Mastercard-backed fintech startup Instamojo has shut down its core payments business after the Reserve Bank of India rejected its application to operate as a licensed payments aggregator in September, citing non-compliance with eligibility criteria.

Consequently, Instamojo has shifted its focus away from payments following the regulatory setback, The Morning Context reported.

Instamojo has promptly ceased its business operations after the RBI rejected its payment aggregator application. While payment companies typically have 180 days to wind down operations following a rejection, Instamojo has chosen an immediate shutdown, indicating that they would not reapply as well.

According to the report, InstaMojo is actively seeking a potential buyer as its founders aim to exit the business. Additionally, the startup has faced challenges in securing funding over the past few months, encountering difficulties with both existing and new investors.

Founded in 2012 by Sampad Swain, Akash Gehani and Aditya Sengupta, Instamojo is an ecommerce platform for independent businesses, direct-to-consumer (D2C) brands and micro, medium and small enterprises (MSMEs) that enable them to start, manage and grow their business online.

In early 2019, the startup raised INR 50 Cr as a part of its Series B funding round from Gunosy Capital, Japanese payments firm AnyPay and existing investors. It also counts Kalaari Capital and Blume Ventures among its investors.

Queries sent to Instamojo did not elicit any response till the filing of this article.

Introduced by the RBI in March 2020, the payment aggregator framework requires all payment gateway operators to obtain a license for acquiring merchants and implementing digital payment solutions.

Payment aggregators (PAs) facilitate merchants and ecommerce platforms in accepting payments by providing their technological infrastructure for streamlined online transactions. However, the licensing process, initiated three years ago, has become challenging and cumbersome procedure for payment solution providers.

Strict regulations from the central bank have resulted in numerous PA applications, including those from Paytm and LivQuik, remaining in a state of uncertainty. Even prominent names like MobiKwik’s Zaakpay faced delays and had to submit multiple applications before obtaining their licenses.

Earlier in February, RBI granted in-principal authorisation to 32 existing payment aggregators (PAs) to act as online PAs.

Amazon (Pay) India Pvt Ltd, Paymate India Ltd, Razorpay Software Pvt Ltd, Pine Labs Pvt Ltd and Zomato Payments Pvt Ltd were among the PAs that had been granted in-principle authorisation.

As per a report, the Indian payment gateways market is projected to grow to $2.68 Bn by 2027.

The post Mastercard Backed Instamojo Shuts Core Payments Biz After RBI Rejects Its Application appeared first on Inc42 Media.

Paytm’s parent company, One97 Communications, is among the nine stocks newly incorporated into the MSCI Global Standard Index. Following its inclusion, One97 Communications observed its shares reaching the highest level this month.

Paytm shares are presently trading at INR 912.30, reflecting a 2% increase. The stock has registered a remarkable 72% gain in the year 2023.

IIFL Alternative Research estimates potential stock inflows at $140 Mn, while Nuvama Alternative and Quantitative Research anticipates inflows of $162 Mn.

Recently, Paytm announced a 49% year-on-year decrease in its consolidated net loss, amounting to INR 291.7 Cr for the quarter ending September 2023. Operating revenue experienced a significant 31% surge, reaching INR 2,518.6 Cr, propelled by robust expansion in the payments and financial services sector.

Meanwhile, shares of Paytm slumped as much as 10.6% to INR 882.1 during the intraday trading on the BSE on October 23 after the company released its Q2 FY24 earnings.

In addition to Paytm, IndusInd Bank, Tata Motors ‘A’ (Tata Motors DVR), and Suzlon Energy shares are also among the nine stocks included in the MSCI Global Standard Index.

As per the latest announcement by the global index provider, other stocks added to the MSCI India Index include APL Apollo Tubes, Macrotech Developers, Persistent Systems, Polycab India, and Tata Communications.

The changes in constituents for the MSCI Global Standard Indexes will take place at the close of November 30, 2023.

At the same time, MSCI has not removed any stocks from the India index.

Passive funds globally monitor the Morgan Stanley Capital International (MSCI) indices. Any additions or upward adjustments in stock weightages within these global benchmarks are likely to attract inflows from passive funds aligned with these indexes.

Morgan Stanley Capital International or MSCI is known for its stock indices. The MSCI Index includes stocks from developed markets worldwide, as defined by MSCI. It covers securities from 23 countries but excludes stocks from emerging and frontier economies, making its global scope somewhat narrower. In contrast, the MSCI All Country World Index (ACWI) incorporates both developed and emerging nations. Additionally, MSCI offers a Frontier Markets index, which includes another 31 markets.

The MSCI India Index is crafted to gauge the performance of the large and mid-cap segments within the Indian market. Encompassing 122 constituents, the index effectively spans about 85% of the entire Indian equity universe.

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The Reserve Bank of India (RBI) reportedly appointed executive director P Vasudevan as the new head of the fintech department earlier this month. With this, Vasudevan has become the second top official of the department since its formation in early 2022. 

Sources told The Economic Times that Vasudevan has taken over the reins from the incumbent chief and RBI executive director Ajay Kumar Choudhary, who is said to have retired. As per the report, Choudhary has now been appointed to the board of the Reserve Bank Innovation Hub.

“He has immense experience handling the payment ecosystem in the country, which will help him while dealing with the growing fintech ecosystem in the country,” a senior fintech executive reportedly said. 

The RBI hived off a separate fintech department in 2022 to foster innovation and provide impetus to the burgeoning Indian fintech industry. It is this department that industry stakeholders have to coordinate with for regulatory push and policymaking. 

Industry executives told the publication that Vasudevan will likely focus on streamlining coordination between various supervisory departments and ironing out policy bottlenecks. 

The fintech department will be an additional charge for Vasudevan who already oversees currency management, the corporate strategy and budget department at the central bank. 

This comes barely three months after Vasudevan was appointed as the executive director of the central bank in July this year. The RBI executive previously served as the chief general manager in charge of the department of payment and settlement systems before the elevation. 

The new appointment comes as the central bank has issued a slew of diktats and directives to streamline the entire fintech ecosystem. Just this month, the RBI issued rules to directly regulate entities facilitating cross-border payments. 

It has also been tightening its grip around fintech players, especially payment aggregators, and mandating greater compliance with rules and regulations. In September, RBI deputy governor T. Rabi Sankar also pitched for the creation of self-regulatory organisations (SROs) in the fintech sector to tackle key issues such as market integrity, data privacy, and cybersecurity.

A flurry of diktats from the RBI in the past one year also forced companies to pivot while the business models of many other players have also been rendered useless. 

As the fintech space grows in prominence, it remains to be seen how the space evolves. With a new official at the helm of affairs, all eyes are now on Vasudevan as to how he walks the tightrope between regulation and innovation.

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Online travel aggregator Yatra Online saw its consolidated net losses surge nearly 11X year-on-year (YoY) to INR 17.1 Cr in the second quarter (Q2) of the financial year 2023-24 (FY24) on the back of a fall in revenues. In contrast, the company reported a net loss of INR 1.56 Cr in the year-ago period. Sequentially, the company posted a net profit of nearly INR 6 Cr in Q1 FY24. 

Revenues from operations jumped 14% YoY to INR 94.1 Cr in Q2 FY24 compared to INR 82.4 Cr in Q2 FY23. On a quarter-on-quarter (QoQ) basis, operating revenue declined 14.5% from INR 110.1 Cr in Q1 FY24.

Including other income, total income rose 8% YoY to INR 97.3 Cr in the quarter ended September 2023. 

Meanwhile, expenses continued to drag the company down. In Q2 FY24, total expenses zoomed more than 25% YoY to INR 113.5 Cr, up from INR 90.5 Cr in the year-ago period. 

Employee benefit expenses emerged as the biggest cost centre and contributed INR 36.6 Cr to the total expenses in Q2 FY24. Other expenses stood at INR 18.6 Cr and service costs accounted for nearly INR 16 Cr in Q2 FY24. 

Yatra claims to be one of the country’s largest online travel companies in terms of gross booking revenues and competes with the likes of players such as MakeMyTrip and EaseMyTrip. Yatra also claims to cater to more than 700 corporate customers and offer hotel bookings, holiday packages and homestays. 

The online travel aggregator claims to have more than 1.03 Lakh hotels in India and over 15 Lakh hotels available on its platform for booking. The Indian arm of the Nasdaq-listed Yatra Inc. made a muted debut on the Indian bourses in September this year. 

The stock got listed at INR 127.50 per share on the NSE and INR 130 on the BSE against the issue price of INR 142. Since then, the company has been hovering around the same range. Yatra closed 0.32% lower at INR 138.60 on the BSE on Tuesday (November 11).

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After raising $50 Mn in its Series C funding round led by Tiger Global in June 2022, lending tech unicorn slice has now secured INR 75 Cr (around $9 Mn) from Stride Ventures in a debt funding round. 

The startup has passed a special resolution to allot 7,500 non-convertible debentures (NCD) at an issue price of INR 1 Lakh per share, slice’s regulatory filing with the Registrar of Companies (RoC) showed. The debentures issued by the company are non-convertible and have an interest rate of 14.25% per annum.

A separate filing noted that the debt funding round may reach INR 300 Cr (around $35 Mn). The development was first reported by Entrackr.

The funding round comes a month after slice and North East Small Finance Bank (NESFB) announced their merger. The joint venture seeks to integrate advanced technology solutions with initiatives to promote financial inclusion at the grassroots level, an official statement noted.

slice acquired a 5% stake in Guwahati-headquartered bank for about $3.42 Mn in March.

