Zinka Logistics

Zinka Logistics delivered robust Q3 FY25 results, with total revenues reaching INR 123 crores, marking a 45% year-on-year growth. This strong top-line performance translated into a significant profitability surge, with adjusted EBITDA growing 5x year-on-year to INR 42 crores, up from INR 7.5 crores in the prior year. The company maintained a high contribution profit margin of 93%, leading to INR 115 crores in contribution profit, a 48% increase year-on-year. PAT (excluding exceptional item^📎s) turned positive to INR 30 crores, a significant turnaround from negative INR 6.5 crores last quarter.

The core verticals, primarily tolling and GPS, continued their strong growth momentum, expanding by 35% this quarter and contributing 87% of the total revenue. The company's market share in the tolling business steadily increased, reaching 43% by December, up from 33% in the last fiscal year. This consistent growth is attributed to strong customer retention and the compounding effect of recurring revenues, with revenue from continuing operations growing 41% YoY to INR 114 crores.

Zinka Logistics is actively investing in new growth opportunities, with growth businesses (excluding core verticals) doubling their revenue year-on-year to INR 14.5 crores from INR 7 crores. A significant unlock was achieved with the fuel sensor, which is now being sold at INR 10,500-11,000, offering a 70-80% contribution margin. The marketplace loads vertical is projected to reach a maximum annualized revenue of INR 200 crores within 5-6 years, indicating future growth potential from these new ventures.

A key development this quarter was the government's notification in January, clarifying the future of the MDR (Merchant Discount Rate) program management fee. This provides strong cementing to revenues, enhancing quality, visibility, and predictability for the company, which previously faced uncertainty regarding this revenue stream. This regulatory clarity is crucial as the MDR-linked revenues constitute 30-35% of total revenues.

The company demonstrated strong operating leverage, with adjusted EBITDA growing significantly faster than revenue, and adjusted EBITDA (excluding other income) growing 10x YoY to INR 33 crores. This is due to the recurring nature of revenues, minimal incremental customer acquisition costs for cross-sold services, and efficient cost management. Employee costs saw a sequential decline, partly due to one-time^📎 leave reversals of INR 1.5-1.7 crores and a strategic focus on variabilizing the workforce, contributing to overall margin expansion.

The platform continues to see increased engagement, with 735,000 transacting customers (up 21% YoY) and 350,000 users utilizing two or more services (up 30% YoY). Daily app usage increased by 15% YoY to 45 minutes, up from 39 minutes. The company's strategy of acquiring customers via FASTag makes customer acquisition for cross-sold services like load matching effectively free, driving efficient growth and expanding the customer base across its ecosystem.