Network People Services Technologies Limited (NPST) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Network People Services Technologies Limited Q1 FY '26 Earnings Conference Call, hosted by Kirin Advisors Private Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Harshil Ghanshyani from Kirin Advisors. Thank you, and over to you, sir.

Yes. Thank you. On behalf of Kirin Advisors, I would like to extend a warm welcome to everyone joining for the NPST Limited Q1 FY '26 Conference Call. We are pleased to have with us today, the esteemed senior management, Mr. Deepak Chand Thakur, Chairman and Managing Director; Mr. Ashish Aggarwal, Joint Managing Director; and Ms. Savita Vashist, Executive Director. The call is scheduled for 40 to 50 minutes to ensure that everyone has the opportunity to participate. If we are unable to address any questions during the call, please feel free to reach out us at info@kirinadvisors.com. We'll be happy to coordinate with the management team and arrange further discussions. We appreciate your understanding and cooperation. We look forward to an engaging and productive call. Now I hand over the call to Mr. Deepak Chand Thakur. Over to you, sir.

Thanks. Thanks, Harshil. Good evening, everyone. A very good evening to all our shareholders. First of all, I would like to thank everyone on behalf of my team for staying with us on this journey. We are back on the growth track that we have shown last year, the efforts to make this. It has been majorly through our tech, product ops, sales and support functions, everyone contributing, I really thank them for this. Also, I thank our Board for backing up very strongly when it was required and the results are only upward from here. What I'll do is, I will just like what I do usually, I'll split this call into 3 to 4 sections. One is I'll give you a very quick analysis on the quarterly number that we have posted. Secondly, we'll give you a quick idea about the business updates. This will give you some sense about the immediate and the long-term impact over the business. Then I'll also let you know some road maps that we have built, which is going to trigger a larger potential for the company as and when we go forward, then that's something to look up to. And then I'll open this up for the Q&A. The total income for Q1 has grown by almost about 25% as compared to Q4. This is about -- from INR 28 crores, we have gone to about INR 35 crores-odd. Although, you see there is 500 basis point dip in EBITDA percentage, now major contribution, of course, coming from TSP business. Now that's been the nature of the business. However, the absolute number is on a higher side, which is about 7.5% higher from INR 10.5 crores to about INR 11.3 crores. At the same time, net profit is about 19.7% higher from INR 6 crores, it has gone to about INR 7.19 crores. Now this being the first quarter for FY '26, we have successfully presented our financials in accordance with Ind AS along with the comparative figures from the previous year. Now we have also received our first dollar-denominated remittance from the opportunity we secured in Q1 from Africa, making a key milestone in our global expansion journey. We are actually leveraging the technology we have built indigenously for the global market. Apart from this, now there's a big news which is coming from NPST's desk. I guess you guys are already aware about this. We have received in-principle commitment from Tata Mutual Fund for a preferential issue of around INR 300 crores. We have EGM due by August 10 to take all your approvals. Post that, we can further proceed with the process of completing the transaction. Now what does this mean? It further validates our strong positioning in the paytech industry. It further talks about our growth story, which will continue over a long-term period. our strategic steps and decision, which is not limited to what we are doing, but the agility with which we are picking up the opportunities, solving industry use cases and creating a revenue road map by building value proposition in the industry that has been forte of NPST. Our performance over the last 3 years and the potential that we have built for the next decade. It further boost our plan to expand our market as well as product. It will help fast track the requirement we have around inorganic approach for business product and service growth. At the same time, we must also understand that it brings a very, very strong institutional support available for the organization growth and of course, a brand recognition. Apart from this, when it comes to business updates, Again, like I always break up, in NPST business, we successfully -- apart from getting empaneled with the leading banks, this time, we also got a panel with the government PSUs, looking at an opportunity in this segment. We have secured a major bill pay order from a large PSU. Now this reinforces our position in the bill payment segment. We are driving deeper engagement with corporates and fintechs by getting into the turnkey project solution. At the same time, PPaaS business, which everyone wants to hear, we have started scaling steadily with significant growth projected in upcoming quarters. The scale has already started. Beyond [PPaaS], we have started collaborating with large merchant federation, which we have already signed that gives an access to mid to large 150-odd merchants. At the same time, we have strategically partnered with industry players, which gives an access to 50-plus banks who will be getting onboarded for the off-line payment platform. We have expanded our ecosystem by adding additional payment aggregators this quarter. We are strategically planning to introduce new revenue stream, which is around the auto pay and payout. We have already given the access to our partners. They're testing it. I presume it will start adding revenue between this and the next quarter. At the same time, we have safeguarded our rails by applying AI capable fraud monitoring system. Beyond this, the additional area, which last year was not contributing to our P&L, but like I said, that the agility with which we work is try to add more and more opportunities and more and more products every year, and that is acceptance ecosystem. One big order, which you heard last time was Central Bank of India, which we got at the end of Q4. We have now secured additional orders from all our existing clients. We are preparing to launch 10 new devices in [GFS], which is required as and when we are going forward, we are seeing the gap in the industry, so that opens up a lot more opportunity for us. At the same time, we have identified an investment opportunity in Device as a Service model. Now this will enhance our scalability in bringing business through the acceptance ecosystem. Now, for last 1 year, we have been working on building NPST's own hosted ecosystem. The idea was how do we bring all our products and services in one single environment and give it on a SaaS-based model. Now that is what we have been working on for quite long. Last quarter, we were able to complete our compliances. We are in a position right now that by this quarter, we should be able to get that piece done where all our products and services will be hosted for small to medium-sized banks, regulated entities and fintechs. Now this opens up a lot of opportunity around this area. When it comes to global footprint, Q1, we got the order for the Africa opportunity somewhere mid-quarter. Let me tell you that we have enabled AI for the development strategy. This is the reason why within 2 months, 2.5 months, we were able to execute and close Phase 1 of the order. Now that's a really fast pace. This will become a potential strategy for the organization going forward. We are in active discussion with multiple partners in Southeast Asia, Africa and Middle East. Apart from this, we are currently in process of working in new business model -- sorry, new products, which are going to open several new business models around IoT, that is one area of work. Second is, we are also working on the NCMC payments transit. That is also one area that we are working on. Third is obviously, apart from web and app, we see huge potential through the devices, the POS business, so that is the area that we are also trying to target in this global fintech space. That's majorly from us on the business updates. Beyond this, I would say, let us get on call, try to understand from you guys, and I'm happy to answer your questions. Harshil, over to you.

