Zaggle will only acquire companies that are highly EBITDA accretive, a source told Inc42
One of the companies that Zaggle is in talks to acquire provides services to merchants and has an EBITDA of around INR 45 Cr
The acquisitions will help Zaggle reach INR 2,000 Cr gross revenue and INR 150 Cr to INR 200 Cr net profit in FY26
Fintech SaaS company Zaggle, which raised nearly INR 595 Cr via qualified institutional placement (QIP) this week, is eyeing three more investments and acquisitions by March 2025 to expand its offerings and top line, a source told Inc42.
Zaggle
will only acquire companies that are highly EBITDA accretive, the source said.
One of the companies that Zaggle is in talks to acquire provides services to merchants. The target entity has an EBITDA of around INR 45 Cr and will further strengthen Zaggle’s offerings, the source said, without disclosing the name of the entity.
The investments and acquisitions will help Zaggle reach INR 2,000 Cr gross revenue and INR 150 Cr to INR 200 Cr net profit in FY26.
Zaggle posted a net profit of INR 44 Cr in FY24 on an operating revenue of INR 775.6 Cr. It is pertinent to note that while announcing its Q2 FY25 results, Zaggle reiterated its guidance of a 50-55% top line growth for FY25. This translates to around INR 1,050 Cr revenue in the ongoing fiscal year.
Founded in 2011 by Raj Narayanam, Zaggle currently provides expenses, payments, and corporate employee benefits solutions to enterprises. It offers a range of SaaS products, such as Zaggle Save for managing expenses and rewards, Zaggle EMS for expense management, and Zaggle Propel for employee rewards and incentives.
The company claims to have issued 50 Mn prepaid cards in India through partner banks and serve over 3 Mn users.
Zaggle currently has about 3,200 corporate customers and is looking to sign over 200 new contracts with enterprises over the next few months, the source said.
Besides expanding its offerings, the fintech SaaS company is looking to increase its cross-sell rate to about 45% over the next three years from 20% currently to take its revenue to INR 5,000 Cr.
The comments come at a time when Zaggle is already on an expansion spree. While it acquired a 98.32% stake in Span Across IT Solutions for INR 32.07 Cr in September, it bought a 26% stake in Mobileware (now known as ‘86400’) for INR 15.6 Cr in the same month.
In its Q2 investor presentation, cofounder and chairman Raj narayanam said“As part of our growth strategy, we are actively seeking strategic alliances and inorganic growth opportunities. We are strongly focusing on M&As with a combined strategy of small tuck-ins and larger investment opportunities, in the SaaS fintech sector, including areas like NBFC, payments etc.”
In line with this, the company also plans to utilise a big chunk of the QIP proceeds for acquisition. It plans to use INR 375 Cr from the INR 595 Cr raised from the QIP for strategic investments, acquisitions and inorganic growth opportunities. Of this, INR 175 Cr would be used in FY26 and INR 200 Cr in FY27.
On the financial front, Zaggle posted a 167.67% jump in its consolidated profit after tax (PAT) to INR 20.29 Cr in Q2 FY25 from INR 7.58 Cr in the year-ago period. Revenue from operations zoomed 64.21% to INR 302.55 Cr from INR 184.24 Cr in Q2 FY24.
Buoyed by the strong growth in its revenue and bottom line, shares of Zaggle have surged 232.28% from their listing price of INR 164 in September last year. The stock ended Tuesday’s (December 24) 2.78% higher at INR 544.95 on the BSE. The stock has gained nearly 150% year to date.
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