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    Network People

    NPSTMixed
    Information Technology·14 Feb 2025
    Management Summary

    NPST experienced a significant revenue dip in Q3 FY25 due to policy changes affecting its primary cooperative bank partner in the payment platform vertical. Despite this, the company maintained healthy profitability and aggressively pursued diversification by launching new products like RegTech and UPI credit lines, and onboarding new types of banks. Management acknowledged the impact on FY25 guidance but expressed confidence in the long-term growth story driven by these new initiatives and market expansion.

    Highlights

    8

    • Q3 FY25 Revenue declined to Rs. 23.23 crores, down from Rs. 68.97 crores in Q2 FY25 and Rs. 31.39 crores in Q3 FY24.

    • EBITDA for Q3 FY25 stood at Rs. 8.21 crores, with a margin of 35.33%.

    • PAT for Q3 FY25 was Rs. 5.14 crores, maintaining a 22% PAT ratio.

    • Nine months consolidated figures showed strong growth: revenue up 78%, EBITDA up 96%, and PAT up 133%.

    • Management revised FY25 revenue growth guidance, stating it is 'difficult to achieve 75%'.

    • Strategic diversification included the launch of RegTech (AI/ML for fraud/compliance), UPI credit line (live with Canara Bank), BBPS, and offline payment solutions (QR/Soundbox).

    • Payment platform expanded to include private sector, payments banks, and two small finance banks in the pipeline, mitigating risk from cooperative bank policy changes.

    • Target to manage at least 1 million Soundboxes through the platform.

    Concerns

    1

    • Impact of Cooperative Bank Policy Changes

    What Changed2

    vs Q4 FY25

    Tone shiftGood → MixedGuidance items11 → 6 (-5)

    Key financials

    Single quarter

    08 metrics
    1. 01Revenue₹23.23 Cr-26%YoY
    2. 02EBITDA₹8.21 Cr
    3. 03EBITDA Margin35.3%
    4. 04PAT₹5.14 Cr
    5. 05PAT Ratio22%

    Guidance & targets

    6
    CategoryTargetPriority
    Revenue
    FY25 Revenue Growth
    difficult to achieve 75%
    		Low
    Revenue
    FY26 Revenue Growth Aspiration
    75%-odd
    		Medium
    Revenue
    FY26 Revenue Contribution (Existing Portfolio)
    85% to 90% odd
    		Medium
    Revenue
    FY26 Revenue Contribution (New Portfolio)
    10%, 15%
    		Medium
    Volume
    Soundboxes Managed
    1 million
    		High
    Product Launch
    RegTech Product Availability
    mid-April
    		High

    Risks & concerns

    3
    RiskSeverity

    Impact of Cooperative Bank Policy Changes

    Policy changes at a primary cooperative bank led to a halt in acquiring business, impacting the payment platform vertical and causing a significant Q3 revenue dip. — Management acknowledged

    high

    Difficulty in achieving FY25 Revenue Growth Guidance

    Due to the Q3 impact and spillover into January, achieving the previously stated 75% growth for FY25 is now considered difficult by management. — Management acknowledged

    medium

    TimePay App Performance and User Experience Issues

    Users reported money getting stuck and poor UI/performance on the TimePay app, which management is actively working to resolve for monetization. — Analyst acknowledged

    medium

    Q&A highlights

    3

    “Let me be honest, I personally feel that that it is difficult to achieve 75%. But we are still trying. So my confidence is not 100%, a little lower than that.”

    This question directly addressed the significant revenue miss and the credibility of future projections, leading to management's revised outlook for the current fiscal year.

    asked by Akshay Kaila

    2 min read5 chapters

    Detailed Narrative

    01

    Q3 FY25 Performance Overview and Revenue Dip

    Network People Services Technologies Ltd. reported a substantial decline in Q3 FY25 revenues, reaching Rs. 23.23 crores. This marks a significant decrease from Rs. 68.97 crores in Q2 FY25 and Rs. 31.39 crores in Q3 FY24. Despite the revenue contraction, the company maintained healthy profitability, with EBITDA at Rs. 8.21 crores (35.33% margin) and PAT at Rs. 5.14 crores (22% PAT ratio). For the nine months consolidated period, NPST still achieved robust growth, with revenue up 78%, EBITDA up 96%, and PAT up 133%.

    02

    Impact of Cooperative Bank Policy Changes and Mitigation

    The primary reason for the Q3 revenue dip was policy changes at a cooperative bank, which served as NPST's main source in the payment platform vertical. This regulatory shift led to a halt in the acquiring business for cooperative banks, impacting the entire quarter and spilling over into January 2025. To mitigate this risk, NPST has diversified its payment platform by onboarding private sector and payments banks, with two small finance banks also in the pipeline, and the acquiring business has now restarted.

    03

    Strategic Diversification and New Business Verticals

    NPST aggressively pursued diversification by fast-tracking new product launches and market entries. Key initiatives include RegTech, an AI/ML engine for fraud prediction and compliance, which was recently awarded at the Bharat Fintech Summit. The company also launched a UPI credit line, already live with Canara Bank, and is part of two more tenders. Additionally, BBPS was launched last quarter, and efforts in offline payments (QR and Soundbox solutions) are progressing, with a target to manage 1 million Soundboxes through its platform.

    04

    FY25 Guidance Revision and FY26 Outlook

    Management acknowledged that achieving the previously stated 75% revenue growth guidance for FY25 is now 'difficult' due to the Q3 impact and spillover. While a specific revised number was not provided, clarity is expected by the end of Q4. For FY26, the company's aspiration remains to maintain a growth rate of '75%-odd', with existing business expected to contribute 85-90% and new portfolios adding 10-15% to the P&L.

    05

    International Market Entry and TimePay App Challenges

    NPST is expanding its footprint internationally, with plans to open its first office in Dubai by March 2025, focusing on the Middle East and African markets as a payment expert and software provider. Domestically, the TimePay app faced user complaints regarding money getting stuck and UI issues. Management acknowledged these challenges, attributing them to the app's push towards monetization, and confirmed that a dedicated product tech team is actively revamping the solution, with all compliance-related complaints already settled.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.