Network People Services Technologies Q1 FY27 earnings call

Network People Services Technologies Limited reported robust year-on-year growth in Q1 FY27, with revenue increasing by 75% to ₹61.42 crores and net profit rising 53% to ₹11.4 crores. Despite this, the company experienced a quarter-on-quarter revenue decline from ₹68 crores in Q4 FY26. Management clarified that this is due to a strategic business transformation, shifting away from a high reliance on the PPaaS segment (now projected at 5% from 90%) towards a technology-led subscription model, and advised investors to focus on yearly performance rather than sequential triggers.

The company is actively diversifying its offerings to de-risk from regulatory landscape changes, focusing on new products and segments like RegTech and AI-based risk intelligence. This strategy aims to build a global footprint and acquire accounts from new territories, with international business already contributing 10-12% of Q1 revenue. NPST is targeting around 50% of its revenue from international business within the next two years, with higher EBITDA margins of at least 35% compared to domestic operations.

NPST has made significant strides in its RegTech segment, securing an order from a large Public Sector Undertaking (PSU) and planning to launch a SaaS-based subscription model for mid-to-small banks. Management highlighted their AI-based risk intelligence product as a key differentiator, claiming it is completely new with no direct competition, having successfully processed approximately 650 million transactions with 98% accuracy in banking environments.

The potential introduction of Merchant Discount Rate (MDR) on UPI transactions is viewed as a significant advantage for NPST. Management expects MDR to revive the PPaaS segment, which had seen reduced risk exposure. While awaiting clear guidance from regulators, banks, and NPCI, the company anticipates a substantial increase in revenue as it provides the acquiring infrastructure for banks, allowing them to share a portion of the MDR revenue with NPST.

Eight months after receiving IPO funds, only 10-15% have been deployed. Management indicated that deployment would accelerate in the next two quarters, focusing on product development and market expansion. These investments are strategically aimed at gaining access to international markets, acquiring ready customers, and developing new products, particularly in AI-based technologies, to strengthen the company's competitive position.

Despite a QoQ drop in EBITDA margin in Q1, management expressed confidence in achieving the full-year FY27 EBITDA margin guidance of 30%. They attribute the current margin profile to ongoing investments and the business transformation. The company expects margins to improve as milestone-based revenues from new, higher-margin global and RegTech orders materialize, targeting PAT margins of approximately 20% by year-end.