Niyogin Fintech — Q3 FY25 earnings call

Call held 1 Feb 2025

Management summary

Niyogin Fintech announced a significant demerger to create two focused, listed entities: an NBFC and a payment infrastructure business. While Q3 FY25 saw strong consolidated revenue growth driven by Moneyfront, adjusted income declined QoQ, and the company reported an EBITDA loss. Management provided ambitious FY27 targets for both entities, emphasizing a shift to a SaaS model for iServeU and embedded lending for the NBFC, supported by an upcoming equity infusion.

Highlights

  • Niyogin Fintech announced a demerger into two distinct listed entities: Niyogin Finserv (NBFC, AI, wealth) and iServeU (payment infrastructure).

  • The NBFC business aims for an AUM of ₹800 crores by FY27, targeting a Return on Equity (ROE) of 15% and Return on Assets (ROA) of 6% by the same period.

  • iServeU is transitioning to a SaaS-based revenue model, targeting net revenues of ₹150 crores and an EBITDA margin of 18-20% by FY27.

  • Consolidated total income for Q3 FY25 was ₹113 crores, a 110% YoY increase, primarily driven by Moneyfront's new product line.

  • Adjusted total income (after trading costs) stood at ₹60 crores, a 12% YoY increase but a 17% QoQ decline.

  • Adjusted EBITDA for Q3 FY25 showed a loss of ₹2 crores, compared to a loss of ₹0.5 crores in Q2 FY25.

  • Current AUM (including off-book exposures) is ₹242 crores, with cash and cash equivalents at ₹78 crores.

Key financials

  1. Consolidated Total Income ₹113 Cr +110%YoY
  2. Adjusted Total Income ₹60 Cr +12%YoY
  3. Adjusted EBITDA ₹-2 Cr
  4. AUM (including off-book) ₹242 Cr
  5. Consolidated Cash & Equivalents ₹78 Cr
  6. Lending Business Debt ₹67 Cr

What they filed

Q1 FY27: revenue down 19.8%, net profit down 169.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue73 111 70 82 70 −3%63 −43%72 +3%66 −20%
EBITDA1 -1 0 1 3 +108%— — —
Net profit-4 -5 3 -2 1 +115%0 +110%1 −59%-5 −169%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • NBFC Business
    6,307 Finance Professionals Network90,093 Loans Processed
  • iServeU Business
    53% TSP Revenue Contribution50,000 devices/quarter Device Disbursement Rate

Capital allocation

high confidence
  • M&A Niyogin Fintech Limited Divestment · Announced

    To simplify the corporate structure, create better alignment, and enhance accountability by demerging into two distinct listed entities: Niyogin Finserv Limited (NBFC, AI, wealth) and iServeU (payment infrastructure).

    Niyogin Finserv will issue shares to NFL shareholders in 1:1 ratio. iServeU will issue shares in 2:1 ratio (2 shares in NFL for 1 in ISU).

    I am excited to announce that the Board has approved the proposal for the composite scheme of arrangement and amalgamation among Niyogin Fintech Limited, Niyogin Finserv Limited and its 51% subsidy iServeU. As a result, as Amit eluded, both the NBFC businesses and iServeU will be individually listed at the end of this journey.
  • M&A AI capabilities vertical Acquisition · Integrated

    To enhance Niyogin's tech-centric NBFC capabilities and bring in AI potential, adding 8-9 engineers.

    The recently acquired Al capabilities vertical, which has already achieved some early success in the insurance space, we aim to scale and monetize this vertical as a standalone business, which will hopefully further enhance shareholder value. We got another eight or nine engineers, again, high end engineers we were able to acquire through that acquisition, which are also sitting at the Niyogin level, right.

  • Liquidity Cash ₹78 Cr
    As of December 31, 2024, consolidated cash and cash equivalents stood at Rs. 78 crores.

Guidance & targets

AUM

  • NBFC AUM AUM · FY25 · High confidence ₹300 crores
    Currently, our AUM stands at approximately Rs. 250 crores, and we plan to close FY ‘25 with an AUM of around Rs. 300 crores.

