One MobiKwik Systems Ltd — Q4 FY26

One MobiKwik Systems Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=kOv0wCju9Ys Published: 1 day ago

0:00 Ladies and gentlemen, good day and welcome to the one mobile systems Q4 FI26 results conference call. As a 0:09 9 seconds reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:18 18 seconds Should you need assistance during this conference call, please signal an operator by pressing star then zero on the touchstone board. Please note that 0:27 27 seconds this conference is being recorded. I now hand the conference over to Mr. Rahul Chen from Dollar Capital. Thank you and over to you sir. 0:37 37 seconds Thank you Sapnali. Good evening everyone. On behalf of Dollar Capital. I would like to thank one moiqu systems 0:44 44 seconds for giving us the opportunity to host this earning call. I welcome the senior management of the company represented by 0:53 53 seconds Mr. Bipinatrit Singh MD and CEO of the company. Mr. Pasna Taku who is executive director and CFO of the company. Now I 1:01 1 minute, 1 second would like the management to take us through Q4 FI26 result and I request management to take it over from here. 1:09 1 minute, 9 seconds Over to you now. Thank you Rahul. 1:16 1 minute, 16 seconds Uh very good afternoon to um all the uh people who have joined all the participants on our call today. Um this is Upasna. 1:29 1 minute, 29 seconds Q4 FY26 was a landmark quarter for Movie Quick. We ended the year with back-to-back profitable quarters. 1:38 1 minute, 38 seconds The fullear financial year 26 was an inflection year for us. We achieved an AIDA of almost near break even negative 1:47 1 minute, 47 seconds 5 crores with a total swing of 742 million from minus 794 million in FY25 to -52 million in FI26. 2:00 2 minutes The full year packed halfed to minus 621 million, an improvement of 594 million 2:07 2 minutes, 7 seconds year-over-year from the previous financial year where it was negative 1,215 million. 2:15 2 minutes, 15 seconds The payment GMV hit an all-time high of 524 billion rupees in the fourth quarter 2:23 2 minutes, 23 seconds which is 58% yi improvement and 9%q improvement. This is the 13th 2:30 2 minutes, 30 seconds consecutive quarter of record high GMV that the company has reported in the payments business. 2:37 2 minutes, 37 seconds Within payments in wallet, we remain the largest wallet in India by GTV as of March 2026 with about 20% market share. 2:48 2 minutes, 48 seconds In UPI, we are the second fastest growing UPI app in India. Now, our customer initiated UPI transactions grew 2:56 2 minutes, 56 seconds 170% year-over-year versus the industry which grew at 26% year-over-year 3:03 3 minutes, 3 seconds which is we grew 6.5 times the market rate. 3:08 3 minutes, 8 seconds in bill payments uh bat bill payments uh we are the sixth largest customer operating unit by GTV as of March 26 3:18 3 minutes, 18 seconds in our overall recharge and bill payments business which is a mature business for us the total GME scaled 3:26 3 minutes, 26 seconds 2.2x 2x to 269 billion rupees in the full financial year 26. We reported a 48% three-year ker in this business. 3:37 3 minutes, 37 seconds To clarify, the BBTAs COU GTV is a subset of the recharge and bill payments GMV that I just cited. 3:48 3 minutes, 48 seconds In our financial services business, we delivered our highest ever quarterly gross margin at 59% 3:55 3 minutes, 55 seconds in Q4, which indicates our objective of disciplined expansion, profitability, 4:03 4 minutes, 3 seconds prioritized over volume. Our focus here has remained on increasing dispersals to super prime and repeat users. Super 4:12 4 minutes, 12 seconds prime customer mix improved year-over-year from 10% to 32% in the total dispersal while repeat loans went 4:20 4 minutes, 20 seconds up from 20% to 63.5%. 4:26 4 minutes, 26 seconds At a consolidated level in Q4, the total income came at 2,960 million, which is a 6% improvement year-over-year. 4:37 4 minutes, 37 seconds contribution margin expanded to 46% nearly double of the 23% we had posted in Q4 financial year 25. 4:48 4 minutes, 48 seconds The AIDA for the quarter came in at 174 million which is a 5.9% margin 4:55 4 minutes, 55 seconds reflecting a 632 million year-over-year swing. 5:00 5 minutes The reported pack of 44 million rupees for the quarter includes a 37.6 million 5:09 5 minutes, 9 seconds onetime exceptional charge due to the changes in the labor wage code. Without this exceptional item, our underlying 5:16 5 minutes, 16 seconds path would have been 81 million rupees for the quarter. 5:22 5 minutes, 22 seconds In a summary, FY 26 in the first half we were catching up. We were rebuilding credit quality, compressing costs and 5:30 5 minutes, 30 seconds restoring our margins. By H2, the business had fully turned. H2 delivered 5:37 5 minutes, 37 seconds uh 84 million cumulative pata and pack positive as we had committed to 5:45 5 minutes, 45 seconds all of you in the last few earnings calls. The trajectory entering financial year 27 is therefore much stronger than what our fullear numbers indicate. 5:56 5 minutes, 56 seconds The right way to think about FY26 is this. Moiqu now has a core business which is generating real profits. 50 cr 6:06 6 minutes, 6 seconds of Aida is what our core business payments and lending has generated. And now we are deliberately reinvesting these profits towards building new growth engines. 6:17 6 minutes, 17 seconds To be specific, we are focused on four new growth engines. The first two are payments offline and online. Together 6:26 6 minutes, 26 seconds they represent what we believe is the single largest untapped opportunity in the Indian payments ecosystem. 6:33 6 minutes, 33 seconds Merchant payments both offline merchant payments and online merchant payments operate on MDR device and settlement 6:40 6 minutes, 40 seconds economics with significantly less competition than what we see in consumer payments. Our offline merchant payment 6:49 6 minutes, 49 seconds business is targeting a 5x device scale up to scale to enable a 10x revenue growth by financial year 28. 6:59 6 minutes, 59 seconds Our online merchant acquiring business zay housed in our wholly owned subsidiary is targeting a 10x GMV by financial year 28. 7:09 7 minutes, 9 seconds In the payments business, GMV growth precedes revenue. The revenue from what we have already invested is in the 7:17 7 minutes, 17 seconds pipeline and it will start reflecting in financial year 27. 7:21 7 minutes, 21 seconds Both merchant payment businesses are on track for a bit break even by financial year 28. 