Detailed Narrative
Q2 FY26 Financial Performance Overview
MobiKwik delivered a strong Q2 FY26, marked by operational discipline. Total income remained steady at ₹279 crores. The company achieved an 80% improvement in EBITDA, reducing the negative figure from -₹31 crores last quarter to -₹6.4 crores this quarter, representing a ₹25 crore upswing. Loss before exceptional items📎 stood at -₹16 crore.
Cost Efficiency and Margin Expansion
A key highlight was the significant reduction in direct costs, which decreased from 7.3% in Q1 to 4.4% in Q2 as a percentage of disbursal. This contributed to a healthy contribution margin of 34%. Fixed costs also saw a 5.7% quarter-over-quarter reduction, with management expecting stability and potential further savings through automation.
Payments Business Dynamics
The payments segment showed improved margins, with gross profit increasing from ₹59 crores to ₹61 crores and margins expanding from 27.9% to 29.4%. However, revenue growth in this segment was impacted by the massive growth in UPI transactions, which currently do not generate revenue. The company is awaiting industry and NPCI circulars, expecting revenue from pocket UPI to commence in a couple of months.
Lending Business Performance
The lending business primarily focuses on unsecured personal loans and has introduced loan against mutual funds. While take rates for pure distribution are lower (2-4%), the company aims for about 3% profit from lending. Margins are stabilizing, and cost reduction is attributed to the winding down of older loan books and recovery in newer ones. MobiKwik is prudent in scaling digital lending, prioritizing profitability over aggressive growth.
Fraud Incident and Mitigation
A fraud incident occurred on September 12 due to a technical bug, exploited by 2,400 merchants in Haryana. Unauthorized payouts were quickly stopped, and 70% of the loss has been recovered, with aggressive efforts underway to recover the rest. The company has implemented enhanced controls, blacklisting, and appointed a new Chief Risk Officer to strengthen enterprise risk management.
Path to Profitability
Management expressed confidence in reaching PAT positive, citing the significant EBITDA improvements. They outlined that PAT positive depends on managing ₹6–7 crore in financing costs and ₹2–3 crore in depreciation per quarter. The company is actively working towards achieving profitability quickly, supported by cost efficiencies and stabilizing margins.
Zaakpay's Role and Future
Zaakpay, MobiKwik's payment gateway, is focused on onboarding and is expected to break even soon, potentially consolidating into the topline next year. It serves as a key partner, helping to lower overall costs for the company.