Founded in 2016 by Rajan Bajaj, the lending tech unicorn had to pivot after the Reserve Bank of India’s (RBI) mandate on prepaid payment instruments (PPIs) from last year. slice used to issue credit cards with pre-loaded credit lines, which the RBI has since made impossible.

Now, slice facilitates personal loans and UPI payments via its app, even though the fintech unicorn obtained a PPI licence last December. The fintech unicorn has raised $340 Mn to date and was valued at over $1.5 Bn during its Series C round.

In FY22, slice’s consolidated net loss widened 2.5X to INR 253.7 Cr from INR 100.4 Cr in FY21. Its operating revenue jumped 4.2X to INR 283.1 Cr from INR 67.7 Cr in FY21.

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While Fintech unicorn Razorpay plans to relocate its parent company to India through a cross-country merger, this move could incur a tax payment of $250 Mn – $300 Mn in its current domicile, the United States.

This plan involves a merger between its US-registered entity and its Indian arm.

Razorpay and its investors are contemplating a merger at a reduced valuation from its peak of $7.5 Bn in 2021. Despite this, advisors on both sides of the deal, including those in the US and KPMG and Deloitte in India, are hesitant due to the paced growth trajectory of the payments processor over the past two years, ET reported.

A reduced valuation would proportionally decrease the tax liability; however, a significant reduction might face challenges in obtaining regulatory approval.

“Yes, there have been discussions to value the company at $3 Bn – $4 Bn, but external advisors are of the view that it may not be cleared by US authorities because of the company’s steady growth over the last year or so, even as peers in the US have seen correction in their valuations,” a source said as quoted in the report.

Razorpay is set to pursue approval from the National Company Law Tribunal (NCLT) within the next two months for the merger. Additionally, the company will appoint an auditor for the valuation discussions.

The fintech unicorn is also looking at raising a new round of funding from investors in 2024 to cover the tax payout. The uncertainty surrounding the duration of NCLT approval has prompted this strategic move.

Razorpay’s decision to relocate is primarily motivated by its goal to list on Indian stock exchanges within the next two to three years. This strategic move is also aimed at enhancing the company’s ability to navigate the regulatory landscape more effectively.

Razorpay has reportedly held discussions with government officials as well regarding the requisite approvals needed for the relocation process.

Founded by Shashank Kumar and Harshil Mathur in 2014 as a payment gateway platform, the startup has branched out into SME payroll management, banking, lending, payments, insurance among others, over the years.

In 2021, Razorpay bagged $375 Mn in its Series F round from Lone Pine Capital, Alkeon Capital, and TCV, among others, at a valuation of $7.5 Bn. Razorpay entered the unicorn club in 2020 after bagging $100 Mn from Singapore’s GIC and Sequoia Capital, among others.

Razorpay’s standalone net profit widened 20% to INR 7.3 Cr in the financial year 2021-22 (FY22) from INR 6.1 Cr in FY21 due to a strong growth in its business.

The startup’s revenue from operations surged 76% to INR 1,481 Cr from INR 841.2 Cr in FY21.

A growing trend among major players in the Indian startup scene is the consideration of “reverse flipping” — relocating their headquarters back to India. Triggered by PhonePe’s shift, which paid INR 8,000 Cr to shift domicile, for a potential public listing, this move has encountered challenges.

As per an Inc42 survey published earlier this year, over 77% venture capital funds and 65% angels said that after the SVB collapse, founders are rethinking overseas registration, with tax implications deterring a return to India for startups registered in the US.

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Fintech SaaS startup Perfios turned profitable in the financial year 2022-23 (FY23), posting a consolidated net profit of INR 7.8 Cr on the back of a significant jump in its service income due to strong performance of its India business.

The startup had reported a net loss of INR 16.8 Cr in FY22 on an operating revenue of INR 136.5 Cr.

In FY23, Perfios’ operating revenue jumped almost 200% year-on-year (YoY) to INR 406.8 Cr.

Founded in 2008 by VR Govindarajan and Debasish Chakraborty, Perfios provides software solutions to financial institutions for credit decisioning, analytics, onboarding automation, due diligence, among others. It earns a majority of its revenue from the sale of services.

At INR 198.5 Cr, income from software support for loan processing had the biggest contribution to its operating revenue and grew almost 90% YoY.

Meanwhile, service income jumped over 28X YoY to INR 166.5 Cr, contributing the second-highest portion to sales revenue.

Perfios also earns revenue from software coding and maintenance services, licence and subscription fees.

On the other hand, if looked at geographically, India continues to be the biggest contributor to the startup’s income.

Perfios posted a 211% surge in its domestic revenue to INR 382 Cr in FY23 from INR 122.6 Cr in the previous fiscal year.

Meanwhile, the startup earned INR 24.7 Cr from its international businesses during the reported year, as against INR 13.8 Cr in FY22.

In a recent statement, Perfios said it processes 1.7 Bn transactions a year with $36 Bn of assets under management (AUM).

Zooming Into The Expenses

In line with the rise in its revenue, Perfios’ total expenses more than doubled to INR 386.4 Cr in FY23 from INR 155.9 Cr in the prior year.

Employee Costs The Biggest Expense: Employee benefit expenses accounted for over 55% of the startup’s total spending during the year.

Perfios’ total employee costs surged to INR 213.5 Cr in FY23 from INR 99.7 Cr in the prior fiscal. In that, a majority was spent towards salaries and wages.

The startup also spent INR 7.1 Cr on employee share-based payments (equity settled).

Other Major Expenses: Depreciation, depletion, and amortisation expense increased by over 200% to INR 32 Cr in the reported period.

Perfios’ legal professional charges surged 80% to INR 41.1 Cr in FY23, while miscellaneous expenses also increased to INR 70 Cr from INR 13.5 Cr in FY22.

In the recent past, there have been a number of new developments at the startup. In September, Perfios signed an agreement with Kedaara Capital for an investment of $229 Mn in its Series D funding round.

Recently, it also acquihired Chennai-based open finance platform Fego.ai and announced an ESOP buyback of shares worth INR 154 Cr.

Perfios also appointed Sumit Nigam as the startup’s chief technology officer (CTO) and Anu Mathew as chief people officer (CPO). At that time, the startup also said that it is eyeing an IPO in the next 18-24 months.

The post Fintech SaaS Startup Perfios Turns Profitable In FY23, Revenue Triples To INR 406 Cr appeared first on Inc42 Media.

Bengaluru and San Francisco-based event management startup Hubilo’s net loss jumped 2.75X in the year ended March 31, 2023, as expenses shot up. The startup’s loss rose to INR 52.02 Cr in the financial year 2022-23 (FY23) from INR 18.93 Cr in the previous fiscal year.

Hubilo, founded in 2015 by Vaibhav Jain, Mayank Agarwal and John Peter, started as a virtual networking platform for attendees. However, gauging the preference for physical events, it started developing tools and executing and managing mid to large-sized events for enterprises.

The rise in virtual events during the COVID-19 restrictions saw the startup pivoting to online event management and offering a streaming platform for enterprises to cater to the needs of the industry at the time.

However, with daily life returning to normalcy after the pandemic, online events have gone down steadily and this seems to have affected Hubilo’s business.

Its revenue from operations rose marginally to INR 55.95 Cr in FY23 from INR 55.06 Cr in FY22. Including other income, total revenue stood at INR 56.68 Cr in FY23 as against INR 55.59 Cr in the previous fiscal year.

Zooming Into Hubilo’s Expenses

The startup’s total expenditure surged 1.46X to INR 108.70 Cr in FY23 from INR 74.54 Cr in FY22.

Employee Costs Surge: At INR 93.62 Cr, employee benefit expenses accounted for 86% of the total expenditure in FY23. Employee costs grew over 86% from INR 59.02 Cr in the previous fiscal year. The increase came despite the startup laying off around 160 employees across two rounds during the year.

Other Expenses: The startup categorised INR 14.07 Cr worth of expenditure under ‘Other Expenses’ in its filings, down slightly from the INR 14.77 Cr reported in FY22. Of this, consultancy charges stood at INR 3.10 Cr in FY23 as against INR 6.44 Cr in FY22. 

Advertising Costs Slide: Hubilo managed to drastically bring down its advertising spending, bringing to INR 14.30 Lakh in FY23 from INR 1.04 Cr in FY22.

On a unit economics level, Hubilo spent INR 1.94 to earn INR 1 from operations during FY23.

Hubilo has raised a funding of $153 Mn to date and counts the likes of Alkeon Capital, Lightspeed Venture Partners and Balderton Capital among its investors.

The post Hubilo’s FY23 Loss Surges 2.75X To INR 52 Cr As Expenses Mount appeared first on Inc42 Media.

Amazon India said over 38,000 sellers achieved their highest-ever single day sales during the Great Indian Festival that started on October 8. The platform onboarded over 40 Lakh new customers and recorded 110 Cr+ visits during the month-long event. 

In a bid to help customers make the right purchase, the platform onboarded 300+ influencers to live stream for over 1,000 hours. With over 18 hours of non-stop live streaming per day, Amazon witnessed engagement from viewers, taking its viewership to an all-time high.

Amazon India’s consumer business manager Manish Tiwary highlighted that the event recorded the highest numbers of Prime sign ups with highest seller participation. Also, 5,000 new products were launched by the top brands on the platform in categories such as  smartphones, premium electronics, high-quality TVs, engaging books, health & personal care essentials, fashion items, durable luggage, home decor, and fitness gear. 