7:29 7 minutes, 29 seconds The third growth engine is our NDFC application approval which is the most consequential regulatory milestone in our lending journey. 7:38 7 minutes, 38 seconds The NDFC helps us establish the right foundation to continue our lending scaleup in the most regulated model 7:46 7 minutes, 46 seconds available in this country. The strengths that we have built in doing digital lending in the last seven years include underwriting and credit risk expertise. 7:57 7 minutes, 57 seconds Our collections have been tested in stress cycles and our lender partnerships are in place. All of which 8:04 8 minutes, 4 seconds will seamlessly transition from our current lending service provider LSP model to the new NDFC co- lending model. 8:13 8 minutes, 13 seconds The NDFC will unlock better economics both on own book as well as in co- lending where we will be able to partner with 8:22 8 minutes, 22 seconds many more partners in the banking and NBSC sector. We'll be able to get better terms than FLG and we will have an 8:31 8 minutes, 31 seconds access to a much larger universe of regulated PSU and private sector banks. 8:36 8 minutes, 36 seconds Beyond just the economics, the NDFC will also provide us product velocity. As an LSP, every product decision goes through 8:44 8 minutes, 44 seconds lender approval cycles and we build what they can sanction. As an NBFC, we will design products on our own timeline. 8:54 8 minutes, 54 seconds The fourth and final growth engine is AI. 8:58 8 minutes, 58 seconds MovieQuick as a company intends to be an AI first company by financial year 28. 9:04 9 minutes, 4 seconds We are already running AI across the business. 80% of code is AI generated. 9:10 9 minutes, 10 seconds 55% of early corrections are AIdriven and 86% of customer support is self-s served by AI. And we are going further. 9:19 9 minutes, 19 seconds AI will own the full lending life cycle. 9:22 9 minutes, 22 seconds It will identify funnel drops, drive user personalization at scale and acquire better cohorts 9:29 9 minutes, 29 seconds at lower spend. And it will also help us detect frauds in real time. For us, AI is not just a productivity tool. It is a compounding competitive mode. 9:41 9 minutes, 41 seconds With that, I'll end my opening speech and we'll open it up for questions. 9:48 9 minutes, 48 seconds Thank you very much. We will now begin with the question and answer session. 9:52 9 minutes, 52 seconds Anyone who wishes to ask a question may press star and one on the red throne telephone. 10:00 10 minutes If you wish to remove yourself from the question queue, you may press star and two. Participants, you are requested to use handsets while asking a question. 10:10 10 minutes, 10 seconds Ladies and gentlemen, we will wait for a moment while the question to assembles. 10:19 10 minutes, 19 seconds A reminder to all, you may press star and one to ask a question. 10:35 10 minutes, 35 seconds A reminder to all the participants, you may press star and one to ask a question. 10:46 10 minutes, 46 seconds We will take the first question from the line of Raja from RK family office. Please go ahead. 10:52 10 minutes, 52 seconds Uh am I audible? Yes, you're audible. 10:56 10 minutes, 56 seconds Hello. Yeah. Uh so uh ma'am, our payment business from last four to five quarters is struggling to grow in terms of 11:03 11 minutes, 3 seconds revenue. So what are we doing about this excluding our new growth engine and do you expect it to cross uh 220 210 K revenue per quarter anytime soon? 11:28 11 minutes, 28 seconds Hello. Yeah, just one second. 11:34 11 minutes, 34 seconds As I just explained in my opening speech in payments revenue generally follows GMV. There is substantial GMV growth 11:42 11 minutes, 42 seconds that we are showcasing in the payments businesses across all the businesses of wallet of UPI bill payments. Uh the 11:51 11 minutes, 51 seconds margins that we are earning from payments have also increased. 11:54 11 minutes, 54 seconds Of course there is more UPI mix in the overall payment GMV. uh due to which um 12:02 12 minutes, 2 seconds we have so far not been able to demonstrate significant revenue growth but like I mentioned we have invested and we will be delivering growth in the 12:11 12 minutes, 11 seconds coming years and quarters and so uh any long-term guidance for our 12:18 12 minutes, 18 seconds payment revenue growth so um see basically what a partner is saying is that here the revenue is going 12:26 12 minutes, 26 seconds to lag uh the GMBB growth uh simply because the growth that is happening is in uh a lot of growth is happening 12:34 12 minutes, 34 seconds around the UPI and uh as you mentioned we've grown 170% on UPI over the last year or so even our wallet has grown uh 12:43 12 minutes, 43 seconds but the wallet has grown over UPI and uh that PPI over UPI NDR you know which is supposed to come has not yet come and we 12:51 12 minutes, 51 seconds are expecting it to come uh so because of that there is a revenue lapse uh but you will see uh consistent growth in the 13:01 13 minutes, 1 second revenue uh uh follow the GME growth in the next few quarters. 13:08 13 minutes, 8 seconds Okay. Uh my uh I have some doubts regarding FLD. So FLG cost which is 13:16 13 minutes, 16 seconds majority part of our lending related expenses is actually not a cost right. 13:21 13 minutes, 21 seconds This amounts get blocked and if lender doesn't record it comes back to us. Am I right? 13:27 13 minutes, 27 seconds Uh no it's not correct. It's actually uh you know you have to bear the up to the 5% kind of a cost. Uh the exact 13:37 13 minutes, 37 seconds mechanism of how it gets settled is different. Uh you know but whether it gets invoked or not but basically the 5% 13:44 13 minutes, 44 seconds if your credit cost is 5% then the 5% has to uh come out of the economics. Uh it doesn't really come to us also 13:54 13 minutes, 54 seconds because it's blocked. You're right. uh but it is part of the overall economics but uh if it doesn't get invoked then uh 14:01 14 minutes, 1 second what happens with that uh so basically it keeps on uh so as your book is growing so let's say you 14:10 14 minutes, 10 seconds have 100 crores of book so against that you have 5 crores of FLG next month you have 200 crores so you have 10 crores of 14:18 14 minutes, 18 seconds uh book so you basically against the future losses that are coming so you have to keep uh you know depositing more 14:25 14 minutes, 25 seconds and more Apple Fleg. Uh if for example the business degross for some reason then you will start getting the money back. 14:34 14 minutes, 34 seconds Okay. Okay. Got it. 14:36 14 minutes, 36 seconds Yeah. Uh so sir uh regarding our uh high debt and interest cost you have mentioned that it is working capital due to some settlement settlement uh with merchants. 