DiGiSPICE Technologies Limited — Q3 FY26 earnings call

I would say that, definitely H1 this year, we saw a significant subsidy flows, even more than what we had expected. So, I would say that we would want to factor in the seasonality or the fact that there was a significant shoot up in subsidies and therefore on a relative basis, there is a dip in GTV. I think the underlying slowdown, Gulshan, is more related to the lending book of MFIs and NBFCs.

Management clarified the reasons for the sequential GTV dip, attributing it to seasonality and MFI/NBFC sector issues rather than a fundamental slowdown.

Asked by Gulshan Singh

So, obviously, one thing that is mentioned here in the question itself, that the CMS volumes are dropping, which is a low margin business, which is looking like as if the margins are coming from the low margin CMS volumes going away, while that is not the actual case. The CMS that is decreased for us is basically on the side of one major client that we are working with, where the margins were in itself very low. So, when the volumes with that one client has decreased, our overall CMS margins have grown up. So, that is in turn helped us grow our overall margins on the CMS side. ... we could say that this would somewhere look like somewhere between 44% to 45%, on an average for a quarter.

Management explained the drivers of gross margin improvement, linking it to a shift away from a low-margin client in CMS and operational efficiencies, and provided a future target range.

Asked by Agarwal Family Office

Absolutely, Rahul. I think absolutely, because when I said industry, we are talking about growth of UPI. As I mentioned, this is literally building out an infrastructure at the last mile, because at the end of the day, to do a UPI, to be able to do digital, you have to have a transacting bank account and to be having a transacting bank account, you have to make it easy for people to put money into the bank account.

Management affirmed the strategic importance of UPI and AePS in building last-mile financial infrastructure for digital inclusion, highlighting its utility-like potential.

Asked by Rahul Kumar

I think credit distribution is something that we have definitely seen a big need for. There are lots of financial providers who want to distribute credit. ... I think the next couple of months will go more in terms of building the stack for financial product distribution, right. ... I think H2 next year is where we can hopefully see that numbers scale.

Management indicated that while embedded credit for agents is scaling, broader credit distribution requires more time (1-2 quarters) to build out the necessary product infrastructure before significant scaling in H2 FY27.

Asked by Navdeep Mehta

Yes, so we are investing in the new engines and building up the capabilities and capacity both in terms of new products distribution. And if you see our numbers also, that new engines, what we were investing or incurring as an investment, almost Rs. 11 crores we have done in the last financial year on these new engines, which has now come down to kind of Rs. 1 crore a quarter.

Management confirmed continued investment in new growth areas while maintaining cost efficiency, providing specific figures for investment in 'new engines'.

Asked by Gulshan Singh

Shrey, we believe that both will continue to grow. I think when it comes to products like Insurance and Savings, we believe that agents definitely have a role to play. We still believe that not just in small towns, even in big towns, agents continue to play a role, given the complexity of the products, helping to hand hold you, what we call wealth managers when it comes to investments, so directionally, I think, just improving understanding what is an FTE? How do you think about gold savings? How do you look at this? We believe that, there is a trust factor that exists, when it comes to working with people in your communities.

Management emphasized the crucial role of agents in driving adoption of complex financial products in rural areas due to trust and hand-holding requirements.

Asked by Shrey Patel

I think for us, Rahul, what we have seen is that, definitely our agents started off as being cash out points, became cash collection points, and now are also enabling distribution of financial products. But at large, I think we believe that both, for cash and non-cash products, this network, this model continues to have relevance. ... I think, my sense is that the model continues to be relevant at all points.

Management asserted the continued relevance and resilience of their assisted fintech model across various market conditions, including liquidity tightening, due to its foundational role in cash and non-cash transactions.

Asked by Rahul Kumar

I think Rahul, definitely lending is a big part of the profit pool going forward. You know, that clearly is a standout. Payments continue to be under stress when it payments and collections, when it comes to margins. So, that is more about throughput that we tend to drive. So, if I say it is Lending, followed by Financial Distribution, followed by Payments and Collections from a profit pool perspective, right?

Management outlined its strategic view on future profit drivers, prioritizing lending and financial distribution, while acknowledging payments and collections as essential for throughput and data.

Asked by Rahul Kumar