In the product category, fashion and apparel purchases increased three times compared to 2022, with a significant chunk of customers buying sarees, men’s denims, casual wear, premium shoes and sports shoes.

In addition, the Amazon Fresh products also saw more than 50% year-on-year (YoY) growth with a 3X jump in customers shopping for the first time.

• 750+ sellers made sales worth crores
• 31,000+ sellers made sales worth lakhs
• 30% YoY increase in the number of participating SMBs 
• 65% sellers from tier 2 & beyond cities
• 80% new customers came from tier 2 & beyond cities
• 19,000+ pin-codes pan India covered
• 140% YoY increase in flight purchases (by value) compared to last year

Last year, Amazon claimed 30,000 sellers and brand partners on the platforms clocked sales worth over $100K during the event. Back then, 79% of the new users came from Tier-2 and 3 towns.

The ecommerce major claimed that customers saved more than INR 600 Cr this year by availing the discounts. It said almost half of the orders to Prime members were delivered in less than 48 hours

Earlier, Amazon’s major competitor Flipkart said it set a new benchmark with 1.4 Bn customer visits during its Big Billion Days festive season sale, which took place between October 8 and 15 this year. The company said that the transacting sellers saw a 2.5X increase in their business, compared to the pre-festive period. 

According to a report by research firm RedSeer, the first week of the 2023 festive season sale, which concluded on October 15, saw online platforms clocking a GMV of about INR 47K Cr, growing at about 19% over week 1 of the 2022 festive season sale. Mobiles, electronics, and large appliances dominated the sales for the week.

The number of new customers has been changed to 40 Lakh from 15 Lakh following a revision by Amazon.

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Tata Group has completed the acquisition of Wistron’s manufacturing facility in Karnataka, marking its foray into assembling Apple iPhones.

Tata Electronics, a Tata Group subsidiary, has acquired 100% equity stake of Wistron InfoComm Manufacturing (India) through a Share Purchase Agreement with SMS InfoComm (Singapore) and Wistron Hong Kong.

“Signing of the Share Purchase Agreement to acquire Wistron InfoComm Manufacturing (India) Private Limited is an important milestone for us. The EMS (Electronic Manufacturing Services) industry in India is poised for growth given the strong support from the Government, and we are happy to be participating in this growth story. We are focused on strengthening our capabilities in the manufacturing sector,” Randhir Thakur, CEO and managing director of Tata Electronics, said.

The next step involves seeking the required approvals for the deal to move forward.

With this deal, Tata Group becomes the first Indian company to enter iPhone production. Last month, it was reported that Tata Electronics was set to acquire Wistron Corp’s iPhone manufacturing unit.

However, this is not the first association of the Tata Group with iPhone production, as it already manufactures the metal body at its Tamil Nadu plant.

“PM @narendramodi Ji’s visionary PLI scheme has already propelled India into becoming a trusted & major hub for smartphone manufacturing and exports. Now within just two and a half years, @TataCompanies will now start making iPhones from India for domestic and global markets from India,” Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said.

The minister also assured full support to boost the growth of global Indian electronic companies, which “will in turn drive global electronic brands to lean towards India as one of their trusted manufacturing and talent partners”.

This comes at a time when iPhone maker Apple is planning to ramp up production by more than five times the current levels to around $40 Bn by 2027. During the last financial year, Apple manufactured products worth more than $7 Bn, per government officials.

Analysts predict that Apple’s manufacturing partners, including Foxconn, Pegatron, and the Tata Group, may start production of the iPhone 17 in India in the latter half of 2024.

As per a recent study, Apple is poised to conclude 2023 with a 7% market share in India, a market predominantly dominated by Android smartphones.”

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Better World Technology Pvt Ltd, the Indian entity of fintech SaaS unicorn Zeta, turned profitable in the financial year ended March 31, 2023. It reported a profit after tax (PAT) of INR 21.94 Cr in the financial year 2022-23 (FY23) as against a loss of INR 20.7 Cr in FY22.

The Bengaluru-based fintech SaaS unicorn’s revenue from operations grew almost 33% to INR 816.20 Cr in FY23 from INR 615.05 Cr in the previous fiscal year.

Total income, including other income, rose to INR 817.79 Cr in FY23 from INR 616.11 Cr in the previous year, an increase of 32.73%.

Founded by Bhavin Turakhia and Ramiki Gaddipati in 2015, Zeta offers an omni stack platform to financial institutions for processing and issuing debit and credit cards, offering loans, and fraud and risk management.

Its products are used by banks like RBL Bank, IDFC First Bank and Kotak Mahindra Bank among others. French food services and facilities company Sodexo also uses Zeta’s offerings to process its payments.

The startup also offers digitised solutions to enterprises such as automated cafeteria billing and more. It has developed an access control server (ACS) for ecommerce players to offer differentiated security features for payments.

The Expenditure Breakdown

The Bengaluru-based unicorn’s total expenses grew 24.97% to INR 795.85 Cr in FY23 from INR 636.82 Cr in FY22.

Employee Benefit Costs The Biggest Expense: Employee costs rose 22.53% to INR 631.57 Cr from INR 515.44 Cr in the previous fiscal year and accounted for 79% of the total expenditure. Staff welfare expenses almost grew over 3X to INR 12.13 Cr in FY23 from INR 3.97 Cr in FY22.

Other Expenses In Check: Unlike FY22, when other expenses more than doubled year-on-year, other expenses, which included rent, training recruitment expenses, and legal charges, increased just 35% to INR 151.07 Cr from INR 111.86 Cr in the previous fiscal year.

Meanwhile, the startup’s cash and cash equivalents declined 54.91% to INR 25.89 Cr in FY23 from 57.42 Cr in FY22. EBITDA margin improved to 2.68% in FY23 from -3.36% in FY22.

Zeta, which entered the unicorn club in May 2021 after raising $250 Mn in a funding round led by Masayoshi Son’s SoftBank, has raised a total funding of $340 Mn till date. It counts names like Softbank Vision Fund, Sodexo, and Mastercard among its backers.

Besides India, Zeta’s offerings are available in countries like Brazil, Spain, the Philippines, and Vietnam. In an interview with Hindu Business Line, Turakhia said the startup is looking to expand its presence in North America, considering it constitutes about 30%-35% of the global revenue opportunity in the sector it operates in.

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In its maiden financial statement since listing in August this year, blockchain and IT development company Yudiz Solutions reported a net profit of INR 1.33 Cr in the first half (H1) of the financial year 2023-24 (FY24). 

The platform had posted a net loss of INR 54 Lakh in the same period of the previous fiscal year. 

Revenue from operations jumped more than 45% to INR 15.87 Cr in H1 FY24 from INR 10.91 Cr in H1 FY23. Including other income, total income rose 47% to INR 16.18 Cr in H1 FY24 as against INR 10.97 Cr in the corresponding period last financial year. 

Meanwhile, total expenses increased 18% to INR 13.95 Cr in the six-month period ended September 2023. Its total expenditure stood at INR 11.82 Cr in H1 FY23. Employee benefit expenses accounted for the biggest chunk of costs at INR 9.17 Cr in H1 FY24, rising sharply from INR 8.71 Cr in the year ago period. 

Other expenses also rose 91% to INR 3.62 Cr during April-September 2023 compared to INR 1.89 Cr a year ago. 

Founded in 2011, Yudiz is an Ahmedabad-based IT consulting firm that specialises in web and mobile app development. It also provides services in areas of emerging technologies such as AR/VR, AI/ML, blockchain, and IoT. 

In its meeting held on November 9, Yudiz’s board of directors also approved the appointment of Pranita Singh & Associates, with immediate effect, as the new internal auditor of the company for FY24. 

Yudiz listed on the NSE SME platform on August 17 this year. The shares of the company listed at a 12% premium to the issue price at INR 185 per share. 

However, the stock has had a bumpy ride since then. In the past three months, its share price has swung wildly, seeing a 52-week high of INR 213.8 and an all-time low of INR 140. 

The company’s shares closed Thursday’s (November 9) session 0.13% higher at INR 156.85 on the NSE SME. Its market cap stood at INR 156 Cr at the end of day’s trading. 

The post Yudiz Reports A Profitable H1 FY24, Revenue Jumps To INR 15.8 Cr appeared first on Inc42 Media.

Telecom giant Jio has introduced an innovative prepaid plan, the Jio-Swiggy Festive prepaid plan, which will offer Jio customers a free three-month subscription to Swiggy One Lite when they recharge their accounts.

“With this recharge, Jio prepaid customers can enjoy seamless connectivity and have great time with friends and family using Swiggy’s on-demand free delivery benefits across food, grocery and other categories,” Jio said in a statement.

Swiggy launched Swiggy One Lite, a cheaper version of its subscription plan Swiggy One, last month. Swiggy One Lite offers benefits, including free deliveries, exclusive offers, and discounts at a launch price of INR 99 for three months.

Jio’s INR 866 plan offers customers a daily data allowance of 2 GB, unlimited voice calls, and an extended 84-day period of 5G data usage.

Using the Swiggy One Lite subscription, customers can avail up to 10 complimentary home deliveries (for food orders exceeding INR 149) and 10 free Instamart deliveries (for orders surpassing INR 199). Furthermore, customers will not be subjected to surge fees for these deliveries.

While partnerships between telecom providers and content platforms are quite common, this collaboration between a telecom company and a food delivery service sets a new precedent.

