Blackbuck Limited — Q3 FY25 earnings call

Call held 5 Feb 2025

Management summary

Zinka Logistics delivered a robust Q3 FY25, with revenue growing 45% YoY to INR 123 crores and adjusted EBITDA surging 5x to INR 42 crores, driven by strong operating leverage and a 93% contribution profit margin. The company achieved a positive PAT of INR 30 crores (excluding exceptional items), marking a significant turnaround. Strategic investments in new growth verticals like fuel sensors and marketplace loads are progressing, supported by regulatory clarity on MDR, though the financial services vertical experienced temporary headwinds from partner caution.

Highlights

  • Total revenue increased by 45% YoY to INR 123 crores.

  • Adjusted EBITDA grew 5x YoY to INR 42 crores, demonstrating strong operating leverage.

  • Contribution profit margin remained high at 93%, leading to INR 115 crores in contribution profit (up 48% YoY).

  • PAT (excluding exceptional items) turned positive to INR 30 crores, a significant turnaround from negative INR 6.5 crores last quarter.

  • Tolling market share reached 43% by December, showing consistent growth from 33% in the last fiscal year.

Concerns

  • Growth in the financial services vertical was temporarily dampened by cautious partners in Q2 and Q3 FY25.

  • Sequential decline in employee costs was partly due to one-time leave reversals (INR 1.5-1.7 crores), not solely structural efficiency gains.

Key financials

  1. Total Revenue ₹123 Cr +45%YoY
  2. Revenue (Continuing Operations) ₹114 Cr +41%YoY
  3. Contribution Profit ₹115 Cr +48%YoY
  4. Contribution Margin 93%
  5. Adjusted EBITDA ₹42 Cr +460%YoY
  6. Adjusted EBITDA (excl. Other Income) ₹33 Cr +870.5%YoY
  7. PAT (excl. Exceptional Items) ₹30 Cr
  8. Gross Transaction Value (GTV) Payments ₹6,100 Cr +35%YoY
  9. Payment Transactions ₹14.5 Cr +36%YoY
  10. Transacting Customers 7,35,000 units +21%YoY
  11. Users with >=2 Services 3,50,000 units +30%YoY
  12. Daily App Usage 45 minutes +15%YoY

What they filed

Q1 FY27: revenue up 41.7%, net profit up 23.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue99 114 122 144 151 +53%172 +51%185 +52%204 +42%
EBITDA15 30 40 40 37 +147%45 +50%45 +13%50 +25%
Net profit-269 -48 280 34 29 +111%32 +167%66 −76%42 +24%
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

  • Core Verticals (Tolling & GPS)
    87% Revenue Contribution35% Growth
  • Growth Businesses
    ₹14.5 Cr Revenue1× YoY Growth

Guidance & targets

Profitability

  • PAT (excluding exceptional items) Profitability · Immediate quarter / coming quarters · High confidence No exceptional items
    we will probably not be having these exceptional items in the coming quarters, probably in the immediate quarter, we can expect none of these exceptional items to be repeating in the continued operations.

    — Rajesh Yabaji

  • Adjusted EBITDA (excluding other income) as primary reporting metric Profitability · 2 to 3 quarters · High confidence All reporting to this metric
    Over the course of 2 to 3 quarters, we will move everything to adjusted EBITDA, excluding other income, because that is the right metric to measure.

    — Rajesh Yabaji

Revenue

  • Marketplace Loads Vertical Annualized Revenue Revenue · 5-6 years · Medium confidence Max INR 200 crores
    the revenue projection of that vertical probably will be max INR200 crores in probably 5-6 years down the line on an annualized revenue basis.

    — Rajesh Yabaji

Volume

  • Monthly Run Rate of Fuel Sensor Sales Volume · As growth continues (e.g., 6x growth) · Medium confidence Hit GPS numbers (implied higher scale)
    at whatever scale we're doing right now, if we grow by 6x, right, we will in the monthly run rate of sale, we will be able to hit the GPS numbers.

