Zaggle Prepaid shares rise 5% to hit 5-month high on stellar Q1 earnings

Shares of Zaggle Prepaid Ocean Services, a SaaS fintech player, spiked 5.23% in today's intraday trade, reaching a five-month high of ₹353.5 apiece. This surge followed the release of the company's June quarter results, which were announced post-market hours on Tuesday.

Zaggle began the year robustly, achieving revenue of ₹252 crore in Q1 FY25, marking a 112.9% YoY increase. The company's adjusted EBITDA (before ESOP expense) for the quarter was ₹25.8 crore, reflecting 85.3% YoY growth, primarily driven by strong demand for its Zoyer and an increase in credit card volume.

The company's Q1FY25 PAT also saw significant growth, supported by lower incentive payouts and controlled operating expenses. Zaggle reported a net profit of ₹16.7 crore, a staggering 713.6% increase compared to the net profit of ₹2.06 crore in Q1 FY24.

During the quarter, Zaggle added 100 clients and 160,000 users, compared to 185 clients and 150,000 users in Q1 FY24, indicating rising acceptance among larger clients. The company has partnered with Skydo to offer international inward remittance solutions to mid-market clients and has recently onboarded marquee clients such as Wipro and PNB MetLife Insurance.

The company indicated that the 'Zoyer' proposition is receiving a strong market response due to its ability to address complex issues related to vendor management, such as processing MSME payments within 45 days and avoiding manual errors.

Zaggle has upheld its FY25 growth guidance of 45–55%, with revenues for FY24 expected to double within two years. This growth is anticipated to be achieved with adjusted EBITDA margins of approximately 10% or higher.

Additionally, Zaggle is actively pursuing EBITDA-accretive inorganic opportunities to expand its product lines and extend its geographic reach to attractive markets, including the US.

Following the company's June quarter performance, domestic brokerage firm Equirus Securities remains confident in Zaggle's ability to deliver strong revenue growth over FY24-FY27. This optimism is driven by recent launches and Zoyer initiatives, as well as the expansion of offerings through forex cards and other new tie-ups.

As a result, the brokerage has retained its 'Long' rating on the stock, setting a record target price of ₹445 apiece.

"With Zoyer generating ₹540 million (+6% qoq) of 1Q revenues, we believe ZAGGLE can record more than ₹2.5 billion in FY25 revenues from Zoyer (vs. ₹850 million in FY24). Its 3,000+ customers can act as a good base for cross-selling of SAVE/Propel (20% overlap currently) as well as Zoyer platforms," the brokerage said.

Founded in 2011, Zaggle is a prominent player in the business-to-business-to-customer (B2B2C) segment. The company specialises in delivering fintech products, including prepaid cards and software-as-a-service (SaaS) solutions, to corporate clients across various sectors.

The company's shares debuted on Indian stock exchanges in September 2023 at ₹158 each, slightly below the listing price of ₹164. However, following its listing, the stock maintained a robust upward trajectory, leading it to currently trade 109% higher than its issue price.

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