Network People Services Technologies Limited (NPST) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Network People Services Technologies Limited Q1 FY 2027 Earnings Conference Call hosted by Valorem Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, Ms. Jain.

Thank you. Good morning, everyone. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations for NPST Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the first quarter of the financial year 2027. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now let me introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Deepak Chand Thakur, Chairman and Managing Director, and Mr. Ashish Aggarwal, Joint Managing Director. Without any delay, I request Mr. Deepak Chand Thakur to start with his opening remarks. Thank you, and over to you, sir.

Thanks, thanks, Purvangi. Hi everyone, a very good morning and happy to connect with all of you. This being a first quarter, result, we would like to share not just the numbers but the fundamental set around it and how this will pan out this year as well as the next few years. We believe that companies are built by creating sustainable platforms, solving meaningful customer problems, and consistently executing long-term vision rather than chasing short-term goals. We did chase business transformation last year and we continue to make efforts in building stronger platform for a global company you want to see in NPST. We have delivered strong year-on-year growth, increased our revenue sources, expanded our product portfolio. We have accelerated our international journey. In fact, we have made it a little earlier and continued investing in future-ready AI-based technologies. As a result, revenue grew significantly year-on-year while profitability also remained strong despite our ongoing investment for future growth. You know, in last call, like we committed, like, you know, we have explained in our financial results that our focus has been multi-pronged to take the organization to next stage. A, we want to de-risk the organization from industry impact due to regulatory landscape changes. That brings more stability. Pivot into multiple new products and segments including RegTech and AI-based risk intelligence. Create global footprint and acquire accounts from newer territories and build SaaS-based profile to add recurring revenue. We worked our way on all the above directions and now we are seeing funnel as well as results moving in this direction. Although we have brought down the contribution from payment platform like in my last presentation, but any positive move on MDR on UPI will revive this segment. We are closely monitoring the progress for now. We may not see immediate impact, but it will have a visible difference. This is how early the industry absorbs. In RegTech, we have picked up deals in cooperative segment, and now we have an order from large PSU as well. So we intend to launch SaaS-based subscription for mid to small size banks. That will again give us a larger universe to address. We have informed in our vision for global foray, and here we have been able to capture global account in Q1 itself. Our team is now increasing new account quite frequently due to presence of SaaS-based bank-in-a-box model that we invested last year. While historically we have been associated with payments, but the efforts invested last year to diversify has evolved NPST into a broader fintech company. A platform which has capability not just across payments but also RegTech, banking technology, AI-led compliance solution, and international digital financial infrastructure. Another significant milestone during the quarter has been the continued progress on our international business, where we are not just aspiring to get the business, but we now have a revenue contribution coming in. This validates our relevance of the technology which we have built. It is not just in India, but it can go beyond that. And demonstrate the scalability of our product across different geographies. International market, we not just look at it as an additional revenue stream, but we believe it is going to be a strategic pillar for the company going forward. We are consciously investing in product, global business development, artificial intelligence, SaaS infrastructure, and skillset revival. These investments, although cost today, but they are a growth enabler intended to strengthen our competitive position in coming years. We will see continued momentum across banking clients, growing demand for regulatory technology, increase in adoption for digital payment, emerging international opportunities, and stronger technology ecosystem. Our pipeline remains healthy, our customer engagement continues to deepen, and the strategic direction whatever we have given in the beginning of the year That remains unchanged. coming to numbers, I think if you have gone through it, the year-on-year uptick has been about 75% in revenue. We closed at about INR 61.42 crore. Our EBITDA has grown by 66% and our net profit has gone up by INR 53 crore, which is about INR 11.4 crore. I think that should be good enough for now. I will take questions here on. Yes, Pranav, over to you.

[Operator Instructions] First question is from the line of Akshay from AK Investments.