14:48 14 minutes, 48 seconds So can I infer that that our peer who has zero debt and is funding all these through its cash and why we are not 14:56 14 minutes, 56 seconds doing the same we have also some cash on our books. 15:06 15 minutes, 6 seconds Yeah. Hi. Um so see uh I'm happy to inform that whatever long-term debt we 15:13 15 minutes, 13 seconds had we have already paid it off. So the only uh remaining and utilized debt as of 31st March is uh 261 cr of working 15:22 15 minutes, 22 seconds capital lines. These are short-term working capital lines which we generally use for the weekends uh and long weekend spec specifically. 15:31 15 minutes, 31 seconds You're right. We can fund it with our own cash also because our net own cash is about uh 434 crores. Um 15:41 15 minutes, 41 seconds however uh not all of our cash you know has been available to us at all times like out of this a good chunk of cash is 15:50 15 minutes, 50 seconds still you know in the IPO proceeds um and therefore not all of that cash is 15:56 15 minutes, 56 seconds available to us uh as yet. uh we do utilize the working capital lines very 16:04 16 minutes, 4 seconds prudently and uh if you can see the disclosure on the debt both on quarterly 16:10 16 minutes, 10 seconds basis and annual basis you know has come down significantly from the previous financial year. 16:22 16 minutes, 22 seconds Okay. 16:23 16 minutes, 23 seconds uh uh and uh you have mentioned that uh that our margin business uh will uh scale 10x and then we will break even. 16:33 16 minutes, 33 seconds So uh why it it has to scale 10x and then break even in between like 10x is a big number right? So uh why break even is taking uh it to scale 10x. 16:46 16 minutes, 46 seconds Yeah. So look I mean this is a uh again it's a more forward-looking longerterm projection. Um but the thing is that 16:53 16 minutes, 53 seconds what it what we are trying to say is that uh obviously you can break even earlier uh at a smaller scale. Um you 17:02 17 minutes, 2 seconds know uh and break even here uh you know uh means that actually it completely turns and it becomes profitable on its 17:10 17 minutes, 10 seconds own. But if you continue to expand and uh invest where a lot of the cost comes 17:17 17 minutes, 17 seconds in terms of how you are expanding the network right in terms of uh the number of people that you have on the ground uh 17:25 17 minutes, 25 seconds running sales because it's it's sales heavy and operations heavy uh then if you are aiming for a certain scale until 17:33 17 minutes, 33 seconds you reach that scale and stabilize that scale uh then until then it becomes it stays kind of in the negative territory. 17:42 17 minutes, 42 seconds But once you have reached that scale which is what we are targeting uh um you know then uh it just immediately is 17:51 17 minutes, 51 seconds followed by um you know stabilization of margins and and break even. To give you an example uh we could very well target 18:00 18 minutes 3x or 4x growth um and break even much earlier. But again if we get into the 18:08 18 minutes, 8 seconds investment cycle again it will uh we will have to invest because basically the investment 18:15 18 minutes, 15 seconds uh and the return on investment in terms of the margins and the revenue there is a lag. We have taken this call that the 18:24 18 minutes, 24 seconds right level to target is 10x. uh and the reason we have taken this call is because uh you know we see enough um 18:34 18 minutes, 34 seconds execution rigor that has been achieved in the business already. Uh and also the product and the competitive uhness of 18:43 18 minutes, 43 seconds our offering has reached a level where we can get to 10x without having to change anything else. And so we have we've taken this clear call. 18:55 18 minutes, 55 seconds Okay, fair enough. My last question is uh regarding uh interest cost. So uh uh 19:02 19 minutes, 2 seconds like uh we are profitable now. So we are generating some cash also. So can we expect that uh interest cost to come 19:11 19 minutes, 11 seconds down because it is a huge number which eats our profitability. 19:16 19 minutes, 16 seconds Yeah. So the interest cost like is saying coming from the working capital and that working capital you know is a 19:23 19 minutes, 23 seconds necessary evil in our business because you have to you know fund it with the you know bank based deadlines. Uh like 19:31 19 minutes, 31 seconds say for example you have two days bank holidays then the volume of settlements runs into hundreds of crores. 19:39 19 minutes, 39 seconds Just to also explain that we are trying to bring it down. If you see that in quarter 4, you know, the finance cost is 19:46 19 minutes, 46 seconds 5.1 cr versus it was 7.2 cr in Q3. So, we are definitely trying to bring down um the finance cost. 19:56 19 minutes, 56 seconds Okay. Thank you. 20:01 20 minutes, 1 second Thank you. We will take the next question from the line of Sonil Jan from Nirmal Bank Securities Private Limited. Please go ahead. 20:09 20 minutes, 9 seconds Yeah, thank you for taking my question. 20:12 20 minutes, 12 seconds Uh, so you are uh venturing into this merchant acquisition process and all. So 20:19 20 minutes, 19 seconds uh in next 2 year how much investment we need to make for that and uh will that be uh rooted through P&L or uh in fact I 20:29 20 minutes, 29 seconds think we had raised money in IPO for this particular object also. So will it be used from there? 20:39 20 minutes, 39 seconds So uh yeah hi Sil uh as I mentioned you know what we are doing is we are trying to generate margins from our scale 20:48 20 minutes, 48 seconds businesses which are lending and consumer payments and from that we are trying to reinvest into building the 20:55 20 minutes, 55 seconds merchant payments business. Um we will continue investing into this for the next uh at least um 18 months. We expect 21:04 21 minutes, 4 seconds that investments will be required before the these businesses start becoming close to break even. To answer your question, we did raise funds in the IPO 21:12 21 minutes, 12 seconds proceeds also for this. So we will be utilizing it from the IPO proceeds also. 21:16 21 minutes, 16 seconds But in in that case also it will hit the P&L because um there is no concept of capitalization uh for these expenses. 