    — Abhishek Thakkar

  • NBFC AUM AUM · FY26 · High confidence ₹550 crores
    By FY ’26, we aim to reach Rs. 550 crores.

    — Abhishek Thakkar

  • NBFC AUM AUM · FY27 · High confidence ₹800 crores
    And by FY ‘27 we project our AUM will reach Rs. 800 crores.

    — Abhishek Thakkar

Profitability

  • NBFC ROE Profitability · FY27 · High confidence 15%
    We are targeting a return of equity of around 15% by FY ‘27.

    — Abhishek Thakkar

  • NBFC ROA Profitability · FY27 · High confidence 6%
    ROA is about 6% by FY '27.

    — Abhishek Thakkar

Revenue

  • iServeU Net Revenues Revenue · FY26 · High confidence ₹70-80 crores
    We expect iServeU to generate net revenues of approximately Rs. 70 crores to 80 crores by FY ‘26

    — Abhishek Thakkar

  • iServeU Net Revenues Revenue · FY27 · High confidence ₹150 crores
    with projections to double that figure by FY ‘27, reaching around Rs. 150 crores in net revenue.

    — Abhishek Thakkar

  • Niyogin AI ARR Revenue · FY27 · High confidence ₹3-5 crores
    By FY '27, we expect Niyogin Al to generate anywhere between Rs. 3 crores to Rs. 5 crores in ARR, driven by both deeper penetration with existing clients and new customer acquisitions.

    — Aakash Sethi

Margin

  • iServeU EBITDA Margin Margin · FY26 · High confidence 12-15%
    we anticipate iServeU’s EBITDA margin to be in the range of 12% to 15% for FY ‘26

    — Abhishek Thakkar

  • iServeU EBITDA Margin Margin · FY27 · High confidence 18-20%
    improving to 18% to 20% by FY ‘27.

    — Abhishek Thakkar

Contract Value

  • Bank of Baroda Soundbox ARR Contract Value · Annual Recurring · High confidence ₹5-6 crores
    we have recently signed a contract with Bank of Baroda where we have a contract to deploy around more than 1 lakh Soundbox. And the annual recurring would be around Rs. 5 crores to Rs. 6 crores.

    — Debiprasad Sarangi

  • Bharat Bill Payment System Contract Contract Value · 5 years · High confidence ₹17 crores minimum
    In Bharat Bill Payment System also it's a long term contract of five years and the total contract minimum size is around Rs. 17 crores, because there is a per transaction commercial.

    — Debiprasad Sarangi

  • Axis Bank POS and Soundbox Contract Contract Value · 3 years · High confidence ₹5 crores
    I would like to add another contract which is Axis Bank combined contract of POS and Soundbox both, and the contract size is also around Rs. 5 crores which will get translated in next three years.

    — Debiprasad Sarangi

Market context

  • iServeU EBITDA Profitability · Q4 FY25 onwards · High confidence Positive
    I think from Q4 onwards we will start seeing profitability at EBITDA level in iServeU, and FY '26 onwards we will start seeing profitability even at net level in iServeU.

    — Tashwinder Singh

  • iServeU Net Profit Profitability · FY26 onwards · High confidence Positive
    I think from Q4 onwards we will start seeing profitability at EBITDA level in iServeU, and FY '26 onwards we will start seeing profitability even at net level in iServeU.

    — Tashwinder Singh

What to watch in Q4 FY25

iServeU EBITDA Positive

Q4 FY25
Current EBITDA loss of ₹20-40 lakhs (Q3 FY25)
Target EBITDA positive

Why it matters

Key milestone for iServeU's path to profitability and validation of its SaaS model transition.

I think from Q4 onwards we will start seeing profitability at EBITDA level in iServeU, and FY '26 onwards we will start seeing profitability even at net level in iServeU.

Risks & concerns

  • Regulatory challenges impacting DMT volumes

    medium

    Industry-wide decline in DMT (Domestic Money Transfer) volumes due to stricter KYC norms impacted iServeU's performance in Q3 FY25.

    Starting with iServeU, the experienced decline in industry-wide DMT volumes due to the regulatory challenges related to stricter KYC norms.