This new partnership within the broader Swiggy One program is expected to enable the foodtech giant to enhance its platform’s monetisation, especially as Swiggy faces competition from Zomato in the Indian food delivery market.

Last week, Zomato reported its second consecutive profitable quarter, posting a profit after tax of INR 36 Cr. While Swiggy is yet to report its financial statements for FY23, it reported a loss of INR 3,628.9 Cr in FY22.

Swiggy CEO Sriharsha Majety, earlier this year, claimed that the company’s food delivery business achieved profitability (without factoring ESOP costs) as of March 2023.

Amid all these, Swiggy is reportedly eyeing a public listing next year.

The post In An Industry First Move, Jio Bundles Swiggy Lite Subscription With Recharge Plan appeared first on Inc42 Media.

Foodtech giant Swiggy has unveiled a new AI-based feature designed to enhance the visual appeal of restaurant menus, Swiggy Photoshoot. The feature was released around a month ago, the foodtech unicorn said in a blog post Tuesday (November 7).

The feature, baked into the Swiggy Owner app, allows restaurant owners to capture and upload menu images using their smartphones and the app. Photoshoot leverages AI to validate, enhance, and refine restaurant menu images. 

The unicorn’s image AI model rapidly validates images to ensure they meet guidelines and reduces the likelihood of image rejections and improves image quality and aesthetics while allowing users to select the background from a set of options. 

This improvement applies to both real-time images and existing ones uploaded by restaurant partners. Images captured by the owners become live on Swiggy within a few hours. 

The foodtech unicorn claimed that the higher-quality images can potentially lead to up to five times more orders. Further, Swiggy claimed that around 10,000 restaurants have adopted this feature within a month of its release. 

The launch seems to be part of Swiggy’s efforts to leverage AI and offer more features to its restaurant partners.

Earlier in July, Swiggy launched several generative AI-based products, including a food recommendation tool. In a blog post, CTO Madhusudan Rao said that Swiggy’s ‘neural search’ is an AI chatbot that offers personalised recommendations for a user’s open-ended and conversational queries.

At the time, the startup said it would be running pilots for the same in September, though it has yet to provide any updates on that front. 

In September this year, Swiggy also launched a digital learning academy, Learning Station, to support the growth of its restaurant partners. Prior to that, it launched a dashboard, called Network Expansion Insights, to help restaurant partners take informed decisions on their expansion plans.

The developments come at a time when Swiggy is reportedly eyeing a public listing next year. However, the company continues to be bogged down by losses. While Swiggy is yet to release the financial statements for FY23, it posted a loss of INR 3,628.9 Cr in FY22 on an operating revenue of INR 6,119.8 Cr.

Meanwhile, Swiggy’s rival Zomato last week reported its second consecutive profitable quarter, posting profit after tax of INR 36 Cr in Q2 FY24.

The post Swiggy Continues AI Experiments, Launches Photoshoot To Help Restaurants Create Better Menu Images appeared first on Inc42 Media.

PhonePe on Tuesday (November 07) said the number of registered users on its platform has crossed the 50 Cr mark and one in three Indians is now registered with the fintech giant.

PhonePe, which was founded in 2016, said it has onboarded over 37 Mn merchants covering over 99% of the postal codes across India.

The Walmart-owned company, which began operations as a UPI platform and enjoys the highest share in UPI transactions, has been on an expansion spree for the last year or so. It has entered multiple new segments, ranging from insurance to wealth management and lending to joining ONDC.

In order to scale up the new businesses, PhonePe founder and CEO Sameer Nigam said the company has elevated some of the key executives to take on larger roles in the group as the CEOs of new segments.

The newly elevated executives are:

• Hemant Gala: He has been promoted to the role of CEO for PhonePe’s lending business. He was a part of the founding team of PhonePe and has worked across multiple verticals within the company over the past 7 years. 
• Vishal Gupta: He has been promoted to the role of CEO for PhonePe’s insurance business. He was also a part of the founding team and played multiple leadership roles across product, design, risk, customer-experience to build and scale the payments and merchants business.
• Vivek Lohcheb: He has been promoted to the role of CEO for ecommerce app Pincode. In the new role, he will be responsible for scaling the Pincode offering across key cities in India. Previously, Vivek headed the offline business at PhonePe, where he was responsible for expanding the company’s offline merchant network and acceptance.
• Ujjwal Jain: He has been promoted to the role of CEO of Share.Market to head the company’s wealth and stock broking business. Previously, Ujjwal founded WealthDesk and created a curated research baskets category on broking called WealthBasket to address the challenges faced by the funds and broking industry as a whole.

The developments come at a time when PhonePe is looking to spread its wings and turn itself into a super app. The company, which is also eyeing an initial public offering by 2025, moved its domicile to India from Singapore last year and also completed its spin-off from the Flipkart Group.

The company has also raised $850 Mn in funding as part of its announcement of a $1 Bn fund raise last year.

Last month, PhonePe said its revenue rose 77% to INR 2,914 Cr in FY23 due to growth in money transfers, mobile recharges, bill payments and launch and scale-up of new products and businesses. However, the company didn’t disclose its net loss/profit for the year.

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The exponential rise of investment tech platforms like Zerodha and Groww in the last few years has proven but one thing — there was immense headroom for innovation and disruption in the Indian stockbroking arena, which the legacy players took a while to realise.

Nevertheless, the damage was done and retail investors, both young and old, flocked to these platforms in hordes for reasons galore — ease of trade, user experience, fee, convenience, word of mouth, and we have barely scratched the surface here.

It is also worth mentioning that the Covid-19 pandemic gave a booster shot to the two investment tech unicorns, as a great tide of new users embarked on the stock market route to make riches when the Indian economy was trying to recover after multiple lockdowns.

Interestingly, new-age retail investors have since been embroiled in the Zerodha Vs Groww debate, which we intend to conclude in this article today.  

However, before we delve deeper into the discussion, it is imperative to note that the two platforms command 40% of the stockbroking market share in terms of active users in India, as per NSE data.

It’s All About Numbers… Or Is It? 

An early bird in the Indian investment tech space, Zerodha (incorporated in 2010) checks every box essential for being one of the biggest stock brokers in the country. Moreover, it currently holds a 20% share of the NSE’s total trading volume.

Notably, towards the fag end of September this year, the Zerodha CEO, Nithin Kamath, took to Twitter (now X) to announce that the firm was valued at INR 30,000 Cr, or about $3.6 Bn.

In the same week, the Bengaluru-based fintech unicorn reported that its total revenue for the financial year ended March 31, 2023, crossed the INR 7,000 Cr mark. The bootstrapped unicorn’s net profit during the period under review stood at INR 2,907 Cr, up 39% YoY, largely on the back of strong growth in business and other key metrics. 

 Meanwhile, the Tiger Global-backed fintech unicorn, Groww, surpassed Zerodha in terms of active investors at the end of September 2023. As per the National Stock Exchange (NSE) data, Groww had 6.63 Mn active investors at the end of September 2023 as against Zerodha’s 6.48 Mn.

Notably, any individual who trades even once on the platform is an active user of these platforms. And if one goes by this logic, then Groww has already dethroned Zerodha, and we all can now stop reading this article and go back to running our daily errands. But there’s a catch. The metric has too many moving parts. 

Nevertheless, Groww’s active user base of 6.6 Mn against Zerodha’s 6.4 Mn may not look much, but the rate at which the former has been able to increase its users from 4.1 Mn in FY22 to 6.6 Mn in FY23 is quite a progress. On the contrary, Zerodha’s user base slipped from 6.5 Mn in FY22 to 6.4 Mn in FY23.

As per NSE data, Zerodha had 3.4 Mn customers in March 2021, whereas Groww had 0.78 Mn. Zerodha’s user base has only doubled, growing at a steady pace and even stagnating over the last couple of years, Groww saw its customer base surge by an impressive 750%.

Importantly, Groww ventured into stock trading as recently as 2020. Before that, it operated solely as a mutual fund distribution platform. Furthermore, its expansion into loans and consumer payments didn’t happen until this year.

Moving on, just like its bootstrapped opponent, Groww, too, is profitable. However, the profitability was only achieved in FY23 as revenue from operations tripled to INR 1,227.8 Cr. The startup posted an FY23 net profit of INR 448.7 Cr against a net loss of INR 239 Cr a fiscal ago. 

The Battle For Passive Investors Is On, But Why?

The double whammy of global macroeconomic headwinds and improving fixed deposit (FD) rates has particularly led to the highest-ever exit of active retail investors from the public markets in the recent past.

In FY23 and FY24 (so far), retail participation has been paltry compared to FY21 and FY22. On the NSE, the share of retail investors against the total trading turnover dropped from 45% in FY21 to 36.5% in FY23. Similarly, the number of active retail investors fell from 11.7 Mn in January 2022 to 8 Mn in March 2023.

Further, cumulative net outflows (people selling stocks or ditching intra-day trade) in April and May 2023 were the highest in the last seven years.

This is the reason why a lot of companies, which earlier did not see much participation from passive investors, have now started launching passive funds, and Zerodha and Groww are no exceptions.

Zerodha, which relies on active retail investors for 90% of the company’s total revenues, announced the launch of two passive mutual funds, Zerodha Nifty LargeMidcap 250 Index Fund and Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund, last month.

A passive mutual fund comes at a lower expense ratio compared to an active mutual fund but doesn’t guarantee as much returns to the fund investors as an active one. Kamath highlighted the same by stating that Zerodha will be a passive only AMC to avoid the conflict of promoting what generates higher income (active funds). By focussing only on index products, we can hopefully help spread the idea of passive funds in India, Kamath said while announcing Zerodha’s two AMCs.

