed businesses where cashflow is negative because cash is stuck in B2G or bad corporates and it takes years to get that cash back, Zaggle gets it back in 60 days.
There are two ways to manage this: slow down this vertical, or increase the margins and the DSO to 60 days.
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Scenario A: Operating at a 6% Margin Maximum Monthly Growth: 3.14% | Maximum Annualized Growth: ~44.9%
The Math Proof: If you sell ā¹100 in Month 1, your upfront cost is ā¹94. By Month 3 (60 days later), you collect that ā¹100. To break even, your Month 3 cost cannot exceed that ā¹100. If you grow exactly at 3.14% per month, your Month 3 revenue will be ā¹106.38.
At a 6% margin, the cost of that ā¹106.38 order is exactly ā¹100. Cash in = Cash out.
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**Scenario B: Operating at a 7% Margin **
Maximum Monthly Growth: 3.70% | Maximum Annualized Growth: ~54.5%The Math Proof: Because the profit margin is slightly higher, it gives you a slightly larger cash buffer.
If you grow at exactly 3.70% per month, Month 3 revenue reaches ā¹107.53. At a 7% margin, the cost to fund that ā¹107.53 is exactly ā¹100. Cash in = Cash out.
So when the business becomes mature propel growth will slow down, it will automatically become cashflow positive, so no need to worry here.
**2. Why did they acquire Dice at ā¹123 Cr? (The Dice Acquisition Margin Drag)
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Previously the deal was ā¹123 Cr, which was 12 times sales. SaaS companies were valued like that pre-AI boom, so again the valuation was expensive, but then they finally got what they needed at ā¹68 Crore, which is not bad at all. What they got is Diceās codebase, all the clients, and their workforce. TBH, if Zaggle had started developing this from scratch, the cost would have been much higher. Trust me, I work as an SDE-2, I know what it takes to deliver projects, plus there is the risk of failure and delays.
But what markets didnāt like was the 100 additional engineers that will drag the standalone EBITDA margins, which management is yet to disclose. (My estimates are Zaggle previously had around 110 people in the tech team. They laid off 50% and added 100 folks from Dice, which takes the total count to 160. Net 50 people got added). If the avg CTC would be ā¹20L, the max extra cost will be ā¹10 Cr, which would be roughly 40-50 bps in standalone margins. But DICE revenue will should negate this impact on a net basis. Plus, the growth in Diceās revenue may even nullify the drag in the entire year, so again if I look closely, this is not a concern.
**3. AI will disrupt SaaS
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Anyone who still thinks that can just look at the SaaS and software companies listed in the USA and see how they have recovered after this quarterly results. So again, not a concern.
**4. Why is management over-promoting their stock on TV channels?
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I think they are a relatively new management team, and they are trying their best to defend the stock price. Is this a red flag? If they were dumping their stake or trimming it, I would have considered this as a red flag, but instead, they are buying whatever they could, so I canāt say much on this.
Now letās look at the deal. I will talk only consol numbers.
Revenue ā¹1,908 Cr, ā¹185 Cr EBITDA, and ā¹139 Cr PAT in FY26.
One year forward, management says 40% revenue growth (since they have never missed revenue guidance in any quarter after listing, so letās stick to the same).
Revenue ā¹2,700 Cr. Considering whatever margin they were supposed to do, somehow they will not, and letās say a ~30 bps contraction in margins. So 9.4% EBITDA margins = ā¹253 Cr EBITDA. And PAT growth of 32-33%, roughly ā¹184 Cr PAT.
So FY27 PE comes to ~14. PEG will be ~0.4 (which is quite great)
From FY28, operating leverage should play out once they are done with the Dice integration.
Exit multiples you can give accordingly, but this story is definitely quite attractive at this price point.
Are FIIs and DIIs fools? They decreased the stake toh kuch soch smjh k hi kia hoga? If you think so, then I will say you are new to the markets. There are plenty of times when FIIs and DIIs are wrong. If they were that smart, would they have participated in the QIP in the first place at ā¹523? This you can decide.
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How did you calculate 9.4% ebitda margin for fy 27?
50% of the revenue comes from propel.
In the conference call they said that for propel from last year 6% margin they have dropped to 4% margins.
So in FY 26 EBITDA margin consolidated was 9.69 considering Dice will cause a drag on the EBITDA of around 8-10 cr instead of EBITDA margins expanding they will decrease by 30bps. Although EBITDA contraction might get offset with the operating leverage so things shouldnāt be that bad.
why are you looking at the whole year.
See what they are saying what happened in this quarter. margin dropped from 6% to 4% on Propel.
Calculate the impact on PAT based on that. They said margin will resume back to 5.5 % in few years.
propel Margins for Q4 FY 25 was 9.8% and it got dropped to 3.18% in Q4 FY 26.
Full year Propel Margins for FY 25 was 6% | FY 26 full year propel margins are 4.3%.
Now understand what management guided, management said this is the low for propel margins and they should stablize at 5.5% which means in FY 27 margins should not drop further rather improve a bit. So it wonāt cause drag on EBITDA margins in FY 27 ideally because this propel segment they plan to slow down and margins also bottomed out in FY 26. Thatās why i didnāt included propelās margin impact for FY 27 EBITDA margin calculation because it wonāt be significant.
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