[Operator Instructions]. The first question comes from the line of Akshay from AK Investment.

Thanks for the good improvement in the financials. Sir, my first question is how much of our revenue was transaction based and how much was SaaS based in quarter 1 of FY '26?

Quarter 1, our major revenue was TSP. Very less revenue from PPaaS. It has picked up in this quarter, the second one.

Yes, we are already progressing well on quarter-on-quarter, but year-on-year still we are -- we have seen very significant degrowth in this quarter. What is your thought process on upcoming quarters? How much do we see progress in FY '26 as a whole?

We are very strong in our anticipation that somewhere by Q3, we will be breaching the highest quarter, which we achieved last year. That's well on mark. You can anticipate from that, the positiveness in the organization. We have already picked up that trend.

Sir, my last question is, do we have any update about MDR because recently, one of the members said that UPI can't be free anymore and MDR will be implemented in UPI. Do we expect in near time that MDR will be implemented in UPI and we will have some better growth about that?

Akshay, this is a regulatory question. I would like to stay away from that, because that's in the news, and it has to be discussed by those who are decision-makers around it. We embed our solutions, technology, the way regulatory landscape in India unfolds. Let us observe that, and as a company, we'll try and see how to structure us. But this question is not for us. It is for the regulator or maybe someone who is a decision maker that right.

Sir, last one small question is payment gateways are our customers, and they are not our direct competitors. Is that understanding right?

Absolutely correct. Payment aggregators are all our customers.

Payment gateway also, right?

Yes.

The next question comes from the line of [Srinivas] from TIA.

Congratulations for the strong Q1 numbers. My question is about the new launch that you talked about, hosted cloud for payment product. I just wanted to understand how this is different from your competitors like [Savvatra, Jeta] offering these kind of services. Is it a similar one? Or are you having any edge over it?

One name was correct. The other one was not, [Jeta] is not from our segment. You see the industry is concentrated with just 1 or 2 players. If you try to understand the hosted delivery, which we currently have, so the competition -- again, if you split that competition product-wise, you'll realize that all the product which has been built so far, that's where they may have the edge, okay? But every year, there are new products and solutions launched by the regulator. Now what we decided was every single product that we have, let us bring it on the hosted model. Now although, there is a consolidation, you may be aware that one big thing that happened early this year was cooperative banks were also given the acquiring opportunity. Now this opens up gates for everyone who are in the call. There are about 70-odd acquiring banks, but total bank in UPI issuer is 670-plus. Now look at the gap. We feel there is a great opportunity as and when the product multiplies every year. There will be product launches by regulator, product launches by NPCI, then there will be product demand by the customers. We see this as an equal opportunity for everyone. This is the right space where we see, SaaS-based revenue will kick in for the company when it comes to the payments and the digital solution being demand -- as and when we go ahead, the cooperative banks, the small finance banks, all of them, the payment bank or every fintech, they will require more and more digital solution. Here onwards, it's only upward of the demand. This being consolidated between 1, 2, 3 players, I think there is a need for 4, 5, 6 also in this. You want to have that space.