    — Rajesh Yabaji

What to watch in Q4 FY25

PAT (excluding exceptional items)

Next quarter
Current INR 30 crores
Target Continued absence of exceptional items

Why it matters

Confirms the sustainability of the reported profitability turnaround and the absence of one-time charges.

we will probably not be having these exceptional items in the coming quarters, probably in the immediate quarter, we can expect none of these exceptional items to be repeating in the continued operations.

Risks & concerns

  • Dampened growth in financial services vertical due to cautious partners

    medium

    Partners in the financial services vertical have been cautious in the past two quarters, leading to a dampening in growth for this new business area.

    Management acknowledged

  • Differences in Indian market structure for fuel payments compared to Western markets

    low

    The Indian market has a different oil marketing company structure and higher cash transactions, which poses unique challenges compared to Western markets.

    Management acknowledged

Q&A highlights

7 direct
Segmented growth drivers and telematics revenue Direct
today materially, the load marketplace business and the vehicle finance business are contributing to majority of this particular uptick. But as we move forward in the next couple of quarters, fuel sensor will also start contributing.

Clarifies the current and future drivers of growth businesses, indicating a shift in contribution from different new initiatives.

Asked by Sachin Dixit

Tolling market share Direct
By December, and we already reached close to what 43%.

Provides an updated key market share metric for a core business, showing consistent growth and competitive positioning.

Asked by Sachin Dixit

MDR regulatory clarity Direct
in January, government has come out with a notification, clarifying really what this MDR, what this program management fee is going to be in the future, which gives a very strong cementing to the revenues, the quality of the revenues and the revenue visibility and predictability for our company into the future

Addresses a significant regulatory risk previously disclosed, providing crucial revenue certainty and visibility for a material revenue stream.

Asked by Gaurav Rateria

Fuel sensor pricing and profitability Direct
today in the market, we start selling the fuel sensor anywhere in the range of blended realization for us is roughly about INR10,500 to INR11,000 from the fuel sensor... And at the same time, we will be able to deliver a contribution margin profile of 70% to 80%.

Details the competitive pricing strategy and strong margin profile for the newly scaled fuel sensor product, highlighting its value proposition.

Asked by Gaurav Rateria

Sequential decline in employee costs Partial
in December, some of our leave lapses, etc. happen. So, there are some reversals in leave encashment and gratuity. So, that is to the extent of INR1.5 crores to INR1.7 crores. But other than that, as I said, continuous focus is on variabilizing the workforce.

Explains the drivers behind a sequential cost reduction, clarifying that it's partly due to one-time factors and partly a strategic shift towards workforce variabilization.

Asked by Gaurav Rateria

Customer acquisition cost for new segments Direct
the customers for cost of acquisition of truck operators for the load matching platform becomes free, because I acquire a customer for FASTag... So, the cost is essentially, zero

Highlights the efficient cross-sell strategy, where existing FASTag customer acquisition subsidizes new offerings like load matching, driving profitable growth.

Asked by Devendra Wadhwa

Telematics device penetration and renewal rates Direct
We typically have that the first year annual rate typically is roughly in the range of like early 70s in terms of annual rate. After that, typically, the renewal rates are in the early 80s to late 80s on a continual basis.

Provides key metrics on customer stickiness and the recurring revenue nature of the telematics business, crucial for long-term revenue visibility.

Asked by Nilesh Jain

Potential for further fuel sensor cost reduction Direct
Yes, I mean, because right now, we are only talking numbers like mere thousands. And as soon as we hit 10,000s, right, we can definitely get more.

Indicates future margin expansion potential for the fuel sensor product as the company achieves greater scale in sales and manufacturing.

Asked by Prateek Poddar

2 min read 6 chapters

Detailed narrative

Overall Performance & Profitability Surge

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 items) turned positive to INR 30 crores, a significant turnaround from negative INR 6.5 crores last quarter.

Core Business Momentum & Market Share Gains

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.

New Growth Initiatives & Fuel Sensor Unlock

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.

Regulatory Clarity on MDR

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.

Operating Leverage & Cost Efficiency

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.

Platform Engagement & Customer Acquisition

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.

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