Zaggle Shares Drop 20% After Q1 Profit Decline
Fintech company Zaggle Prepaid Ocean Services saw its shares plunge 20% to a 52-week low following a sharp 33% decrease in first-quarter profit. Operating revenue also declined sequentially.
Zaggle Prepaid Ocean Services, a fintech SaaS company, experienced a 20% drop in its share price during intraday trading, hitting its lower circuit and a 52-week low. This significant decline followed the company's report of a sharp slump in its profit for the June quarter.
The stock's fall extended a recent downward trend, with shares down 54% year-to-date and 21.3% over the past five trading sessions. Following the results, brokerage Equirus maintained a 'LONG' rating but reduced its target price to ₹350 from ₹455, citing slower core business growth and near-term margin pressure from the integration of DICE Enterprises.
Zaggle's consolidated net profit fell 33% year-on-year to ₹17.5 crore in Q1 FY27 from ₹26.1 crore a year prior, marking a 57% sequential decrease. While operating revenue grew 28% YoY to ₹423.3 crore, it was down 32% from the previous quarter. Profitability also weakened, with adjusted EBITDA rising only 4% YoY to ₹34.7 crore, while the margin narrowed to 8.2% from 10.1%.
The company attributed much of the pressure to costs associated with its May acquisition of DICE Enterprises, a spend-management startup. Revenue from DICE is expected to contribute from Q2, with a fuller impact anticipated in Q3. Additional costs related to integrating the Zagg.Money consumer credit card business, higher employee expenses, and the reclassification of costs also impacted profitability.
Despite the weaker quarter, Zaggle maintained its FY27 revenue growth target of approximately 40%, anticipating that the DICE acquisition and increased AI deployment will support future growth. Founder and Executive Chairman Raj P Narayanam described the quarter as an "inflection point" in the company's transition towards transformation through consolidation.