21:26 21 minutes, 26 seconds Uh so you will be giving this uh uh soundbox and all. So that will not be considered capital expenditure mean that 21:34 21 minutes, 34 seconds will be more of a subscription base you will be giving to the customers. No. 21:40 21 minutes, 40 seconds So the devices piece we are depreciate we are putting it in depreciation which you can see the depreciation cost are going up only. Uh but only the device 21:48 21 minutes, 48 seconds piece but outside of that also there is investment in manpower there is investment in the product that we are 21:55 21 minutes, 55 seconds building. So outside of the device capitalization which goes into the depreciation cost everything else is directly hitting the BNS. 22:05 22 minutes, 5 seconds And uh can you quantify how much could be the investment? 22:10 22 minutes, 10 seconds Yeah for financial year uh 26 which we are just closing. We have mentioned that we have invested 55 crores. Uh and had 22:19 22 minutes, 19 seconds we not invested that you know um our aida would not be negative 5 crores you know it would be uh positive 50 crores. 22:30 22 minutes, 30 seconds Okay. And for coming here any figure uh in similar range. 22:37 22 minutes, 37 seconds Okay. Fine. Great. Thank you very much. 22:45 22 minutes, 45 seconds Thank you. Before we take the next question, a reminder to all you may press star and one to ask a question. 22:54 22 minutes, 54 seconds We have the next question from the line of Ankush Shagarval from Search Capital. Please go ahead. 23:00 23 minutes Yes. Hi, thank you for taking my question. Uh so firstly uh I'm just trying to get a sense uh that know last 23:07 23 minutes, 7 seconds quarter uh we had this commentary that uh the fixed cost base is expected to settle between 115 110 crores and that 23:14 23 minutes, 14 seconds we are investing around 105 kores uh like we are burning 105 crores on the merchant business which we expect to sort of reach break even in three four 23:21 23 minutes, 21 seconds quarters but if I look at this quarter I think the fixed cost base has grown to like 120 about 120 crores and the 23:28 23 minutes, 28 seconds commentary now is that uh we expect the merchant business sort given in FI28. 23:34 23 minutes, 34 seconds So just wanted to get a sense of what has changed and you know uh what is driving this uh at the same time uh one of the commentary that you specifically 23:42 23 minutes, 42 seconds mentioned in the presentation is uh that we expect to remain baseline profitable for next two years. So can you highlight what do you mean by this? 23:52 23 minutes, 52 seconds Yeah. Hi. So actually these are two different questions. So uh firstly yes we are saying uh that we are making uh 24:00 24 minutes fixed cost increases on purpose to build the new businesses which I highlighted at the beginning of the call and it's also detailed out in our earnings presentation. 24:10 24 minutes, 10 seconds uh to qualify if I tell you that in Q4 we have reported 117 cr in fixed costs 24:17 24 minutes, 17 seconds uh which is about 4 crores higher than last quarter and we've also mentioned that in this quarter we have taken the 24:25 24 minutes, 25 seconds new uh wage code related hit which is almost 4 cr 3.8 8 cr if I'm not uh 24:32 24 minutes, 32 seconds wrong. So the gap between Q3 and Q4 you know is just that much uh which is the new wage code related provision that we 24:40 24 minutes, 40 seconds have taken. Um now outside of that when we are saying that we will be baseline profitable. What do I mean by that? What 24:49 24 minutes, 49 seconds I mean is that we are generating uh profit margins from our baseline business of consumer payments and lending which are our scale businesses. 24:59 24 minutes, 59 seconds We are redeploying reinvesting some of that and building the new businesses and despite that you know despite making that investment we have ensured that we 25:08 25 minutes, 8 seconds are uh you know pat profitable for the quarter by 4.4 crores. What we are trying to say is that in financial year 25:15 25 minutes, 15 seconds 27 we will have these new businesses which will scale which we want to new modes new verticles but those businesses also as they scale 25:24 25 minutes, 24 seconds their burn will keep going down and uh at all times we intend to be profitable uh you know at the bottom line that is 25:33 25 minutes, 33 seconds definitely our intention is what we are saying which means that same thing that I'm saying this financial year had I not invested in building a merchant payment 25:40 25 minutes, 40 seconds business I would have reported a plus 50 cr reinda instead of reporting a negative 5 cror rainda for the full financial year 26. So I'm trying to say 25:49 25 minutes, 49 seconds that in FI 27 let's say hypothetically I could have reached a 2x 25:57 25 minutes, 57 seconds uh positive aida I may not reach 2x I may reach x or x plus something because the balance between x and 2x I would 26:04 26 minutes, 4 seconds have invested in continued investments in building these businesses so that in two years time they will also become 10 20% of the revenue pie of the company. 26:16 26 minutes, 16 seconds Right. Right. uh but so the broad sense would be that uh I mean I think to the earlier participants you said of sort of 26:24 26 minutes, 24 seconds mentioned that you expect similar kind of investment the merchant business as FY26 going into FYI 27. So if that is going to the big case and the fact that 26:33 26 minutes, 33 seconds you mentioned that as this business will expect them to sort of reduce the upon uh I believe the profitability should 26:39 26 minutes, 39 seconds see sharp improvement going ahead right despite this investment being there 26:47 26 minutes, 47 seconds because the core business either way is is substantially profitable assuming that the fixed cost base doesn't grow on that 26:55 26 minutes, 55 seconds yeah I think they're both saying the same thing Okay. Okay. Maybe I have a different read of the wording. 27:04 27 minutes, 4 seconds No, I'm trying to say that the core business will also scale up. The net new businesses will also start generating revenue. Uh and as a result of that, we 27:13 27 minutes, 13 seconds expect that the company's overall revenue will grow while maintaining the current u profitability which is 27:20 27 minutes, 20 seconds baseline profitability. You know, we are not reporting right now 10% PAT. We are reporting 1% PAT. So that is what we are trying to say that with a very moderate 27:28 27 minutes, 28 seconds baseline profitability we will further scale up the business both existing businesses and net new businesses. 