    Management acknowledged

  • Demerger process timeline and approvals

    medium

    The demerger transaction is expected to take 15-18 months to complete, subject to various regulatory approvals (RBI, DFC, NCLT, SEBI).

    The transaction we have announced today will take an 18 month timeline to accomplish. ... This transaction is obviously subject to customary regulatory approvals, including approvals from shareholders and creditors, RBI, DFC, NCLT and SEBI. Thus we expect the entire process to conclude between. 15 to 18 months

    Management acknowledged

  • Investment requirements for iServeU growth

    medium

    Achieving iServeU's ambitious FY27 targets will require significant investments in management, sales force, and potential international expansion, implying higher fixed costs.

    And then just to close this understanding on the margins bit, assuming Rs. 150 crores plus net revenue, 18%, 20% margin, implying almost Rs. 110 crores, Rs. 120 crores of fixed cost, that's almost more than tripling the cost base for iServeU today. So, maybe could you highlight a few areas that we are looking to spend specifically going forward, which would entail such large investments?

    Analyst acknowledged

Q&A highlights

6 direct
NBFC AUM and ROA/ROE targets Direct
Yes. I am sorry, I think there was some disturbance on my line. So, when you were guiding about, I just wanted to just reconfirm so that the NBFC business by FY '27 you want to take it to Rs. 800 crores, right, the AUM? That's right. ... ROA is I think 6%. ROA is about 6% by FY '27.

Clarifies the specific financial targets for the NBFC business post-demerger, providing key metrics for future evaluation.

Asked by Darshil Jhaveri

iServeU profitability trajectory and FY27 targets Direct
So, I think we can talk about EBITDA or profitability whichever factor you want to look at. I think FY '26 will be the first year of profitability, both at EBITDA and PAT level. ... I think from Q4 onwards we will start seeing profitability at EBITDA level in iServeU, and FY '26 onwards we will start seeing profitability even at net level in iServeU.

Addresses concerns about iServeU's current profitability and provides a clear timeline for achieving EBITDA and net profit positive status, validating the SaaS model shift.

Asked by Darshil Jhaveri

Confidence in achieving targets amidst corporate restructuring Direct
The corporate restructuring is a process that is now linked to basically approvals, right. ... The management teams that you heard of from today, whether it is people like Aakash and Sanket on the NBFC side, or Debi and Sanjib on the iServeU side, these teams, these people are fully dedicated to building the business. So, they are not involved in managing any part of the corporate restructuring process.

Reassures investors that the ongoing demerger process will not distract operating teams from achieving their business targets, emphasizing clear separation of responsibilities.

Asked by Darshil Jhaveri

Future of Niyogin as an acquisition platform post-demerger Direct
Once we have done that, Niyogin will continue to assess strategic transactions in a way that aligns with its NBFC and AI businesses. So, we would not go further away from that, we will continue to build strategic value that is adjacent to where we operate. And I would also expect for iServeU to think similarly as well.

Clarifies the strategic direction post-demerger, indicating that both entities will pursue M&A opportunities aligned with their core businesses after achieving scale and profitability.

Asked by Yash Modi

Investment required for iServeU to achieve FY27 targets and implied fixed costs Direct
I think there are a bunch of things we are working on. ... There is a beefing up of the management team which again Amit mentioned that we will end up investing in, right, creating a much larger sales force for that business. We are also toying with a couple of ideas on the international scale on opportunities that are coming our way.

Explains the rationale behind the significant investments and potential increase in fixed costs for iServeU, outlining key areas of expenditure for growth.

Asked by Pranav Gupta

NBFC tech investments post-demerger and iServeU's role Direct
the capabilities that Niyogin has built on the tech, which is platforms like NiyoBlu, etc., right, are all in-house built by Niyogin itself. That's not been created by the iServeU developers, that has been created by Niyogin. We have almost a 20, 23 man tech team in Niyogin NBFC itself. ... There are some overlaps which are minor, which is for example in the KYC process we use iServeU as a technology service provider for doing the KYC using the NPCI e-KYC Setu platform. But those are all very minor changes which are not necessarily required.