Sir my first question is about, revenue guidance. So we had earlier guided that we should be able to grow by around 15% to 20% quarter-on-quarter throughout the year, but in the first quarter itself we have degrown quarter-on-quarter. So what should be the fair assumption on the revenue front and all? And also we had guided that we should be somewhere around highest revenue per quarter of around INR 67 crore in the next quarter, but we are still INR 10 crore behind this target. So please put some more color on the growth trajectory going forward.

Well, we gave a guidance of about 60 to 70% growth, and that remains unchanged. There is no challenge at all. In fact, I addressed this question in detail in the last quarter itself, and I gave the nature of the business. I clarified that. So I would like to reiterate the fact that we brought down our projection in the PPaaS segment to just about 5% to reduce the risk associated with that segment. And now we are more of a technology-led subscription and, and the overall solution that we are selling in the ecosystem, which may not have exactly the same nature of revenue every quarter. And that is the reason why I, I even give a clarity that you should definitely be looking at, you know, yearly numbers that is coming out. So whatever funnels we had, we had that clarity. We had-- we knew how this is going to work out. And that's why comparing Q4 of last year with Q1 may not be the right approach. You should be looking at how the company is growing year-on-year, and you should be looking at what numbers we are sharing. Is it meeting the guidelines? And the answer is yes. We are actually following the same trend. There is no change in guideline. when it comes to the, the overall numbers, I think last quarter we have been able to do about INR 68 crore, which we already did, you know, when it comes to the highest performing quarter. And it will be due in this year as well. So the triggers coming in, the numbers coming in, the execution and implementation as and when it goes ahead in, in some quarter we will definitely shoot up much higher than that.

Okay, sir, fair enough. And we are also sticking to the full year FY '27 EBITDA margins guidance of around 30%, right?

That remains unchanged.

Okay, sir. And my second question is about the MDR. So recently there was a bill in Parliament that approved the MDR on UPI. So do we get any benefit out of it, and what is the economics of the bank's revenue and our sharing on that front?

So it's a-- it's an advantage to the company, but we are actually waiting for the guidance to come from the regulator, banks, and, you know, from NPCI, which is-- I mean, we are extremely positive about how this should shape up. Just to give you an idea, we will be acquiring infrastructure for banks on which the entire how UPI payment ecosystem would work. And this is that platform. There are certain contracts which we usually do on SaaS-based model. Now the entire industry had a limited fund in absence of MDR. The moment MDR starts flowing in, when UPI is doing about 23 billion transactions, even 5%-10% of such transactions brings in huge amount of revenue to the entire industry, and that goes across the payment aggregators, banks, and DSPs like us. We start generating that revenue. So the PPaaS segment, which was just about 5%, that will start flourishing. Where we brought down the risk associated with the platform revenue, now the MDR revenue will start kicking in, and that will add in, you know, much-- a good amount of revenue to the organization.

Okay, sir. And sir, lastly, on the international market presence, so we are continuously developing, international-- our international presence. So, what type of products and solutions do we provide in the international market? And also in the presentation you have mentioned that we have got the, license, we have got the order for one of the biggest telecom companies in India for the Super App. So can you put some light on these two developments?

Unfortunately, I will not be able to zero down exactly on what we have, what, what product is, is, is the, the hero product because of the competition. What I can definitely tell you is that when it comes to digital transformation around payments, digital banking, we have multiple products with us, right? We have interoperable payment platform, we have merchant acquiring platform. We have banking Super App. So all of these we take as a bouquet and go to international market. So what we have got now as an order, we are actually transforming the entire digital landscape and payment for the telecom provider. So just like you have, you know, exactly if I replicate it, like you have, you know, Airtel as a telecom provider, but Airtel also has Airtel Money, Airtel Payment Bank. So that's where it opens up opportunity for us, when, when the telecom provider has a fintech options.

Next question is from the line of Nishant Joshi from Equisense Advisors.

In last con call, you in last conference call you have mentioned that if we do business with Indian companies, we get a margins in range of around 15% to 20%, whereas for clients it could be range of 30% to 35%, which can reach up to 40% also. And you also have -- also have mentioned that the international business would be on a faster growth trajectory. So do you still stick with it, and can you give a number that how much of our sales are coming from international markets, and how do you see growing it in next 12 months to 15 months?