27:36 27 minutes, 36 seconds Got it. Got it. Uh the second thing that I want to understand is uh in a payment business uh the GTV X of UPI is still 27:43 27 minutes, 43 seconds north of 30%. This the growth that we have seen the last many quarters. 27:47 27 minutes, 47 seconds Obviously the revenue hasn't been growing uh but obviously the profitability has been improving. So except for UPI in the remaining business 27:56 27 minutes, 56 seconds uh is are we seeing some sort of uh mixed change into certain products which are you know sort of uh less in revenue 28:03 28 minutes, 3 seconds high on margins because uh if the GPX of UK is still going in north of 30% and the revenue is not growing but the profitability is growing that means 28:11 28 minutes, 11 seconds there there should be something more than UPI that is driving the sort of change in the productness in the paper. 28:19 28 minutes, 19 seconds So uh see basically what is not currently broken down uh fully and it is uh shown in some places is basically we 28:29 28 minutes, 29 seconds have started making some revenue in the UPI business also in some parts uh on the consumer side even though the PPI 28:37 28 minutes, 37 seconds over UPI MDR has not come so once that comes it will completely add on to that but even on the bank UPI side uh the 28:45 28 minutes, 45 seconds 170% growth that happened over the last one has started generating uh revenue in in small amounts in different pockets. So 28:53 28 minutes, 53 seconds as it scales that will directly flow into the uh bottom line of the company. 28:58 28 minutes, 58 seconds The other segment which is showing a lot of promise is bill payments and in bill payments uh you know like Upasna mentioned we've already reached a decent 29:06 29 minutes, 6 seconds scale in terms of B bill payments and there the revenue contribution is also picking up uh and we expect that in 12 29:15 29 minutes, 15 seconds months time both of these uh both UPI uh as well as bill payments will start 29:23 29 minutes, 23 seconds will be contributing significant amount to uh the growth of the revenue of consumer customer payments beyond what you see today. 29:31 29 minutes, 31 seconds I mean I get that but what I'm trying to understand is if the last three four quarters we are seeing X of GTV growth being say north of 30%. Ideally it 29:40 29 minutes, 40 seconds should start reflecting in revenue growth right uh in the payments business. So that divergence uh something that is that I'm not able 29:48 29 minutes, 48 seconds to understand because obviously the uh total GTV growth is much stronger because of UP and assuming that UP doesn't make any revenue uh but even 29:58 29 minutes, 58 seconds excluding that I mean revenue being flat and you know X of UK GTV growth being not of 30%. So that is not adding up honestly. 30:10 30 minutes, 10 seconds No, so look I mean uh there is uh been uh obviously moderation of the take rates in some of the existing business 30:18 30 minutes, 18 seconds also that we have seen uh because of which you see the overall uh payments business the take rate gross take rate has come down. uh at the net level we 30:27 30 minutes, 27 seconds are still making money but at the gross level uh there is a mix that change that has happened thanks to UPI thanks to uh 30:34 30 minutes, 34 seconds addition of some categories which don't make as much money as possible uh so that's how much what I can tell you 30:42 30 minutes, 42 seconds today um and so because of that you see that the revenue growth in the non-UPI part is also uh you know not as much as we would have expected in the Right. 30:56 30 minutes, 56 seconds Okay. Lastly, just uh any sense of what kind of cost we can expect going ahead. 31:18 31 minutes, 18 seconds Hi, I'll just take this question. Uh this is from moiqu. So fixed costs right now we are on the uh 115 to 120 K per 31:27 31 minutes, 27 seconds quarter range. Now as the merchant business keeps growing obviously there will be increases in depreciation as well as we will also increase the people 31:35 31 minutes, 35 seconds cost for further distribution of those devices. So you can roughly assume a 15 to 20% increase in fixed costs in the next year. 31:45 31 minutes, 45 seconds Okay. That was thank you. A reminder to all you may 31:52 31 minutes, 52 seconds press star and one to ask a question. We have the next question from the line of Smith Sha from GHP securities. Please go ahead. 32:03 32 minutes, 3 seconds Yeah. Hi. Uh so basically on the NDFC side from when can we start our own lending and how will we arrange for the funds for that particular lending? 32:18 32 minutes, 18 seconds Yeah. Uh hi Smith this FNA. So um on the NDFC side um as we have detailed out in 32:26 32 minutes, 26 seconds the earning slides also uh currently the dictat from the regulator is that we have to first move our existing digital 32:36 32 minutes, 36 seconds lending LSP business uh to a wholly owned subsidiary of Moiquake which we intend to finish in the next two to 32:43 32 minutes, 43 seconds three months. uh post which we will start the NDFC setup work which we expect that if I count from today then 32:51 32 minutes, 51 seconds you know at least 3 to 6 months is the time frame in which the NDFC will be set up. Um and after that in the 6 to9 month 33:00 33 minutes time frame is when I expect that we will launch the operations and start dispersals in the coalending model. So this is sort of the high level guidance 33:08 33 minutes, 8 seconds that I can give but and these are the steps that I just mentioned. First we have to move our existing business from the parent to a wholly owned subsidiary 33:17 33 minutes, 17 seconds and only then we can start the NBFC operations in yet another wholly owned subsidiary. With regard to the capital allocation 33:25 33 minutes, 25 seconds uh because it's a wholly owned new subsidiary of Moiqu uh we will be uh shortly going through the board and uh 33:32 33 minutes, 32 seconds shareholder approval process to infuse funds uh into this entity. 33:40 33 minutes, 40 seconds Okay, understood. and uh our digital credit GMBB growth on a sequential basis has been subdued this quarter. What are 33:49 33 minutes, 49 seconds the reasons for the same because on this day like driving a single like high single digit or 10% kind of frequency 33:56 33 minutes, 56 seconds growth wouldn't be too difficult. So what were the reasons for the subdued growth? 