This is ofcourse a distant approach from what Zerodha has been focussing on for the past decade

The funds were launched under Zerodha Fund House, an asset management company (AMC), which it formed in a joint venture with Sequoia-backed smallcase.

Similarly, in September, Groww received approval from SEBI to launch its first index fund, Groww Nifty Total Market Index Fund, paving the way for its entry into the mutual fund space. Earlier this year, Groww acquired the mutual fund business of Indiabulls Housing Finance for INR 175.6 Cr.

In a report, ratings firm ICRA highlighted that Groww generated 80% of its revenues from F&O trading in FY23.

According to market experts, at a time when F&O traders are bleeding losses, with a SEBI report suggesting that 90% of these investors faced losses, passive trading will continue to be the norm for some time.

As per Motilal Oswal Financial Services, retail AUM in Exchange Traded Funds/passive funds stood at INR 9,700 Cr in FY23, growing at a CAGR of 56% since FY19. This growth has been driven by a thrust from online distributors. 

Additionally, the share of ETFs in total retail AUM is a meagre 2%, which means the market is ripe for disruption. 

Traditionally, stock brokers steered away from passive funds because of lower commissions, fees and less return on investments.

“A reason why the retail investors will turn to passive funds offered by discount brokers is that the space is dominated by AMCs or banks, which charge a heavy broking fee and maintenance charges. This upsets individual investors. However, discount brokers like Zerodha and Groww take minimal to zilch maintenance charges,” said a Bengaluru-based analyst.

On the other hand, Zerodha and Groww will move towards passive funds whose performance typically depends on how indexes perform, in order to bring down their operational expenses, the analyst added. 

Calling A Spade A Spade: Groww’s Active Users Not Enough To Crush Zerodha

According to industry experts, the increase in the number of Groww’s active users may not give it an edge over Zerodha. This is sheer because of the strong technology stack and the trader community-driven approach Nithin Kamath-led firm has built since its inception.

A report by HDFC Securities mentions that Zerodha has an overall customer base of 12 Mn users, of which 6.5 Mn are active users. Further, of the total active users, 2.5 Mn are F&O traders.

The research states that nearly 50% of the 2.5 Mn F&O traders at Zerodha are sticky, semi-professional, and place strategy-based trades. In addition, the top 35% of customers account for 70% of Zerodha’s revenues. 

The bottom 50% of the F&O traders meanwhile churned within the last year, as per the report.

This is what Nithin Kamath said in a blog post earlier that a small community of very active intra-day and F&O traders are maximising the revenues for discount brokers.

Additionally, Zerodha has various offerings. Its products like the Kite app for active traders and Coin for passive mutual fund investors have given the investment tech platform the leverage to target niche audiences.

“Zerodha believes that the user base of the two apps is diverse and needs to be targeted separately. While the typical user of Coin is a passive investor in MFs and does not want to be bothered with regular market updates, the Kite app is targeted at a customer who needs regular stock or trading-related notifications. Passive products such as Ditto Insurance are likely to be launched on the Coin app,” according to an HDFC Securities analysis.

Meanwhile, Sonam Srivastava, the founder and CEO of Wright Research points out that the kind of tech products that Zerodha has developed for its users are unparalleled in the stockbroking industry.

“It is a completely evolved technological infrastructure. The algo solutions, urgent alerts for entry/exits to the active retail investors (intra day/F&O), the varied products and its B2B product Kite Connect which offers other fintech platforms access to Zerodha’s products, technology, and user stickiness has worked tremendously in favour of this firm,” Srivastava said.

Zerodha still has a share of 20% of the overall trading volumes in India, almost 70% higher than Groww, which is a huge gap to close for the latter, Srivastava added.

The Nithin Kamath-led stockbroking firm has also doubled down on its education channel resources to tap the growing pool of investors. 

Zerodha’s Varsity (its education-based platform) claims to run on zero-profit education initiatives — from helping novice investors to offering skill-based certifications to serious traders. Also, Kamath recently launched a new YouTube channel, Zing, to target the growing number of young investors.

However, analysts believe that this is Zerodha’s attempt to counter the huge marketing push of the closest rival, Groww, which has been leveraging content/influencer marketing over the past several years to tap young investors.

It is imperative to mention here that Groww, too, is focussed on spreading financial awareness. Under its “Ab India Karega Invest” initiative, the startup organises financial awareness sessions. Moreover, it also publishes newsletters centred around financial news and education, besides creating videos in different languages.

Groww Needs To Grow Its Offerings

According to a July 2023 report published by ICRA Ratings, Groww needs to diversify its income stream, as a sizeable share of its FY23 broking revenues is from futures and options (F&O) broking (over 80% of the broking income). 

“Going forward, Nextbillion Technology’s ability to maintain the momentum of client additions while improving its revenues and profitability and maintaining comfortable capitalisation would remain critical from a credit perspective,” the report stated.

Currently, Groww doesn’t charge annual account opening and maintenance charges from its users like Zerodha, which as per analysts draws new and young customers to the platform. However, much still depends on how Groww builds products to ensure customer stickiness. 

“Millions of users opening new accounts with Groww will not ensure monetisation unless the platform can sell any of its products to these users. The conversion would matter for which Groww will have to experiment with diverse product offerings,” a veteran investor said.

Notably, Groww’s revenues mainly come from charging brokerage fees of up to INR 20 per buy/sell order.

Zerodha & Groww: Comparing Apples And Oranges?

Despite the recent buzz around Zerodha and Groww competing in terms of user growth and increasing revenues, experts in the industry believe that Groww still has a significant journey ahead in capturing a highly monetisable user base similar to Zerodha.

At the same time, keeping the marketing expenses in check will be a challenge for Groww, which has largely ignored community-based organic growth like Zerodha.  

The CEO of FinEdge Harsh Gahlaut said that comparing the two investment tech platforms is like comparing apples and oranges.

“Groww has used the money it raised to rack up numbers on client acquisition at any cost. It rode the boom of first-time users for both stocks as well as mutual funds over the last 3-4 years and that has helped it surpass Zerodha on the number of ‘subscribers’. If this is the only metric then clearly Groww is the winner,” he added. 

 Gahlaut also noted that Zerodha currently has no competition. “The broking industry has serious challenges of revenue sustenance. This is because most traders can have a very short span on the markets. This problem is even more with first-time users… and Groww has a significant number of such clients,” he noted.

Meanwhile, Vivek Banka, the cofounder of fintech startup GoalTeller is of the view reliance on VC money and operating in highly volatile markets put it at a disadvantage compared to Zerodha, which is bootstrapped.

“The pace of user growth will stagnate at some point. Stockbroking is kind of cyclical as when a recession hits, sooner or later, there can be degrowth in the active user base. The true test of businesses is during such times and companies with heavy PE/VC funding will be in a fix,” Banka added. 

It cannot be denied that the Kamath brothers-led startup has stood the test of time, gone through various market cycles and is sitting on a loyalist userbase. 

Zerodha maintains a dominant position in the market, despite the growing competition from its closest rivals such as Groww, Angel One, and even HDFC Bank.

This may clarify why Zerodha stands out as the sole discount broker that imposes an annual account maintenance fee of over INR 300, while other platforms do not levy such charges.

Be that as it may, Groww is yet to reach the maturity that Zerodha is in charge of today. A mere rise in active users does not put it ahead of Zerodha in the race. 

While one cannot deny that Groww offers more comfort to novice investors than any other platform in the stockbroking market, this is hardly any insurance for their stickiness. 

For the platform to have a more sustainable user base, more market cycles will have to forge their journeys. And finally, in terms of user sustainability and diversification, it’s quite likely that Groww may face substantial headwinds going ahead.

Update | 8th November, 1:00 IST

Note: The story has been updated to include the info on the year in which Groww ventured into the stock trading segment and its education initiatives.

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Fintech unicorn Razorpay has promoted Rahul Kothari to the position of Chief Operating Officer (COO) for India and Malaysia. This elevation coincides with Razorpay’s global expansion, beginning with the South East Asia (SEA) region.

Kothari boasts more than twenty-one years of experience in the US, European, Australian, and Indian markets, having worked with organizations like PayU, WNS Global Services, and The Boston Consulting Group, among others.

In 2019, he joined Razorpay as the Chief Business Officer (CBO) and played a pivotal role in the global growth of the company as a full-stack B2B fintech platform. He also spearheaded the launch of the company’s first international payment gateway in Malaysia with Curlec.

As the COO, Kothari will further develop Razorpay into a customer-centric organisation, ensuring a seamless customer experience for various customer segments and businesses. His role also involves guiding the company’s business strategies to achieve sustained and exponential revenue growth in India and Malaysia.

He will focus on identifying new opportunities to enhance the customer experience and streamline internal systems, processes, and business structures. Additionally, he will lead initiatives to strengthen partnerships with external stakeholders, positioning Razorpay as a leader in innovation in the ever-expanding ecosystem.

Earlier this year, Razorpay established an advisory board with former RBI deputy governor N.S. Vishwanathan as the chairperson. The board’s purpose is to enhance offerings, ensure better corporate governance, and promote compliance in India’s fast-evolving fintech landscape.

The advisory board also includes Arijit Basu, chairman of HDB Financial Services and former MD of State Bank of India; Aruna Sundararajan, IAS (Retd.) and former secretary of Ministries of Steel, IT & Telecom, GoI; and K. P. Krishnan, IAS (Retd.) and former secretary of the Ministry of Skill Development and Entrepreneurship.