So, the orders that we pick up will go through an implementation cycle, and the implementation cycle can range from, you know, 4 months to about 9 months. That's the journey. There are milestones that come with it. So there will be, there will be early revenue realization in certain cases, and there will be cases where post-implementation, we -- it immediately hits the quarter. And that's the reason why I was saying So, so we got one and we are-- I mean, to be honest, there are 2 more deals in pipeline. So we'll be sitting at a good bucket, by the end of this quarter and when it comes to the margin, yes, that margin is what we are looking at. And yes, that's the margin which we will be working on. For now, if you see the consolidated numbers, we have about 10% to 12% coming in from international. And as and when the, the project goes -- so project can range from 4 years, 5 years, or even longer than that. So those stages we start generating more and more margin as and when the implementation gets completed and, you know, the revenue starts looking in.

Okay, okay. So my second query was again related to the same UPI payment system industry. Can, can you give an outlook to the industry overall? If MDR is introduced, do you see value of transaction and volume of transaction with MDR will be implemented, giving a lower growth trajectory?

I think, see, what I'm going to tell you right now is strictly my personal experience. Why? Because I, we are yet to receive guidance from -- from our customers, like from banks and, and NPCI and the regulator. That is yet not released. So it is way too early, and that's the reason why we are giving, you know, we are not giving a very aggressive, numbers around it because we are yet to see how this is going to pan out. But once it goes, because it has already gone in a very positive direction, so once it goes, it straight away, you know, brings an upgrade to the projection which we have made around payment platform as a service, which we have completely tapered down for now until we see that impact coming in. So that segment will get a boost. Second, we must also understand that the, the conversation which is happening right now is around the higher ticket size transactions, and honestly, it's not going to be customer-- merchants are going to get charged. So high ticket is definitely around those merchants who can afford to sell those kind of products. So if you, if you're going to, you know, a small grocery store, your ticket size is much lesser compared to when you do a bigger shopping. So there, if the ticket size is larger, then the kind of MDR they are talking about is not even equal to what we have in cards. Much, much lower than that. So I don't think that the revenue bucket around those particular transactions-- sorry, the transactions around those revenue buckets will get impacted because that particular business is already making good value transactions. And MDR at much lesser rate on UPI is better than paying for the higher cost card-based transactions. So rather than card, they will still prefer UPI because the MDR is much, much lower on UPI compared to card. So small businesses should not get affected, and large businesses will definitely have an option to use, you know, UPI at lower cost.

Thank you. Next question is from line of Ankit Kanodia from Zen Nivesh.

My first question is related to the last point which you just mentioned regarding large transaction. So I think 4% to 6% of the total UPI transaction falls under that bucket where there will be an MDR available. So looking at our current scheme of things in terms of how we are present, do we see a sufficient enough pool for us given that it is only restricted to 6%?

See, that business is-- those 6%-7% are those large merchants, right? Those are not small merchants. So if you see the ratio among the large merchants I think if we categorize those merchants where the balance sheet is much bigger, then we are probably talking about almost 80%-90% of those merchants, top merchants, who will come under MDR bucket. And where do we have these merchants? These merchants are basically across all acquiring platforms. So there are not more than 80-90 banks who have the acquiring ability, of which about, you know, top 15-20 banks are the ones who are actually catering to such kind of merchants. In our bucket, we have PSU bank, we have private bank, and we have cooperative bank, all of them on our acquiring platform. So we definitely see some kitty.

One thing I was not very clear, and I'm sure, as in, you alluded to your previous remarks also that still everything is not clear, you're waiting for the-- the point which I want to understand is, will we directly get a benefit of MDR as in a share in that, or we will just get the benefit of the -- this market getting expanded, this 4%-6% market may be doing really well, and that will increase business for us in the long run, or we'll get a direct share in the MDR also when it comes in.