34:06 34 minutes, 6 seconds Yes, with the high level uh answer to that is that we are prioritizing uh quality and profitability over volume. 34:16 34 minutes, 16 seconds So like I mentioned uh you know we have in increased our loans to repeat customers from about 20% to 63%. 34:25 34 minutes, 25 seconds We have also increased our loans uh to the super prime users uh which used to 34:32 34 minutes, 32 seconds be 10% of the dispersal to now 32%. So we are moving a lot of our lending focus 34:39 34 minutes, 39 seconds towards prime and super prime customers and of course we have about 20% nearprime customers also and uh 34:46 34 minutes, 46 seconds therefore the larger point I want to make is that the portfolio is tilting towards repeat and super prime cohorts 34:54 34 minutes, 54 seconds and we will be uh continuing to grow in this manner where the focus is uh more on higher quality book resulting in higher net margin. 35:05 35 minutes, 5 seconds instead of uh just focusing on higher dispersals. 35:11 35 minutes, 11 seconds Okay, understood. And the FI26 digital credit GME stands at uh roughly around 3,200 odd crores. Uh what should be the growth rate in FI27? 35:29 35 minutes, 29 seconds I think uh broadly 30 35% is what uh you know you can assume. 35:39 35 minutes, 39 seconds Okay. Okay. And uh can you guide on the like a broad epida margin range for FI27? 35:49 35 minutes, 49 seconds Similar to the 5% range that we are at. 35:54 35 minutes, 54 seconds Okay. Understood. Understood. Thank you so much. That's it from myself. 35:58 35 minutes, 58 seconds Just to clarify, Smith, we are saying that we will make better margins, but we will be making more investments and therefore the neta margin that will be 36:07 36 minutes, 7 seconds reported will be in the same broad range of 5% where we are. 36:14 36 minutes, 14 seconds Thank you. A reminder to all you may press star and one to ask a question. We will take the next question from the 36:21 36 minutes, 21 seconds line of Shloka Kolia from Zylm Investments. Please go ahead. 36:32 36 minutes, 32 seconds You may proceed with the question. 36:40 36 minutes, 40 seconds Due to no response, we will take the next participant. 36:44 36 minutes, 44 seconds We have the next question from the line of Dy Tagur from Pentress Capital. Please go ahead. 36:54 36 minutes, 54 seconds Uh hello am I audible? Yes you're audible please proceed. 36:58 36 minutes, 58 seconds Yeah uh congratulations on a great set of numbers. So actually I had the same question and I I was not able to get the 37:06 37 minutes, 6 seconds answer. So why are we not using our cash and uh uh using the short-term facilities for the loan to meet our 37:13 37 minutes, 13 seconds working capital requirements? I miss the answer. Okay. 37:20 37 minutes, 20 seconds Hi I'll take the answer. So effectively what we are saying is uh out of the total unencumbered cash a significant 37:28 37 minutes, 28 seconds portion of it is still part of our IPO proceeds which we do not have access to yet. The IPO proceeds keep trickling in 37:35 37 minutes, 35 seconds as and when they are used. Secondly uh you know the working capital is required more so to fund during the weekends uh 37:44 37 minutes, 44 seconds when two to three days we do not get the funds from the banks but we have to make the payments to the merchants and our 37:50 37 minutes, 50 seconds customers. So in those days the usage is more which typically tends to be higher than our remaining cash. Hence our 37:58 37 minutes, 58 seconds working capital uh requirement there helps us to maintain the balances. But nevertheless we have tried to ensure that we keep this working capital under 38:07 38 minutes, 7 seconds check. So if you see our uh you know our payments GMV has exploded. It has grown multiffold but our working capital has remained stable over this period. 38:17 38 minutes, 17 seconds Actually it has come down from Q3 7.2 2 cr in Q4 it has come down to 5 cr in terms of finance cost. 38:27 38 minutes, 27 seconds Uh okay got it thanks and all the best for the future. 38:34 38 minutes, 34 seconds Thank you. A reminder to all the participants. You may press star and one to ask a question. We have the next 38:41 38 minutes, 41 seconds question from the line of Sloka Kolia from Tylm Investments. Please go ahead. 38:47 38 minutes, 47 seconds Good evening ma'am. So first of all congratulations on a strong set of numbers. So ma'am I had two questions. 38:54 38 minutes, 54 seconds First uh for expire 27 and 28 what is the revenue growth trajectory that we anticipate for our payments business as 39:02 39 minutes, 2 seconds well as lending business and on uh another question around the sustainability of our margin like our 39:10 39 minutes, 10 seconds lending spreads are at 5.4% 4% is that sustainable so I think we had guided that four to four and a half% was a 39:19 39 minutes, 19 seconds sweet spot for us so around that there's some guidances 39:34 39 minutes, 34 seconds yeah hi shlo um thanks for asking the question so uh we do expect that our GM 39:40 39 minutes, 40 seconds growth will be in the range of 30 to 35% in both of our businesses payments and uh lending. In terms of the lending 39:50 39 minutes, 50 seconds margin, um we have shown that the performance of the cohorts is coming stronger uh where you know 35% lower 39:58 39 minutes, 58 seconds credit cost is coming on the maturing portfolio and we also have some uh you 40:04 40 minutes, 4 seconds know uh uh previously matured cohorts from which we are getting gains due to uh superb collection effort. Given all 40:13 40 minutes, 13 seconds of these, you know, we have landed at the uh 5% uh uh 5.3% uh margin. But from 40:22 40 minutes, 22 seconds a long-term perspective, you know, we are not guiding uh 5%, we are comfortable with the 4% range. Uh we do 40:29 40 minutes, 29 seconds believe that that is the sweet spot. Um I think that uh we have done well and we have collected deferred revenue also from uh previously maturing portfolios. 40:40 40 minutes, 40 seconds uh but uh I'm not sure whether we can commit long-term that we'll be able to deliver these margins. I think 4 and a half% still sounds more uh sustainable. 40:53 40 minutes, 53 seconds Okay ma'am and ma'am uh just around payments margin is the 16 basis points workable number for next two to three years. 