Target: ₹445

CMP: ₹362.95

Zaggle Prepaid Ocean Services (ZAGGLE) delivered a beat on its Q1-FY25 PAT with lower incentive payouts and contained operating expenses. Gross/EBITDA margins expanded 504bps/218bps y-o-y to 56/8.9 per cent (Q4-FY24: 59/10 per cent).

Management has guided to a doubling of revenues in two years, FY25 EBITDA margins (about 10 per cent) remaining stable yoy and rising to about 15 per cent by FY28, Zoyer driving revenue growth ahead, and exploring EBITDA-accretive inorganic opportunities.

For Q1, the jump in revenues from SAVE was a positive surprise and likely included revenues from recent new relationships the company had acquired. Also, traction in Zoyer revenues was strong with about 6 per cent q-o-q growth. This leads us to raise our FY25/FY26 revenue estimates by 7/4 per cent and PAT estimates by 8/12 per cent. ts. The company has partnered with Skydo to provide international inward remittance solutions to mid-market clients. The firm also onboarded marquee clients like Wipro and PNB MetLife Insurance recently. 

We build in a program fees take-rate of 6 per cent vs 9.8 per cent y-o-y . Retain Long with a FCFF-based Sep’25 TP of ₹445 (vs Mar’25 TP of ₹400 earlier).

Key Risks: Slowdown in new customer acquisitions, regulatory changes, increase in competitive landscape.

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