So I'll split it into 3. When I say that we have not got communication, that means we work for a, we work for regulated entities. Where UPI will have an impact. These regulated entities are banks and payment aggregators where we have deployed our payment platform as well as our infrastructure. Now we have, unless and until we do not receive communication from those directions, we, that is where we are saying that the communication is yet not there. However, the industry is already moving in that direction. Once, you know, that entire journey is completed, then it will reach our customers, and then from there it will come to us. That is what I meant. So I'm not denying that it is in positive direction, but I don't want to make any number projections unless we receive the paper from them. You know, these are the changes, you do it, and now MDR can be charged. That is what I'm referring to.

Yes, that was very helpful. So my next question is related-- yes.

I'll answer the second one. So, how we are getting benefit? One is there will be good revenue available. So the total transacted value on UPI today is 2.7 trillion approximately every month. Now if you take this number and whatever number you calculated right now, 4-5%, and then you take MDR. Imagine the money flowing in the ecosystem. And when that happens, there is more money available to pay to technology service providers to start upgrading platform or to faster the roadmap to generate more revenue. So there will definitely be competition amongst banks to generate more revenue because of this MDR, and there will be more investments coming in. So TSP gets an added advantage. So this is an indirect benefit we get. Second, on a payment platform, we have orders where we have implemented acquiring platform, and when we-- and we get paid for transaction. So that is a direct benefit we get.

Yes, thank you so much for the detailed answer. in the same, MDR issue, when the Honorable Finance Minister was talking in the Parliament, he also highlighted about the need for cybersecurity and fraud detection software. So how do we see their opportunity for us? Maybe I'm not asking for any finished guidance, but from a-- maybe from a qualitative view, do you see that? How are we placed and how do we see that business going forward for us?

Yes, just a second. So we anticipated this problem being in this segment for over a decade now, and we are the only company who not only has infrastructure around bank payment platform, but we also have a RegTech. So we invested into AI-based risk intelligence about 2.5 years, 3 years back, and last phone call we clearly said that it was just a product. Now we have treated as a separate vertical to focus onto it. What we see is an opportunity, or much bigger opportunity for NPST, wherein RegTech will start, you know, it's an unsaid regulation now to have such kind of software to control the cyber frauds. And for that, what we built was completely AI intelligence around the merchant acquiring platform. How the transaction loopholes can be identified and how merchant risk can be underwritten. For that is what I was referring to when I said we got an order from large PSU. The product is proven and now we are going to create a subscription-based model for the small to mid-size industry. So that is definitely on cards, and with the growth, if at all there is any further positive change in regulation that demand this kind of software to be mandated, it is straight away going to help us in our RegTech growth.

One last question, if I may. how do you see this MDR thing impacting the micro ATM and the smart POS deployment in the rural area, far-off area where there is still-- there is no scope of ATM and micro ATMs are the only way. And at one point of time, we had RBI having a PIDF, which is Payment Infrastructure Development Fund, which later got stopped. Do you see, with MDR this also getting revised in some ways and we get benefit from that?

To be honest, that is more related to AEPs, wherein the withdrawal happens through, biometric. And, there is also a product called as UPI Cash Point where the MDR always existed. It never changed. So it has a very different segment altogether. We cannot directly compare it with the impact because MDR on UPI Cash -- if you, if you want to withdraw cash through a QR code, that was all-- there was an MDR cost to it, and that did not-- there is no change in that. Second, when it comes to, uh you know, this-- the, the competition between micro ATM, ATM, AEPS, that's a completely different product. So I wouldn't like to call out anything in that direction.

So let's keep the MDR aside. How do you see the micro ATM market going for us going forward?

Unfortunately, I'm not exactly in that segment, so will be difficult for me. However, what I see is that in 2 years to 3 years UPI Cash will definitely make inroads as against the larger cost involved in micro ATMs. So if at all there is more confidence, the cyber risk is less, and, and, you know, it's, it's a good compliant system, then we see that UPI Cash Point will grow. And that's where the infra cost goes down and the revenue is available for everyone.

