India Digital Payments And Expense Management Will Expand Opportunities

Key Takeaways

• Digital payment adoption and compliance trends are driving strong customer growth for Zaggle, with increased recurring revenues through automated, platform-wide expense management solutions.
  
• Expansion into AI-driven SaaS products, partnerships, and technology-led operational leverage is expected to boost margins, earnings quality, and long-term growth prospects.
  
• Increasing expenses, execution risks in M&A, and heavy reliance on the Indian market threaten growth predictability, margin stability, and earnings consistency amid rising competition.

Catalysts

Zaggle Prepaid Ocean Services Limited builds financial products and solutions to manage the business expenses of corporates, small and medium-sized enterprises, and startups through automated workflows.

• The accelerating shift to digital payments infrastructure in India is fostering higher adoption of prepaid and expense management solutions, directly supporting Zaggle’s strong customer acquisitions (3,455+ customers, 3.8M active users) and underpinning future revenue growth as both large enterprises and SMEs formalize and digitize spend—indicating significant headroom for ongoing top-line expansion.
  
• Increasing enterprise compliance needs and formalization are driving demand for automated, platform-wide expense management like that offered by Zaggle, as evidenced by ramping adoption of their Zoyer/BROME solutions in large accounts and successful penetration into quick commerce/gig worker ecosystems, which should translate into better client stickiness and recurring revenues.
  
• Continued expansion of product offerings into AI-powered SaaS-based spend management and rewards (e.g., MCP protocol, automated workflows, AI assistants) is expected to drive higher recurring platform/SaaS fees and improved operating visibility, positively impacting margins and earnings quality over the medium and long term.
  
• Rapid growth in partnerships with banks, fintechs, and payment networks (e.g., Bank of India empanelment, UPI integration via Mobileware, international expansion through Mesh Payments) is broadening distribution and opening cross-sell opportunities, which should support both net margin improvement through scale and further revenue acceleration.
  
• Increasing operational leverage via technology-driven automation and targeted margin accretive M&A (with 95%+ target deals expected to improve margins) positions Zaggle to keep raising EBITDA margins (guided to 15-16% in 3–4 years), suggesting a strong path for medium-term earnings growth if topline momentum persists.

Zaggle Prepaid Ocean Services Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Zaggle Prepaid Ocean Services's revenue will grow by 30.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 6.6% today to 8.3% in 3 years time.
• Analysts expect earnings to reach ₹2.4 billion (and earnings per share of ₹20.0) by about May 2028, up from ₹879.2 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 62.3x on those 2028 earnings, down from 65.1x today. This future PE is greater than the current PE for the IN Software industry at 30.6x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 14.92%, as per the Simply Wall St company report.

Zaggle Prepaid Ocean Services Future Earnings Per Share Growth

Risks

• Increasing competitive intensity from global and domestic fintech and large technology players entering the Indian spend management and payments market could compress margins and force higher customer acquisition costs, thereby impacting net margins and future revenue growth.
  
• Heavy reliance on continued M&A for growth (with substantial capital raised but no major acquisitions completed yet) increases execution risk; delays or failed integrations could affect both near-term revenue expansion and long-term earnings stability.
  
• Slow scale-up and long gestation cycles for onboarding large enterprise clients mean revenue realization from new deals can be delayed, leading to volatility in quarterly growth and uneven cash flows, impacting predictability of future earnings.
  
• Elevated customer acquisition costs (₹360 crores in FY25) and rising other expenses (network, promotional, and switch costs) may outpace revenue growth if not contained, placing pressure on cash flows and eroding operating leverage.
  
• High dependence on the Indian market, with limited global diversification, exposes the company to macroeconomic, regulatory, or sector-specific shocks in India, threatening revenue stability and risking greater earnings volatility.

Valuation

• The analysts have a consensus price target of ₹612.5 for Zaggle Prepaid Ocean Services based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹675.0, and the most bearish reporting a price target of just ₹550.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹29.4 billion, earnings will come to ₹2.4 billion, and it would be trading on a PE ratio of 62.3x, assuming you use a discount rate of 14.9%.
  
• Given the current share price of ₹426.4, the analyst price target of ₹612.5 is 30.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.