Zaggle Plunges 20% To Hit Lower Circuit After Q1 Profit Slump

Shares of fintech SaaS company Zaggle Prepaid Ocean Services plunged 20% during the intraday trading today to ₹160.45 apiece, hitting their lower circuit and a 52-week low after the company reported a sharp decline in its profit in the June quarter. 

The stock remained locked at the lower circuit, taking Zaggle’s market capitalisation to ₹2,157.3 Cr ($225.6 Mn). 

Today’s decline extended the stock’s recent slide. Shares of Zaggle have fallen 54% so far this year and 21.3% over the past five trading sessions. 

Following the results, brokerage Equirus retained its ‘LONG’ rating on Zaggle but cut its target price to ₹350 from ₹455, citing slower growth in the company’s core business and near-term margin pressure from the integration of DICE Enterprises. It also lowered its FY27 earnings estimate by 21%, expecting the acquisition to weigh on profitability in the near term. 

Zaggle’s consolidated net profit fell 33% to ₹17.5 Cr in the first quarter of FY27 from ₹26.1 Cr a year earlier. Sequentially, profit declined 57%. Operating revenue rose 28% YoY to ₹423.3 Cr but fell 32% from the preceding quarter. 

Profitability also weakened during the quarter. The company’s adjusted EBITDA rose 4% YoY to ₹34.7 Cr, but the corresponding margin narrowed to 8.2% from 10.1%. 

Reported EBITDA increased just 1.3% YoY to ₹30.9 Cr, while the margin contracted to 7.3% from 9.2%.

Zaggle attributed much of the pressure to costs associated with DICE Enterprises, an enterprise spend-management startup whose assets and intellectual property it acquired for ₹68 Cr in May.

Revenue from DICE contracts is expected to begin contributing from the second quarter, with a fuller impact likely from Q3.

Zaggle also incurred costs related to integrating Zagg.Money, the consumer credit card business it acquired from Rio.Money. Higher employee expenses and the transfer of previously capitalised costs to the profit and loss statement also weighed on profitability.

Despite the weak quarter, Zaggle retained its revenue-growth target of about 40% for FY27. The company expects the DICE acquisition and increased deployment of AI across its platforms to support growth as it integrates its newer businesses. 

“Q1 FY27 marks an important inflection point for Zaggle as we move from a decade of profitable growth into a phase of transformation through consolidation,” founder and executive chairman Raj P Narayanam said.

During the quarter, Zaggle also invested ₹8 Cr to acquire a 20% stake in Unobanc as it looks to expand its capabilities in cross-border payments, forex cards, and remittances.

 

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