You. Next question is from the line of Hardik Gandhi from HPMG.

So I had two questions. First, I think we've put out a very aggressive guidance on the margins, and after such in the last quarter, right? And this quarter, when I'm looking at the margins on the EBITDA level we have dropped. So what is the reason for that, and do we have to look at on a year-on-year basis? How do we go about that? That's my first question.

So like I said, that the margin, what we have referred to is a combination of, so, so if you see the table which we gave last year, sorry, last call It's a combination of domestic, global, and RegTech all taken together. And that's why we gave the cautious understanding also that the nature of business has also changed. It was 90% on PPaaS, which has gone down to, you know, 5% as projection now. So you should be looking at the technology-led growth. So, the order that we have picked up in Q1, the order which we have picked up in Q2 these margins will start adding up, and then the averaging out will definitely be much higher than what we currently have right now. And that is the reason why we are confident that by the end of the year we are definitely meeting our guidance.

Okay, so global play will add margin as well as RegTech, which is AI-based product, so that also has a higher margin. So that is where it will impact.

A follow-up on the global business, just wanted to know that if we are able to expand our offerings to, like new banks, or are we just trying to cross-sell to our existing clients?

Our first target is always banks, central banks, and, you know, BFSI segment, because that's where it evolves. But when we are going to global market, the interesting case that we are coming across is the other segment also. Struggling with the same problem. So the nature of, of payment ecosystem in a geography differs from the other geography. However, the product that we have designed, developed, has a universal acceptance. It may be banking, it may be telecom, or any other segment. So we are still evolving. So, to be very clear, the other two orders are going to be of the, of the 3 first orders that we are going to pick up, there is going to be just one order from the payment service provider. Rest are going to be from the other segment.

Okay, okay. So I just wanted to know on that traction because, you know, we earlier mentioned that we are far ahead compared to the global peers. Our technology is far advanced given that our quick adoption of UPI and other technology in India. And we mentioned that these will be the low-hanging fruits for us to capture the global banks in different countries. And I think we've-- that for that we have not been able to tap as successfully, or is it just taking time? I'm not sure.

I think we are connecting in less than 3 months, and I've already given-- I've already shared the order book. So I mean, what we already have and what is the new that is coming in. That talks about the traction which is available.

Yes, there may be possibility that certain orders we are anticipating in 3 months, it may come in 5 months. That, that may happen. But, but the, but the overall business, whatever we saw with last year's efforts, it is still intact. Our funnel is growing, and at the same time, our traction has only improved. So I don't see there is any change at all.

Correct. And just last question, For the IPO funds, I think we received it in December. I think it's been 8 months. We've used only 10%, roughly 10%-15% of it. So what is the deployment schedule or plan for that?

So we currently have zeroed down on 3-odd opportunities where we intend to invest. Our conditions are very, very strict, and that's the reason why it has taken time. In fact, I mentioned this last year also. We don't want to completely, you know, invest into, only one segment. So we wanted to diversify that. RegTech was one area where we had to zero down on few companies. Then there was, solutions around AI, you know, and then there was solutions around, you know, payment infrastructure. So all of these, we have identified. So we will definitely see some traction soon.

No, no, so just the meaning for that was that what will be the rough time of deployment, that within, within next, next year we'll be able to deploy the funds, or, or will it be like a very gradual process where, you know.

No, no, we can't wait till next year. Yes, not the entire fund, but we'll start seeing deployment in next 2 quarters.

And those will be on product development.

So we are looking at market expansion. So we get an access to the international market, ready customers with new product altogether? So, so, so all those parameters exist.

Next question is from the line of [ Preet ] Shah from Blue Star Capital.