41:06 41 minutes, 6 seconds uh so um you know from my perspective I would have loved to say that but of course it's not in my control as you 41:13 41 minutes, 13 seconds know that uh India is a very uh healthily regulated market and um you know we have various licenses also in 41:20 41 minutes, 20 seconds payments business so the various regulatory changes can impact that which is why from a longer mid to long-term 41:28 41 minutes, 28 seconds perspective we are guiding 12 to 15 basis points even though every quarter so far we have been uh doing better than that but I don't from a 2-year time 41:37 41 minutes, 37 seconds frame, I would recommend modeling for 16 basis points because we really can't tell if and when uh any regulatory change could uh you know um change that. 41:49 41 minutes, 49 seconds Therefore, we always recommend a more conservative uh approach. 41:56 41 minutes, 56 seconds Okay, ma'am. Okay. Thank you. And all the wish for the next water. 42:05 42 minutes, 5 seconds Thank you. We have the next follow-up question from the line of Smith Shaw from GHP Securities. Please go ahead. 42:14 42 minutes, 14 seconds Yeah. So, this merchant partners currently are 4.9 million. Where do you see the merchant partner number going in 42:22 42 minutes, 22 seconds FI28? Like this year we grew at a mere 7%. So like now we are going to aggressively on board a lot of merchants. So where do you see this number in FA28? 42:33 42 minutes, 33 seconds Uh so we are not uh you know obsessing about the number of merchants. Um I think what we are looking at is we have 42:42 42 minutes, 42 seconds looked at our offline merchant partners in terms of different categories uh especially three different categories. 42:48 42 minutes, 48 seconds One is the organized retail. Second is petrol uh and third is small mom and pop stores. Our aim is that uh you know we 42:57 42 minutes, 57 seconds get to uh like maybe between 10 to 20% uh of the uh market leader size uh in 43:07 43 minutes, 7 seconds the next 18 to 24 months or perhaps before that and with that view we are investing and building in this business. 43:16 43 minutes, 16 seconds Okay, understood. 43:18 43 minutes, 18 seconds Yeah, that's it from my side. Thank you so much and all the best. 43:25 43 minutes, 25 seconds Thank you. A reminder to all the participants, you may press star and one to ask a question at this moment. 43:39 43 minutes, 39 seconds A reminder to all press star and one to ask a question. 43:49 43 minutes, 49 seconds We have the next question from the line of Rahul Jen from Dalip Capital. Please go ahead. 43:56 43 minutes, 56 seconds Yeah. Hi, thanks for the opportunity. 43:59 43 minutes, 59 seconds Uh, basically I want to understand uh on your strategy on the merchant acquisition side. We have this uh goal 44:07 44 minutes, 7 seconds of increasing uh our Zach Pay revenue meaningfully and on sir also on the offline side of it. uh if you could 44:15 44 minutes, 15 seconds explain what kind of investment that could entail what could be the is he picking relatively for us uh to have 44:24 44 minutes, 24 seconds that kind of a growth potential is it more like reviving the same customer it's led by more customer acquisition 44:31 44 minutes, 31 seconds any color on those factors would help thank you yeah so uh thanks R for the great question so what we are doing is uh you 44:39 44 minutes, 39 seconds know u both the merchant side both on the online and as well as offline side is obviously uh the uh the businesses have become 44:47 44 minutes, 47 seconds very very big in the market. I mean and so what we are looking at is identifying specific categories within which uh we 44:55 44 minutes, 55 seconds will uh try to gain a meaningful share of the market. Uh and so for example in the offline space uh our business is 45:04 45 minutes, 4 seconds divided into three categories. One is small mom and pop store, second is uh oil and gas and third is organized which is basically you know midmarket and 45:12 45 minutes, 12 seconds above. uh we're not necessarily focusing too much on enterprise. Uh in at least two out of the three categories we are 45:19 45 minutes, 19 seconds focusing and identified that uh combined with the better product experience uh end to end uh and great service we can 45:28 45 minutes, 28 seconds get to 10 to 20% market share uh or at least 10 to 20% of the market leader size in the 18 to 24 month mark and with 45:37 45 minutes, 37 seconds that aim we are investing in this business. uh on the online piece uh Zak Pay again we have identified few categories uh we have identified for 45:46 45 minutes, 46 seconds example education as a as a great category we have identified uh you know government uh as a as a great category 45:55 45 minutes, 55 seconds and then some of these categories are really really very big uh and even a double digit share uh percentage share 46:02 46 minutes, 2 seconds in these markets will easily help us reach the goals of 10x that we are targeting for the next 18 months 46:10 46 minutes, 10 seconds And so um BBPS is another category in the bar bill system where our PA the online PAP pay is going to be 46:18 46 minutes, 18 seconds particularly relevant is a category that we are scaling um very rapidly. So uh because our scale is less right now. So 46:26 46 minutes, 26 seconds for us to get to 10x in the next uh 18 to 24 months looks doable by just identifying the right categories and investing and going deep into it. 46:37 46 minutes, 37 seconds Sure. 46:40 46 minutes, 40 seconds Uh and one question on the lending side of the business since now we have this NBFC route also to tap into uh this 46:48 46 minutes, 48 seconds opportunity. So is there a change in strategy on the LSP side of the business or that remain as is and we this could 46:57 46 minutes, 57 seconds be an incremental thing. uh and is there any kind of a conflict of interest that we need to identify on the user 47:06 47 minutes, 6 seconds acquisition side or we just become one of the uh another lending partner and uh everything looks same from an LSP point of view. 47:16 47 minutes, 16 seconds Yeah. So look I mean from an regulator point of view you have to reinfence the businesses and so therefore as you know NBFC has been uh received in one of the 47:24 47 minutes, 24 seconds subsidiaries and the LSP business is being migrated to another subsidiary. So the whole core which is one movie quick will not have any LSP business or will 47:33 47 minutes, 33 seconds not have any NBFC business. Uh these businesses will sit separately in two subsidiaries. Uh you know and and uh 47:41 47 minutes, 41 seconds they will have uh all have basically agreements with each other on how the sourcing of customers is there or how 47:48 47 minutes, 48 seconds the billing of customers and revenue happens. Uh so this is all uh how the uh it will be set up as far as the NBFC is 47:57 47 