With a team of 3,500 employees, Razorpay has been actively launching new products, forming partnerships, and acquiring companies in 2023. This year, the fintech unicorn introduced several new products including — MoneySaver, One Tap, OTP Less Checkouts, UPI Autopay on QR, and Optimizer – an AI-powered payments system. It also joined ONDC to offer payment reconciliation services for buyer and seller apps.

Razorpay also acquired Mumbai-based digital invoicing and customer engagement startup BillMe to offer businesses a hybrid model for better customer engagement.

Founded in 2014 by IIT Roorkee alumni Shashank Kumar and Harshil Mathur, Razorpay has raised close to $741 Mn to date from the likes of — Lone Pine Capital, Alkeon Capital, TCV, GIC, Tiger Global, Sequoia Capital India, Ribbit Capital, Matrix Partners, Salesforce Ventures, Y Combinator, and MasterCard.

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Shares of Zomato touched a fresh 52-week high at INR 123.9 on the BSE on Monday (November 6) as they jumped as much as 6.4% during the intraday trading on the back of the company’s robust Q2 FY24 earnings and positive Street view on the stock.

The foodtech major reported its second consecutive profitable quarter on Friday as its Q2 PAT jumped to INR 36 Cr from INR 2 Cr reported in Q1 FY24. Zomato saw strong growth across business verticals, including quick commerce platform Blinkit, during the quarter under review.

Following the announcement of results, at least nine brokerages raised their price targets (PTs) on Zomato.

Raising its PT on the stock to INR 145 from INR 120 earlier, Bernstein said that Zomato flywheel is not only turning but also accelerating into a dominant platform across food delivery and commerce.

The brokerage increased its PT on the back of Zomato’s better-than-expected growth in the quarter, positive outlook, and an improvement in the market conditions that led to a higher uptick in monthly transacting users (MTUs). It also increased Zomato’s food delivery revenue estimate for FY24 and FY25 by 3% and 4%, respectively.

On the other hand, Kotak Institutional Equities increased its fair value for the stock to INR 130 from INR 125 earlier, which implies an upside of 5.4% to the stock’s last close of INR 123.3 on the BSE today.

The brokerage also upgraded its FY2024-26 revenue estimates by 10-11%, which it expects to be driven by all three segments of Zomato’s business. However, Kotak expects higher ESOP costs for FY25.

JM Financial said that following its Q2 results and strong gross order value (GOV) growth outlook for key businesses, Zomato’s shares will remain buoyant. 

“With food delivery EBITDA margin gradually moving towards steady state levels and Blinkit business turning contribution level profitable, we now use a lower WACC (Weighted Average Cost of Capital) assumption of 12% versus 13% earlier,” said the brokerage as it raised its PT on Zomato to INR 155 from INR 115 earlier.

It must be noted that Q2 FY24 was the first full contribution positive quarter for Blinkit. 

Highlighting that Zomato’s gold subscribers contributed about 40% to Zomato’s food delivery GOV compared to 33% and 19% in Q1 FY24 and Q4 FY23, JM Financial said this development augurs well for the business as subscriptions typically have a positive impact on customer stickiness and ordering frequencies. 

At a time when the entry of the government-backed ONDC in the food delivery space has raised some concerns about the impact on Zomato’s business, Motilal Oswal reiterated that it does not expect the competition to intensify further for the Deepinder Goyal-led company. 

It also reiterated its positive stance on the long-term growth opportunity for Zomato and increased PT to INR 135, which implies an upside of 9.5% to the stock’s last close.

Elara Capital increased its PT on Zomato to INR 150 from INR 140 earlier, implying an upside of over 21% to its last close.

“We believe Zomato’s clout in the food business (duopoly nature) and scalability prospects in Blinkit may drive share price performance,” the brokerage said.

Jefferies increased its PT on the stock to INR 165 from INR 130.

It is pertinent to note that shares of Zomato have gained 107.7% so far this year on the back of strong growth and the company turning profitable. Its market cap has also crossed the $12 Bn mark from $6 Bn at the end of last year.

Twenty three out of the 27 brokerages covering Zomato have a ‘buy’ or above rating on the stock, while four rate the stock as ‘sell’ or lower.

The post Zomato Rallies Further To Touch A New 52-Week High At INR 123.9 After Strong Q2 Show appeared first on Inc42 Media.

PB Fintech chairman and CEO Yashish Dahiya believes the second quarter of the financial year 2023-24 (FY24) was the last quarter when the company reported a loss and expects it to begin posting profits from Q3 onwards.

Dahiya made the comments during the company’s earnings call for Q2. PB Fintech, the parent company of Policybazaar and Paisabazaar, reported a loss of INR 21 Cr in the quarter ended September 2023, a decline of over 89% year-on-year (YoY).

“For me, the priority is always core business growth and then EBITDA. I’m very happy with our Q2 performance…I’m extremely confident that this will be our last quarter of losses. Next quarter we will definitely have profits,” Dahiya said during the company’s earnings call on November 6 (Monday).

The September quarter was also the third consecutive adjusted EBITDA-positive quarter for PB Fintech. Its consolidated EBITDA, excluding ESOP costs, stood at INR 13 Cr in Q2 FY24 as against an adjusted EBITDA loss of INR 53 Cr in Q2 FY23.

Revenue jumped 42% to INR 812 Cr in Q2 FY24 from INR 573 Cr in the year-ago quarter. Sequentially, it rose 22% from INR 665 Cr. Revenue from Policybazaar and PaisaBazaar, which are classified as core businesses, jumped 46% to INR 597 Cr in the quarter ended September 2023 from INR 410 Cr in the year-ago period. 

“We are very pleased with our core online business growth, especially health and term business growth…Our total insurance premium for the quarter is reaching an ARR of about INR 14,000 crore…Of our total online business, credit continues to contribute about 25% of total revenues,” Dahiya added.

The new insurance premium of health and term plans grew at 53% YoY. The fintech’s insurance premium for the quarter was INR 3,475 Cr with an ARR of INR 14,000 Cr. PB Fintech’s credit business under Paisabazaar also had a total loan disbursal of INR 16,500 Cr as of Q2 FY24.

“Credit business continues to grow very well, it has been EBITDA positive since December 2022…About 39 Mn customers have accessed our credit score platform and more than 75 of our disbursals are from existing customers,” Dahiya said during the call.

However, expenses continued to be a major headache for the company, rising more than 11% to INR 910 Cr in Q2 FY24 from INR 820.6 Cr in the year-ago period. Total expenditure jumped 18% from INR 768.4 Cr in Q1 FY24.

Shares of PB Fintech ended Monday’s session 3.2% higher at INR 724.80 on the BSE. After a rout on the bourses in 2022, similar to other new-age tech stocks, shares of PB Fintech are trading about 60% higher year to date.

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After nearly a decade in India, food delivery is finally a profitable business. Zomato’s second consecutive profitable quarter shows that the company in particular has figured it out.

The Deepinder Goyal-led company capitalised on the revenue momentum in FY24 and seems poised to become a profit-making machine based on what we have seen this year.

But it’s not just Zomato; Swiggy, too, is close to cracking profitability, and the company is also eyeing an IPO in the near future. The food delivery race has been fuelled for nearly a decade by VC money, but it seems the duopoly will now rely on cash generated by the business.

There’s of course a lot more at stake than just food delivery, but this Sunday, we wanted to see how profitability might change Zomato and its biggest rival. After these top stories from our newsroom:

• BYJU’S Strange Numbers: After multiple delays, BYJU’S finally released its FY22 financials, but only partially. The core business reported an EBITDA loss of INR 2,253 Cr, while revenue grew to INR 3,569 Cr. But the full picture is still missing
• Funding On The Rise? With Q3 2023 ending this past week, we can see that Indian startups have raised $8.3 Bn so far this year, nearly on par with 2020 levels. Does this mean we are on the road to recovery of some kind? Read our full report for more

The Zomato Express Rolls On

Last quarter, Zomato got a deferred tax boost of INR 17 Cr to eke out INR 2 Cr in profit, this time around it has taken a more certain step into the black. With a PAT of INR 36 Cr, Zomato’s profits surged 18X this quarter, thanks to Zomato Gold subscription revenue, growth in gross order value and an increase in order volume.

While there was bullishness last quarter that Zomato’s core food delivery business would soon be able to sustain Blinkit and other verticals, as it turns out, this will not be needed for long. Zomato’s quick commerce vertical Blinkit turned contribution positive for the first time in the quarter as well, with a record 45.5 Mn orders.

Hyperpure, the B2B supply arm, reported a 123% YoY surge in revenue, while dining-out vertical saw a sharp 88% increase in revenue to INR 49 Cr. But both these verticals continue to remain loss-making.

How Did Zomato Get Here?

So, how exactly did Zomato turn things around? For one, it must be noted that expenses grew 16.3% QoQ in the second quarter, whereas revenue grew 10% QoQ.

This indicates that the push has come from improving how much money Zomato keeps for itself per transaction. One of the ways it has improved this is with platform fees.

The company said that the fee, which ranges between INR 1 to INR 5, did not affect demand elasticity. So one can expect platform fee to become a permanent fixture in our food delivery bills

The other major revenue stream for food delivery is Zomato Pro, but Pro orders are less profitable for the company than regular orders. Here too, the platform fee is a major contributor to Zomato’s bottom line, and makes up for some of the lost revenue for every Pro order.