How many tenants you are planning? How many are pilot and how many do you think it will be live in this year?

100-plus tenants in next 24 months. We already have 6 lined up. As soon as we go live, we'll start with 6.

My next question is in your introductory comments, you talked about new opportunity like Device as a Service model, right? Can you walk me through how that works like per device economics, how it will work?

I don't know if you -- I think on the retail side, when you go-to-market, have you observed in the last few months, last 6, 7 months, you have started seeing bank devices now? Have you started observing that? You see, AU, TMB, SBI, some bank device in some model, you'll find somewhere. Earlier, it was 0. Now what has happened is banks have started taking the note of CASA impact of acquiring an offline business, and staying there. Now this is where the opportunity is much larger. Device as a Service model, what it usually does is, it takes away the entire CapEx cost for a bank to start entering into the offline business. Now here, again, there are 2 things we need to understand. We got some of the large order in the country, including CBI, which happened last year. We are doing Karnataka Bank. We currently have about 11-odd banks where we are working. The learning is great. What we intend to do is going forward, what more channel of payments can be added to these particular solution. The Device as a Service model works on per month per merchant SaaS-based revenue. As and when you add more devices and more customers, the opportunity for the type of devices also multiplies. It can be static, it can be dynamic, it can be pocket, it can be any type. As and when this multiplies, again, the overall market demand increases. That's Device as a Service model.

My last question is about AI fraud thing that you talked about it. What kind of models are in production for your AI fraud engine, like real-time scoring latency, all those things, what kind of models are in production?

There are 3 things that we'll be doing. One is at the enterprise level, we are going to plug in this particular solution as part of our payment platform straight away. This goes as a value-added service to every single acquiring bank and every single payment aggregator who will be taking this product from us. Second, this is decoupled so that those who are already into this space and they need this product, they can also buy it beyond my acquiring space. That's what it does. What essentially does is it predicts and it gives you an idea that there is a possible fraud in the system, either through the bad merchants or through bad transaction. You need to address that. Basis that, it starts triggering the alerts and then you have to take an action. We have done both as a part of our platform and as separate. That's how we are working right now.

The next question comes from the line of [Sumant Pattaya from Texas & Consultants].

Congratulations, excellent numbers. I have just 2 questions. One is, I believe you have raised a lot of cash. What are your plans for that?

Like I said earlier, one critical reason why we really wanted was to get an institutional backing and someone who would really understand our story and bring a lot of guidance to this organization. More than money, it was also about the kind of association and the kind of strength this organization can get with such kind of guidance. That's something, but when it comes to money, what we have done is, we have a very structured and thought through process around the growth. One is we want to ensure that our growth path around inorganic structuring of the business is rightly achieved. One, product; second, service; third, business, irrespective of the domain that we are operating, like it can be PPaaS, it can be TSP, it can be acceptance ecosystem, it can be global opportunity wherever possible. Now the organization is empowered beyond organic, it can now take an inorganic leap. That's one. Second, the new area of interest, like our -- what we further try to see that what more can we do for the expansion. We built APIs and then we give web solutions, we give app solutions, but the acceptance of payment beyond this is also through devices. We believe there's a huge gap, and that's why we have literally planned around payment infrastructure development fund by the government. That's the area that we really wanted to target because it not only has the domestic demand, it has the global demand. It is agnostic to the domestic design of payments. Now that is a specific vertical where we see a lot of opportunity. Third, beyond inorganic and acceptance is our -- a lot of focus around the building lending-based platform. Now here is what we want to do, the opportunity that comes around the gap in credit card domain, I mean, if you take global and if you take Indian market and the gap you see with the number of card issued, the number of credit line available around MSME, SME or the business segment, the number of credit lines available in the P2P segment. Now that's tremendously big. Going forward, it is only going to multiply. Having a platform around that will be a great opportunity for us. These are 3 to 4 areas where we feel there will be a right utilization of funds.

You can give some ballpark figure where you can be, let's say, 3 years down the line, 4 years down the line in terms of top line, 2029 or ’30?