Clarifies that the NBFC's core technology is independently developed and maintained, addressing concerns about potential reliance on iServeU post-demerger and ensuring operational autonomy.

Asked by Pranav Gupta

iServeU revenue per device and order book assumptions Partial
I think, Yash, we have not given the details of average revenue per device per customer because these are price sensitive numbers, these are customer sensitive numbers so I cannot share the revenue per customer that we have taken. But the way the revenues work is there is obviously some money we make on the sale of the device, right, and there is some money which is a one-time income we make if the device is being sold under the under the CAPEX model, which means we are not keeping the device on our books. And then there is a software charge that is loaded on top of that device which over three or four years, depending on the size of the contract, on a per month per device basis we are able to get that, right.

Analyst challenged the implied revenue per device from iServeU's order book. Management explained the complex revenue model but did not provide specific per-device figures, leaving some ambiguity.

Asked by Yash Modi

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Detailed narrative

Demerger Rationale and Structure

Niyogin Fintech announced a demerger into two distinct listed entities: Niyogin Finserv Limited (housing the NBFC, AI capabilities, and Moneyfront wealth business) and iServeU (payment infrastructure). This strategic move aims to simplify the corporate structure, create better alignment between reporting and operating companies, and enhance accountability for management teams. The process is expected to take 15-18 months, subject to regulatory approvals from RBI, DFC, NCLT, and SEBI. Shareholders of Niyogin Fintech will receive shares in both new entities, with a 1:1 ratio for Niyogin Finserv and a 2:1 ratio for iServeU.

NBFC Business Outlook and Strategy

The NBFC business, post-demerger, will focus on growing its lending book through fintech partnerships, leveraging differentiated data for underwriting, and low customer acquisition costs. The company targets an AUM of ₹300 crores by FY25, ₹550 crores by FY26, and ₹800 crores by FY27. It aims for a Return on Equity (ROE) of 15% and a Return on Assets (ROA) of 6% by FY27, with funding primarily through debt (2:1 debt-equity ratio) and an upcoming ₹60 crores equity infusion from warrants. The network of finance professionals grew 10% YoY to 6,307, and 90,093 loans were processed in Q3 FY25, a 245% YoY increase.

iServeU Business Transformation and Growth

iServeU is transitioning to a SaaS-based revenue model, moving away from pass-through revenues to achieve more stable and predictable growth. The company has secured long-term contracts worth over ₹350 crores, including significant wins with Bank of Baroda (1 lakh Soundboxes, ₹5-6 crores ARR) and Axis Bank (₹5 crores for POS and Soundbox over 3 years). iServeU targets net revenues of ₹70-80 crores by FY26, doubling to ₹150 crores by FY27, with EBITDA margins improving from 12-15% in FY26 to 18-20% in FY27. TSP revenue contribution has significantly grown to 53% of total net revenue from 8% last year.

Q3 FY25 Financial Performance

Niyogin Fintech reported a consolidated total income of ₹113 crores for Q3 FY25, marking a 110% year-on-year and 55% quarter-on-quarter increase, largely driven by Moneyfront's new product line. However, adjusted total income (after trading costs) was ₹60 crores, a 12% YoY increase but a 17% QoQ decline. The company posted an adjusted EBITDA loss of ₹2 crores, compared to a loss of ₹0.5 crores in Q2 FY25. AUM (including off-book) stood at ₹242 crores, and cash and cash equivalents were ₹78 crores as of December 31, 2024.

Niyogin AI and Technology Focus

Niyogin AI is being developed as a strong independent revenue stream, supporting the NBFC with process automation and underwriting. It has gained traction with a large insurance player for Aadhaar masking and OCR solutions, with an expected ARR of ₹3-5 crores by FY27. The company emphasizes its in-house tech capabilities for the NBFC (NiyoBlu) and its ability to build scalable, low-cost solutions for payment processing, leveraging public cloud infrastructure and a strong regulatory environment. The tech team for Niyogin NBFC comprises 20-23 members, supplemented by 8-9 engineers from a recent AI acquisition.

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