Swiggy On The Profitability Trail

Of course, Swiggy was the first one to introduce platform fee, charging consumers directly while simultaneously eliminating commissions for restaurants. This strategy protected restaurants and nudged them towards using the commissions saved for ads and promotions.

Zomato aped this strategy and the results are clear for everyone to see now. In Swiggy’s case, the company has not filed its FY23 numbers, but its loss jumped to $545 Mn for the calendar year 2022 from $300 Mn in 2021, according to Prosus, Swiggy’s lead backer.

Swiggy cofounder and CEO Sriharsha Majety claimed in May that the company has achieved profitability in its food delivery business. Majety also said that other parts of Swiggy’s business are slowly gaining traction and close to breaking into positive unit economics.

At the time, Swiggy told Inc42, “Instamart would reach unit economics positivity in the next few weeks.” And now reports indicate that Swiggy is gunning for an IPO too.

Swiggy began preparations for its IPO in 2023. However, the funding winter and a sharp fall in the valuations of tech startups globally made it keep the plan on the back burner. Now, the company is considering a stock market debut in 2024 and has engaged in discussions with bankers to evaluate its valuation.

This will bring another dimension to the rivalry between Swiggy and Zomato, which has been a mainstay in the Indian consumer services market.

How Will Zomato & Swiggy Change?

Of course, it’s not just food delivery, as Zomato and Swiggy have quick commerce and dining out as rival businesses too. Plus, Zomato recently entered the courier delivery space too, which is a direct competition for Swiggy Genie. For the moment though, Zomato is looking at B2B deliveries only.

In all likelihood, given how similar Swiggy and Zomato’s revenue strategy is and given the fact that both have subscription programmes and similar allied businesses, we expect both companies to have roughly the same scale and profit margins by 2024 and early 2025.

The revenue mix might be different but primarily, both companies will more or less grow at a similar pace given that this is not a zero-sum business category. Essentially, Zomato users also use Swiggy and vice versa.

There are possibilities that profitability will unlock better outcomes on other fronts such as customer service and issues related to gig workers, but that is still not a certainty.

What cannot be doubted is that Zomato and Swiggy will need to look for ways to maximise revenue and add more revenue streams, even perhaps outside their traditional strengths.

As per analysts that track food delivery space, fintech is one area that both Swiggy and Zomato will look to target, particularly financing for cloud kitchens and restaurants. The duopoly has the data advantage to create better risk models for lending to such businesses.

Another option is lifestyle-related verticals that are asset-light. Zomato already does events, and analysts can also foresee the company branching out into hotel and travel experience bookings.

“There is room for a disruptive player at scale, similar to what Airbnb did in Silicon Valley to the likes of Booking.com and others. And it fits what Zomato does with Zomaland and other events,” said one analyst at a Mumbai-based brokerage that covers Zomato.

Profits can change a company, and this is especially true for listed companies that have shareholders to answer to. In the past, Zomato’s experiments and pilots have been hit or miss, but in its current situation, the company needs to take a more measured approach to expansion.

For now, Zomato can bask in the afterglow of its second profitable quarter for a brief moment, but before long, it will be back to the old rivalry and figuring out the next big thing.

Financials In Focus 

It’s not just Zomato, of course — a whole host of Indian startups and listed tech companies have released their latest financial statements.

• Tiger Global-backed unicorn Apna saw revenue grow by nearly 3X in FY23, closing in on the INR 200 Cr mark
• Delhi NCR-based logistics unicorn Shiprocket saw operating revenue go beyond the INR 1,000 Cr mark, but its net losses widened due to acquisition costs
• The Indian entity of gaming unicorn MPL narrowed its loss by over 80% in FY23, while operating revenue surged by 36%
• Listed logistics unicorn Delhivery posted a net loss of INR 102.9 Cr in Q2 FY24, down 59.5% from INR 254.1 Cr
• Listed geospatial tech company MapmyIndia saw profits rise 30% YoY to INR 33.1 Cr in Q2 FY24, with momentum across business verticals
• NASDAQ-listed SaaS unicorn Freshworks reported 19% higher revenues, and stepped out of the red with a profit of $17.4 Mn in the July-October quarter

Find these and more financials in our tracker here

Sunday Roundup: Startup Funding, Tech Stocks, IPOs & More

• Funding Galore: Indian startups raised $133 Mn across 18 funding deals, a decline of 71% week-on-week. Aequs and Skyroot saw the biggest rounds of the week
• Mamaearth’s Mega IPO: D2C unicorn Mamaearth’s public issue was oversubscribed 7.61X on the last day of its IPO buoyed by huge demand from qualified institutional buyers

• Drone Battle: The NCLT has blocked RattanIndia’s attempts to alter the shareholding structure of Throttle Aerospace Systems amid an ownership dispute between the two parties
• Messaging Apps Vs Telcos: A telco body has appealed to the government to classify WhatsApp, Telegram and other apps as illegitimate channels for business communication

That’s all for this week. We’ll be back next Sunday with another roundup of the biggest stories and trends from the startup ecosystem!

The post Zomato’s Profit-Making Machine appeared first on Inc42 Media.

PB Fintech, the parent company of insurtech platform Policybazaar, saw its net loss decline over 89% year-on-year (YoY) to INR 21 Cr in the quarter ended September 2023. The company had reported a net loss of INR 187 Cr in the second quarter (Q2) of the financial year 2022-23 (FY23). 

However, net loss widened from nearly INR 12 Cr in Q1 FY24.

Revenue jumped 42% to INR 812 Cr in Q2 FY24 from INR 573 Cr in the year-ago quarter. Sequentially, it rose 22% from INR 665 Cr. 

Revenue from Policybazaar and PaisaBazaar, which are classified as core businesses, jumped 46% to INR 597 Cr in the quarter ended September 2023 from INR 410 Cr in the year-ago period. 

Meanwhile, expenses continued to be a major headache for the company, rising more than 11% to INR 910 Cr in Q2 FY24 from INR 820.6 Cr in the year-ago period. Total expenditure jumped 18% from INR 768.4 Cr in Q1 FY24.

Employee benefits and advertising expenses accounted for the biggest chunk of expenditure. Employee-related costs stood at INR 422.84 Cr and marketing costs at INR 247.35 Cr during the quarter under review. Together, the two accounted for nearly 73% of the total expenses. 

It was the third consecutive adjusted EBITDA-positive quarter for PB Fintech. The consolidated EBITDA, excluding ESOP costs, stood at INR 13 Cr in Q2 FY24 as against an adjusted EBITDA loss of INR 53 Cr in Q2 FY23. The metric, however, declined 43% quarter-on-quarter (QoQ) from INR 23 Cr. 

Even as it targets breakeven by FY24 end, employee stock option plan (ESOP) cost the company a hefty INR 102 Cr in Q2 FY24. The number, however, was up 2% QoQ and down 54% YoY.

Meanwhile, the startup said the adjusted EBITDA of its core businesses improved to INR 68 Cr in Q2 FY24 from INR 12 Cr in the year-ago period. 

Policybazaar clocked insurance premiums worth INR 3,475 Cr in Q2 FY24, up from INR 2,545 Cr in Q2 FY23. 

Meanwhile, credit business Paisabazaar also continued to scale, disbursing loans worth INR 4,139 Cr in Q2 FY24, up 41% from INR 2,922 Cr in Q2 FY23. The lending arm’s annualised run rate for disbursals stand at INR 16,500 Cr, while it is on path to issue 6 Lakh credit cards on an annual basis. 

“Credit business continues to grow very well and has been adjusted EBITDA positive since December 2022. We are now at the annualised run rate of INR 16.5K Cr disbursal and about 6 Lakh credit card issuance on an annualised basis. We added about 2.24 Mn new consumers who accessed their credit score through our platform in Q2 FY24, bringing our total credit score consumer base to 39 Mn,” the company said. 

PB Fintech Fires On All Cylinders

PB Fintech’s new initiatives vertical, which include seller aggregator platform PB Partners and the UAE business, reported a revenue of INR 215 Cr in Q2 FY24 as against INR 164 Cr in Q2 FY23. 

EBITDA loss for the vertical improved to INR 55 Cr during the quarter ended September 2023 from INR 65 Cr in the year-ago period. 

PB Fintech also noted that its UAE premium grew by 2.5X YoY.

Meanwhile, the company reiterated its focus on new initiatives arm, noting that it continues to strengthen leadership in the vertical while building further efficiencies. The company also claimed that the agent aggregator platform continues to lead the market in scale and efficiency of operations.

Elaborating further, the fintech major said that the new initiatives vertical has ‘increasingly’ moved its business  towards ‘smaller and higher quality advisors.’ PB Fintech added that the vertical accounts for the highest proportion of non-motor business and has a presence in 16,300 pincodes across the country. 

The post Policybazaar Parent PB Fintech’s Q2 Loss Declines 89% YoY To INR 21 Cr appeared first on Inc42 Media.

Foodtech major Zomato announced its financial results for the second quarter (Q2) of the financial year 2023-24 (FY24) on Friday (November 3). 

Here are the major takeaways from the startup’s Q2 financial results: 

Zomato Continues Profit Run: The foodtech major reported its second profitable quarter in Q2 FY24 with a profit after tax (PAT) of INR 36 Cr, ballooning 18X from INR 2 Cr reported in the previous quarter. 

This is in contrast with INR 251 Cr net loss reported by the foodtech major in Q2 FY23. 