The aspiration is very high. I don't want to bind it with numbers right now because whatever numbers that we are looking at or whatever numbers we are calculating is based on what we are doing right now. But there is a lot that we are developing and building, which will start hitting our P&L maybe 3 quarters down the line or 6 quarters down the line. The fundraise that we are doing right now, it will also have a significant impact. All that said and done, we, of course, want to go back to the trend that we set last year, every quarter, the pace at which we were going, every year, the number that we were achieving. That's what we intend to achieve going forward from this financial year. Not good to put a number to it for now, but yes, the intent is let us breach the highest performing quarter in next 2 quarters and then from there, pick up the same trend, whatever we were trying to build. I hope that gives you an idea of what number we want to achieve.

The next question comes from the line of Harish Kumar Gupta from HKMORPA Trading.

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The next question comes from the line of Keshav from Niveshaay.

Congrats on the strong quarter. Can you please elaborate more on your hosted cloud for payment product vertical?

Keshav, we currently have all our solutions and forever we have been focused on the large to mid-sized banks. Like Canara Bank or 2 of the largest RRB in the country, second largest cooperative bank, one of the largest PPI holder in the country. That's how we have been working so far. Our solution was designed for large-scale consumption. But can we do a sachet-based solutioning for small to mid-sized banks. That's a much larger opportunity. What we did was whatever solution we've built in a decade, we have brought this solution in a structure wherein there is a lot of agility in terms of implementation, certification, deployment and going live. Now when we have such kind of agility and the modules are built in such a way that it's way too productized and there's very less customization, it brings down the cost heavily. Then consumption of infra, consumption of that service required to continue this kind of delivery. All that is part of the hosted platform. When we say hosted, it's not the infra, it's about the end-to-end turnkey solution required by a bank. For example, if you need UPI, I'm your de facto solution provider, right from infra application services and the future scale. Then going forward, whatever is the new industry trend, everything you have -- you can look up to NPST. We wanted to bring all our learning, decade-long learning onto a hosted platform and take it to these banks who are agile and really look up to growth strategy. That's the hosted platform. UPI, IMPS, mobile banking, Omni, all of these will be hosted on this platform and the future for us.

Are you going to host your own servers for this, or?

We'll be hosting it on private cloud, which will be, of course, managed by the data center, not by us, but the entire ecosystem will be built and certified by us. All these compliances around running that cloud will belong to us, whereas managing those security and infra will be done by the expertise who are running the data centers.

Out of those INR 300 crores that you have raised, so how much percentage are you going to spend on this vertical like if the number is there otherwise?

You're referring to hosted?

Yes.

No, we are driving it through our cash flow. As and when we scale further, like I said, anything wherever there is a growth opportunity through inorganic. Then going forward in a year's time, if this particular hosted solution demands some kind of strategic scale, that is where we can look up to utilizing those funds, but for now, we are driving it through our cash flow.

The next question comes from the line of Nitin Gupta, an individual investor.

My first question is with respect to the fund that you have done. I understand that you indicated a lot of things which you will be working on for fund raise may be required, so is it like it's only for the external or the incremental manpower that we'll be putting in we require this or it's like for purchase of hardware or something? Because I don't think it's--

It varies, Nitin. For example, if it is acceptance ecosystem, wherein there is an OpEx-based revenue over the period of, let's say, 3 years committed over the Device as a Service model, then in that case, if at all, there is a need to pick up a larger order and then the pace of delivery is way too fast, the demand has come really fast. Then in that case, if at all required, then we can think about utilizing this fund for the hardware piece. That for us will be hardware. When it comes to building a very strong domain around lending, then it will be a combination of the platform, people, process, everything taken together. When it comes to going forward and executing the hosted solution, and we feel that there is an opportunity to acquire a business, and that is with the customer, then that is an opportunity for us. I say that's why, Nitin, it varies with the kind of opportunity we see forward. Because see, as our DNA, we have built payment stack, right? If you want to scale it to lending, if the journey can be brought down from 24 months to 6 months, now that is the opportunity that we want to capture. In that case, it can be people, process, everything taken together, platform, all these.

One final question, which I was having is like I think since I've been attending calls of NPST, so I think 1 or 2 quarters back, you indicated that there were some 150-odd open positions in NPST, with respect to hiring, I'm saying.

Correct.

Yes. I was asking like if you can update this information and there is a suggestion like in the investor deck, if you can put in the employee count, will it be possible for you in the investor deck, as this information published? [indiscernible].

If you can help me understand the objective, sorry.