minutes, 57 seconds concerned. Look, LSP is still lightly regulated, but NBFC uh the regulator expects uh proper governance, proper 48:04 48 minutes, 4 seconds compliance uh especially as you become bigger. Uh so therefore we expect that these companies will with their 48:13 48 minutes, 13 seconds management will be operating independently in their interest and in the interest of the whole core which is 48:20 48 minutes, 20 seconds one quick um with their own individual managements. Uh so I hope that answers your question. So just last piece which 48:28 48 minutes, 28 seconds you didn't answer pipin is that uh Rahul we expect that the LSP will continue in the similar fashion in the wholly owned 48:37 48 minutes, 37 seconds subsidiary and the business generated from the LSP uh sorry from the NBFC will be incremental to the business that we are already doing as an LSP. 48:45 48 minutes, 45 seconds So NBFC will be one of the partners for the LSP. It doesn't mean that other lending partners will obviously go away. 48:52 48 minutes, 52 seconds Sure. Sure. just one uh further uh product into the point you raised within that uh since both of the both of the 49:01 49 minutes, 1 second business would work in their own interest. So the customer acquisition side of the uh NBFC will completely rely 49:10 49 minutes, 10 seconds on the uh on the app or they might find business opportunity outside the one movie quick app. 49:18 49 minutes, 18 seconds So this level of detail we haven't figured out but you know we have to expect that NBSC will be built as a its own independent company which initially 49:27 49 minutes, 27 seconds obviously will work with Movie Quick but eventually if it follows its own independent trajectory will be able to work in the market openly. 49:38 49 minutes, 38 seconds Sure. Thanks for the color and uh best wishes for so many new uh things that you are working upon. Thank you. 49:46 49 minutes, 46 seconds Thank you. 49:48 49 minutes, 48 seconds Thank you. We will take the next question from the line of Ankush Aarwal from Search Capital. Please go ahead. 49:56 49 minutes, 56 seconds Thank you for the portion here again. So just two quick clarification. Uh on the merchant side when you sort of give a sense that you know you will be investing 50 60 K or whatever that 50:04 50 minutes, 4 seconds amount will be. Uh is it just the opex or it also includes the capital investment in the devices? Uh 50:14 50 minutes, 14 seconds so this is just the opex we are talking about. Okay. 50:18 50 minutes, 18 seconds Okay. And secondly uh on the lending business in the uh medium to long run uh what would be the say targeted split 50:26 50 minutes, 26 seconds between uh the NBFCPS and the uh you know the pure distribution sort of makes any sense. 50:35 50 minutes, 35 seconds I think it is too soon to say right now we have to first set it up and launch it. Maybe in a couple of quarters you can ask this question 50:45 50 minutes, 45 seconds right because uh I mean the sense is that since uh you have taken this this decision of starting an NBFC you would have some idea you know this is how much 50:52 50 minutes, 52 seconds big that is because if it's going to be just 10 20% then ideally uh the kind of investment and the infrastructure that is needed and compliance that is needed 50:59 50 minutes, 59 seconds for an NBFC might not really make that much sense. So this was trying to get a sense that you know you might have some bigger plan to you know go ahead with this. 51:10 51 minutes, 10 seconds We may have but I think it is too soon to reveal. So first we want to reveal that we have completed the setup then we will talk about how we will deploy it to grow the company overall. 51:23 51 minutes, 23 seconds Thank you. 51:28 51 minutes, 28 seconds Thank you. We will take the next follow-up question from the line of Schllo Akolia from Zylm investments. Please go ahead. Yeah. 51:37 51 minutes, 37 seconds So I had a followup on the previous question. So we wanted to understand what are the target unit economics for 51:43 51 minutes, 43 seconds the merchant business side and also how are we tracking the efficiencies of our investments in the 51:51 51 minutes, 51 seconds merchant business till now? uh like are there any signs of early events as they've already invested about 50 crores in there? 52:03 52 minutes, 3 seconds So I think that uh this is the first quarter we where we have actually broken down and given some little level of detail in terms of the various 52:11 52 minutes, 11 seconds subcategories within uh payments uh whether it is bill payments whether it is merchant payments etc. I think in the 52:18 52 minutes, 18 seconds coming quarters we will be revealing more but needless to say we are uh we have revealed it as a growth engine. So 52:26 52 minutes, 26 seconds you should be assured that the management is looking at it with a Hawkeye and we have also we would also like to mention that the investments 52:33 52 minutes, 33 seconds that we have already made are panning out in terms of certain uh growth KPIs and we will start disclosing them in the 52:41 52 minutes, 41 seconds rightful manner in the upcoming quarters. But one should be clear that uh especially on merchant payments also 52:51 52 minutes, 51 seconds uh transactions you know don't generate uh MDR it is the credit on UPI rails or 52:58 52 minutes, 58 seconds the rupee credit card transactions that generate the MDR and then there is a device rentals and then after there is a strong merchant 53:06 53 minutes, 6 seconds engagement then one can build the merchant credit pipe also. So that is the long-term uh buildout of the economics from a merchant business perspective. 53:17 53 minutes, 17 seconds That is enough. I'm looking forward to the next. Thank you. Thank you so much. 53:27 53 minutes, 27 seconds Thank you very much ladies and gentlemen. We will take that as a last question. And with that concludes the question and answer session. I now hand 53:35 53 minutes, 35 seconds the conference back to the management for closing comments. Thank you Natio. 53:41 53 minutes, 41 seconds Thank you so much for hosting us Rahul and the dollar capital team and thank you to all the participants who actively engaged with us in understanding how 53:50 53 minutes, 50 seconds Mubiqu is building the future of fintech in India. Thank you. Have a good evening. 53:55 53 minutes, 55 seconds Thank you members of the management. On behalf of Dollar Capital that concludes this conference. Thank you all for joining with us today and you may now disconnect your lines. Thank you.