The Gurugram-based company’s operating income soared more than 71% to INR 2,848 Cr in the quarter ended September 2023 from INR 1,661 Cr in the year-ago quarter. Sequentially, operating revenue jumped 18% from INR 2,416 Cr.

Food Delivery Leads The Way: Food delivery business was the company’s growth engine as it accounted for an adjusted revenue of INR 1,925 Cr, up 21.7% year-on-year (YoY) from INR 1,581 Cr and 10.5% quarter-on-quarter (QoQ) from INR 1,742 Cr.

The surge in revenue was largely led by growing adoption of its Gold programme, growth in gross order value (GOV), and an increase in order volume. 

Even as average order value (AOV) remained ‘flat’, GOV for the food delivery vertical jumped 20% YoY to INR 7,980 Cr in Q2 FY24, recovering well from the demand slowdown witnessed in the last two quarters of FY23.

In Q2 FY24, average monthly transacting customers jumped to 18.4 Mn from 17.5 Mn in the preceding quarter. 

Blinkit Turns Contribution Positive: The foodtech startup’s quick commerce vertical Blinkit turned contribution positive for the first time in Q2 FY24. Its contribution margin as a percentage of GOV in the consolidated entity improved to 1.3% during the quarter under review compared to -7.3% in Q2 FY23.

It clocked a record 45.5 Mn orders during the quarter, while GOV soared 29% QoQ and 86% YoY to INR 2,760 Cr in Q2 FY24. The AOV at Blinkit also zoomed to INR 607 in Q2 FY24 from INR 582 in Q1 FY24. 

The company attributed the high QoQ growth to low base effect as strikes disrupted the quick commerce platform’s operation last quarter. 

Zomato Bullish On Blinkit: Zomato CEO Deepinder Goyal reiterated that Blinkit is well poised to surpass the food delivery business and that the quick commerce vertical is witnessing profitable economics not only at stores but also in some cities. 

Chief financial officer (CFO) Akshant Goyal believes that Blinkit will deliver another record-high quarter in Q3 on the back of festive season demand.

Blinkit Takes The Cautious Route: The quick commerce platform added 28 new stores during the quarter, taking the total store count to 411. Zomato reiterated that Blinkit is well on its way to open at least 100 net new stores in the current fiscal year and close FY24 with 480 dark stores. 

In the post-earnings call, Blinkit CEO Albinder Dhindsa said the company is taking a selective approach to expand to new cities. He said the company first opens a dark store to test the depth of a new market and gauge demand, especially in smaller cities.

Dhindsa said the new markets won’t be ‘meaningful’ in the short term but will turn out to be growth channels in the longer run. In the shareholders’ letter, Dhindsa said that Blinkit’s adjusted EBITDA margin can only improve from here and the business is on track to achieve breakeven by Q1 FY25. 

Zomato Gold Takes The Cake: Headlining the quarterly results was the foodtech major’s customer loyalty programme Zomato Gold. The company claimed that the programme has amassed 38 Lakh members since its launch in January this year. 

Noting that Gold members are driving the food delivery business, Zomato said Gold orders contributed nearly 40% of the total GOV (around INR 3,192) of the vertical in Q2 FY24. However, the subscription service continues to be less profitable on a per order basis owing to longer average delivery and distance which pile up the costs. 

Hyperpure, Dining-Out Verticals Continue To Scale Up: B2B supply arm Hyperpure reported a 123% YoY surge in adjusted revenue to INR 745 Cr in the quarter ended September 2023. Adjusted EBITDA loss improved to INR 34 Cr in Q2 FY24 from a loss of INR 53 Cr in Q2 FY23. 

Meanwhile, the dining-out vertical saw a sharp 88% increase in revenue to INR 49 Cr in Q2 FY24 from INR 26 Cr in the year-ago period. Average GOV of the dining-out arm soared 2.28X YoY to INR 682 in the quarter ended September 2023 from INR 298 in Q2 FY23. 

Zomato Unfazed By Platform Fee: The company said that the rollout of platform fees for food delivery orders has had no impact on demand elasticity. The foodtech major also confirmed that the fee is currently being levied on all orders. 

Meanwhile, ESOP costs jumped 32% QoQ to INR 132 Cr in Q2 FY24 from INR 100 Cr. On a YoY basis, the expenditure fell marginally from INR 137 Cr. During the post-earnings call, CFO Akshant Goyal said the company’s share-based payment expenses would stand at around INR 450 Cr in FY24.

Amid all these, shares of Zomato closed the last trading session of the week 8.3% higher at INR 116.4 on the BSE, crossing the listing price of INR 115 for the first time since January 20, 2022.

The post Zomato Q2 Highlights: Profit Streak Continues, All Verticals Deliver Growth appeared first on Inc42 Media.

In another top-level exit at Swiggy, its senior vice president (SVP) Karthik Gurumurthy is reportedly set to depart the foodtech giant to launch his own startup.

Sources told Moneycontrol that Gurumurthy’s new venture will be called Convenio. As per the report, the new platform will operate in the offline space and will mirror Swiggy. He is also said to have held talks with multiple venture capital (VC) firms including the likes of Matrix and Accel to fund his new startup. 

However, the name of the startup is still not set in stone, and may change later. 

“Think of Karthik’s latest venture as an Aldi and what it does in Germany. That low-cost physical store model will be replicated here… His expertise in food and food and vegetables (F&V) is understandable, he has entirely built Swiggy Instamart so he understands the space. Any venture fund will be willing to fund him,” a source told the publication. 

Meanwhile, Swiggy has roped in former Amazon executive Dipak Krishnamani to fill Gurumurthy’s position. Krishnamani recently joined the foodtech giant after more than six years at the ecommerce giant. 

Inc42 has reached out to Swiggy for a comment on the matter. The story will be updated on receiving a response.

This comes months after Gurumurthy went on a sabbatical in March and returned to head Swiggy’s hyperlocal commerce arm Swiggy Mall, formerly called Swiggy Maxx. 

Curiously, Krishnamani’s LinkedIn bio shows that he took charge as the head of the hyperlocal arm in September. 

Back in March, Gurumurthy said he planned to use the sabbatical to start afresh and ‘build something’ that he loves. He even said that he was taking a break to rejuvenate himself.

Gurumurthy was the architect of Swiggy Instamart and helped scale the vertical from scratch in 2020 to a nearly $1 Bn valuation. 

An alumnus of BITS Pilani and Indian Institute of Management-Bangalore, Gurumurthy earlier worked with global consulting firm Kearney, confectionary major Mondelez International, and software giant Oracle. 

His departure comes at a time when Swiggy has been hit by a slew of senior-level exits. In April, Swiggy’s chief technology officer (CTO) Dale Vaz quit to start his own startup, which eventually secured funding from Accel and Elevation Capital.

In September, senior vice president of growth and revenue Anuj Rathi resigned and later joined Jupiter Money. Around the same time, another senior executive of Swiggy Instamart, Nishad Kenkre, also put in his papers. 

Prior to this in May, vice president and head of brand and product marketing Ashish Lingamneni also bid adieu to the company. 

The departures come at a time when the foodtech major has been witnessing a spell of good news. Recently, investor Invesco marked up its valuation by more than 42% to $7.85 Bn at the end of July.

The foodtech major is also preparing for a potential public listing in 2024 even as Swiggy CEO Sriharsha Majety, earlier this year, claimed that the company’s food delivery business achieved profitability, sans ESOP costs, as of March 2023.

The startup reported a consolidated loss of INR 3,629 Cr in FY22 on a revenue of INR 5,704.9 Cr. 

The post Swiggy’s Senior Executive Karthik Gurumurthy Set To Quit To Start His New Venture appeared first on Inc42 Media.

Listed foodtech giant Zomato has allotted nearly 10.65 Cr equity shares under multiple employee stock option plans (ESOPs).

In an exchange filing, the company said its board has approved allotment of 10,64,69,448 fully paid-up shares under Zomato Employee Stock Option Plan 2018, Zomato Employee Stock Option Plan 2021 and Zomato Employee Stock Option Plan 2022.

Most of the shares were allotted under the 2021 ESOP plan by Zomato, with 30.95 Lakh shares being allotted under the 2018 and 2022 plans. The development comes just three months after it allotted 2.52 Cr shares to its employees in August 2023. 

Following the allotment of the shares, Zomato’s issued, subscribed, and paid-up equity share capital will increase from INR 860.44 Cr to INR 871.09 Cr.

The announcement regarding ESOPs came on the same day when Zomato released its financial statements for the quarter ended September 2023. Its share-based expenses rose to INR 132 Cr in Q2 FY24 from INR 100 Cr in the preceding quarter. However, it declined slightly from INR 137 Cr in Q2 FY23.

Meanwhile, Zomato reported its second consecutive profitable quarter, posting a profit after tax of INR 36 Cr in Q2 FY24. It had reported a PAT of INR 2 Cr in Q1 FY24, its maiden profitable quarter. In Q2 FY23, the company’s net loss stood at INR 251 Cr.

Zomato’s operating income jumped to INR 2,848 Cr during the quarter under review from INR 1,661 Cr in the year-ago quarter. 

The foodtech giant also saw its quick commerce arm Blinkit turn contribution positive for the whole quarter for the first time since its acquisition in June 2022. Blinkit’s contribution margin as a percentage of gross order value (GOV) in the overall business improved from -7.3% in Q2 FY23 to +1.3% during the quarter ended September 30, 2023.

Meanwhile, shares of Zomato ended Friday’s session 8.3% higher at INR 116.40 on the BSE, closing above its listing price on the bourses for the first time in about 22 months.

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