Yes. The first one was with respect to the open positions, which were there like I think 1 or 2 quarters back, you had said that there were some 150-odd open positions. I wanted to relate as to are we able to -- what we are looking for in the market for the person. Are we basically moving on to that path? That's why I said like if you can indicate the employee count on a quarterly basis, I mean basically, we have the services company indicate that, but if you can also include that information, then it will be helpful for us to see how we are growing from human resource?

I got the point. You want to see employee headcount as an indicator. I mean, okay, fine, we can do that, but let me tell you that we still have 100-plus open positions. I think currently, our headcount is more than 350. In fact, there is a growth. Beyond this, just to give you an idea about this, when you adopt a certain technology, now we all know what AI can do. I believe that this next 1, 2 years is very critical for tech companies to understand the importance and adopt it. One of the use case, which I just called out right now was when we delivered the global project, we did not hire even a single person from outside. We just took our existing team built the domain around the product that we had, we just shifted a few people to this particular role, and within 2.5 years, we were able to deliver that. There can always be a -- so I hope you understand that the incremental work, if you are trying to relate to that, may not necessarily be related to the headcount. However, the headcount will only multiply. That is what I can see right now. We still have 100-plus open positions. We have added a much larger number of employees in last 1 year. I hope that answers your question. I'll give the feedback to my IR guys to include some indicator around that.

[Operator Instructions]. The next question comes from the line of Ashish Soni from Family Office.

Sir, regarding usage of the funds, so how much duration do you want to utilize? Whatever you spoke, I think it's lending platform you're targeting. Is that correct in terms of acquisition, if my reading is correct because your domain expertise is in payment space?

Yes. We are extending credit line over payments. We are looking at that segment also. We don't want to let that go. Credit line over UPI is an area. Lending over payments is an area, Invoicing over payments is an area. These are all areas that we want to capture. It's not just lending, but also we have acceptance ecosystem, we have global growth and then wherever there is an inorganic opportunity in the existing set of business. It is spread across these areas. It will be way too early to close on these points.

In terms of the growth aspiration for next 3, 4 years, so which are areas or segments or verticals you are targeting like most revenues, if you have any high-level thought process on that in terms of percentages at least?

We believe payment platform, which was -- we actually built that particular engine in the market and brought it first. That's one area that will continue to grow tremendously. This will follow the trend where in UPI going from 18 billion transactions a month to about 30, which was the initial target and now 100 billion transactions a month. If that's the aspiration this country is holding on until 2029, '30, we are seeing that the market growth itself is 5x. Either we are 5x or we are more than that. We see payment platform as a much stronger contributor. Secondly, RBI brought in their vision document recently. We see a lot of potential around the RegTech, frauds and compliances. That, for sure, in next 2 years, not in first 2 years, but next 2 years will contribute heavily to the growth. Third, all new payment products like Internet banking interoperability, that's completely new stack, great opportunity there. Digital currency, only with about 16, 17 banks, again, regulator demand, that's a great opportunity. Then again -- so what I'm trying to say is that there is so many new product requirements around payment, which will keep on getting added. If you want to ask me a question, payment platform is the first one. Second, for sure, is the technology service provider domain, which we have built all the new solution coming in there. Third is the regulatory technology, which takes care of the fraud and the compliance requirement of regulated entities. Of course, I believe that acceptance ecosystem will play a much larger role in the entire state. Then we have much more that we are working on. Lending, I have still not counted, but that will be a really big contributor. But that is, again, 2 years down the line. Then global, that is again going to be another contributor. There are a lot of triggers. The first 2, 3 are critical for us to continue because that has really matured well.

In terms of headcount, you said AI, you didn't require too many headcount. In terms of next 2, 3 years, where do you see headcount growing? I suppose it will not grow in line with your revenues, right? It will be like lesser. Is that understanding correct?

No. I was just giving an idea that if you are taking headcount as an indicator, that may not be completely true. Headcount will continue to grow. Like even this year, probably my HR is sitting at taking 350 to 500-plus people. That's what they are sitting on right now. This may continue to multiply, but skill set will differ, the type of people and the position will differ. AI will then bring down the labor job around tech and product. There, the headcount may not be required. It will not be like in '24, if I was expecting 100 people to be hired in tech and product. For the same job today, I may not be hiring 100. I may be hiring 50-odd, but the incremental number will always be there. That is what I'm trying to say.

The next question comes from the line of Hardik Gandhi from HPMG shares and Securities Limited.

Congratulations on a good set of numbers. It's good to see that we are back on the track and ramping up very fast. Just a few questions on the line of the new stake, which was sold. Yesterday, I saw there was a block deal where the promoters sold in the open market also. Was that a part of a requirement from Tata?