Yes, so I just want to understand, so from last 2 quarters we have been saying that, next quarter will be fine, next quarter will be fine. I understand the business is changing, but again, you can help me to understand. Then we will see a good growth Y-o-Y and Q-o-Q. From which quarter we can see, and how confident you are to achieve TCR guidance?

I believe you should, you should start looking from the quarter which we have already declared. So, so 68% was in Q4 last year, so we already reached that. Maximum of number after-- even between the transformation period and the change in the business model, we try to maintain that. Secondly, what we, what we have done is we have grown about 75% year-on-year this time, and the execution cycle and implementation, milestones, those are the ones which starts giving the revenue. So this year again, no change in guidance, that remains intact. We continue to scale the number and all the other parameters. If you evaluate, did we get international revenue? The answer is yes. have we been able to, you know, grow the numbers? Have we been able to maintain EBITDA? Have we been able to grow those, you know, self-subscription-based, business? Are we getting revenue from the other verticals like RegTech? So all those are green flags. So if you see that, it straight away takes us to a direction where whatever we have committed is getting achieved.

Got it. So sir, as you are guiding for 60% to 70% growth, so, on revenue, so is my understanding correct, you are saying roughly INR 322 cr-340 cr revenue for this year? And we have done, INR 56 crore for Q1.

The range is around that, yes.

Yes, okay. And we are taking 30% EBITDA margins, right, for this year?

Yes, that's, that's the guidance. I mean, yes,

Next question is from line of Sampath Nayak from ZTO Capital Advisors.

Sir, so this is again question regarding MDR. Just wanted to understand if we are the direct beneficiary of this MDR implementation or the indirect. So when I say direct, let's say some large merchant does the, you know, collects the MDR fees. So will we be getting that or will we be part of indirect spending by these banks or payment gate.

So bank-- so, so the revenue, the interchange revenue generated by the acquiring bank where we have our infrastructure, that is where we'll get paid. So we will get paid from bank for the, for the acquiring staff. Will not, will not be charging merchant.

Okay.

It is the bank which will charge the merchant and, and they will do a share with us.

So again, I mean, let's say, there's a transaction. For every transaction, will we get paid, or will we get --

Sir, there are 2 businesses. One is TSP, another one is payment platform. Wherever we have TSP, there any incremental development on software to generate more revenue, whatever investments they are doing That is where there will be an incremental business coming in, in our TSP model. The other model is payment platform, where whatever acquiring platform we have deployed, on that, whatever per transaction revenue is generated by bank due to MDR, which is not present right now, there the bank will share the revenue with us. So that becomes a direct revenue over the revenue generated from the merchant.

Okay, so the-- I mean, I mean, there are both direct and indirect avenues are open now, correct?

Absolutely.

Next question is from the line of Suman, Individual Investor.

I think there are enough questions on MDR. I'll request when the things are clarified, please have a special session on that. Now coming to other questions, I got questions. How's your competition in RegTech? That's number one. Secondly, how's your TimePay moving on?

So because-- okay, so first one on the competition, I think RegTech is a very broader subject, to be precise, when we talk about, the established products like EFRM or EWS, you know, those, all those products, there the competition exists, is there for, you know, decade odd. What we have built is the AI-based risk intelligence, which is completely new, and that can be only evolved if at all you, you are able to deploy that solution in the banking environment, which we did, and we processed about almost about 650 million transactions on it. So, we not only have product, we also have machine learning, and we also have the data intelligence, which is at 98% accuracy. So, okay, if I take that particular point, we don't have any competition at all right now. That was the first mover we did in the market. We invested as a company, a good amount of investment that went into this particular product with the belief that we'll be able to take it to market. And then now when we go ahead and we, we talk about this product, we have to not -- we don't have to compete. We have to actually give them an idea how this is going to solve the problem. So that's the status right now.

Okay, but this prima facie looks very encouraging. I think number of banks,

In fact, we have got the, we've got a good attraction even from the global market wherever we are talking.

Okay, so that should translate into a good top line, I believe, in the next couple of quarters. Anyway, all the best. How about TimePay?