Protean eGov Technologies Limited (PROTEAN.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Protean eGov Technologies Limited Conference Call hosted by Go India Advisors. [Operator Instructions] I now hand the conference over to Ms. Pushpa Mani from Protean eGov Technologies. Thank you, and over to you, ma'am.

Thanks, Danish. Good afternoon, everyone. Before we commence the call, please note that this call is solely to discuss the recent development pertaining to 4.95% stake acquisition in NSDL Payments Bank. We request you to restrict your questions to the same. If you have any other queries, you may reach out to us afterwards. The management on today's call will be represented by Mr. Suresh Sethi, our MD and CEO; Mr. V. Easwaran, COO; and myself, Ms. Pushpa Mani, Head of Investor Relations. Before we begin, I would like to mention that some of the statements in today's discussion may be forward-looking in nature, and we believe that the expectations contained in these statements are reasonable. However, these statements involve a number of risks and uncertainties that may lead to different results. With this, I invite our MD, Mr. Suresh Sethi, to address you all. Thank you, and over to you, sir.

Yes. Good afternoon, everyone, and thanks a lot for joining us today. This is clearly an important milestone in Protean's growth journey. Last week, we had announced that Protean's Board had approved the acquisition of 4.95% equity stake in NSDL Payments Bank Limited for approximately a value of INR 30.2 crores. NSDL Payments Bank, as you all know, is a wholly owned subsidiary of National Securities Depository Limited. For us, clearly, India's financial ecosystem, clearly at a decisive phase, the big focus is today on inclusion. It's on scale and clearly sustainability. And a lot of our outreach to reach to the last mile is driven by operating digital-first models. Banking institutions today have clearly embedded technology and compliance at the very core of their design, and that will really define the future of payments and financial access. Very clearly, institutionally, payment banks were originally conceived with the idea to solve last mile challenges. Clearly, they have all emerged as high throughput technology-led platforms, which are capable of serving millions within a regulated framework under the Reserve Bank of India. Again, NSDL Payments Bank clearly being no exception, reflects this evolution. It is an institution built with a digital-first vision. The bank today delivers simple, secure and accessible banking services with a clear focus on underserved and unbanked populations. Amongst this offering, there's focus on paperless account opening, zero balance digital saving accounts, instant payment solutions, leveraging the payments DPI, largely UPI, IMPS, Aadhaar-enabled payment systems and micro ATMs. By combining digital platforms with an assisted distribution network pan-India, NSDL Payments Bank today ensures last mile reach across urban, semi-urban, rural India, serving over 3 million active customers as of September '25. Protean, as you all know, over the last three decades has been a cornerstone of digital India evolution. A lot of our core assets lie in exactly the same space right from creating population scale e-governance platforms for taxation, social security to enabling digital identity through foundational DPIs. We are clearly making sure that we are totally aligned with the payment bank outreach and our investment in NSDL Payments Bank is, therefore, anchored in a long-term strategic alignment between two institutions that share a common philosophy of building trusted systems at population scale. To further go deeper and say what does this partnership mean for us? We've always spoken about our core lines of business. Along with taxation, we play a very strong role in the identity ecosystem. We power a large swath of financial technology companies today based on our identity stack. We are uniquely positioned as the only company which serves all four facets of identity. So number one, with NSDL Payments Bank, it gives us an ability to co-create, pilot and certify an entire suite of future-ready digital banking technologies on a secure and compliant platform. We will be leveraging number two, adjacencies across identity, KYC, authentication, consent and reg tech, areas we already operate at population scale. And last but not the least, we will work with the bank as an anchor partner in a live regulated environment to build solutions, which eventually we can scale across institutions. Again, Protean operates as a nationwide assisted distribution network also for providing citizen-centric services. Our partnership with NSDL Payments Bank will also help us to complement their nationwide digital and assisted distribution network. And we'll be able to extend the reach of the joint networks to provide last-mile inclusion for segments like MSME credit, pensions and other citizen-centric e-governance services. So it goes without saying there are a lot of synergies, both at the foundational layer and at the app layer, as we call it, where we are building the data stack aligned with our account aggregator business. This collaboration strengthens a clear direction by bringing digital-first bank closer to digital public infrastructure, we can turn secure identity data and consent flows into banking experiences that reach users who have traditionally been the hardest to serve. With that, I conclude, and we'll be happy to answer any questions. Thank you.

[Operator Instructions] Our first question comes from the line of Grishma Shah from Envision Capital.

I broadly want to understand, I mean, while this is a strategic stake that we've taken, but will this meaningfully impact our revenue, say, 2 years down the line? If you could throw some light on that?

So Grishma, clearly, the intent is towards that only. As I mentioned earlier, while at a foundational level, we are already engaged with multiple payment banks and multiple financial institutions where we provide the foundational sort of identity APIs, if you may, to enable KYC, e-sign, e-authentication, online PAN validation. But clearly, what this means for us is we get an ability to co-create with the bank's banking technology. So the entire ecosystem around user interfaces, around the app layer for digital onboarding, regulatory tech. So that is a suite of services which we clearly see coming into play, which we work jointly with the bank to build. And that gives us a complete stack of technology, which we can then extend across the wider ecosystem. The second area of synergy clearly is from a distribution perspective. We are again partnering with an institution at scale. The payment bank today largely runs on an assisted network, and it also has digital at the last mile as a clear enabler for onboarding and even assisting the agents. So taking services like our pension stack, like MSME credit through this partnership will be the other upside that we see out of this partnership. So for me, the focus will be banking technology and the entire, what we call as our data stack of the business, which is a line of business we've called out as our diversification intent. I think we'll get a strong thrust in partnership with the bank on that.

Two follow-ups. One, is there a number in your mind or a milestone that you want to reach? And the second is, one is taking a stake and the other is your own capital/manpower commitments, if you could highlight those?

So as far as number, I won't hazard a guess at this stage. I would not put a forward-looking number on the table at this point of time. As far as our own capital commitment and manpower is concerned, as you're already aware, we've called out that we have invested in people and technology. At times naturally ahead of the curve, and you've seen our products and services like the entire Protean RISE, the API stack, which is all about empowering bank's API banking stack. Similarly, other areas like eSign Pro, enabling digital workflows, enabling digital lending workflows on eSign and eStamping. So a lot of the technology we are investing into is very close. So already those investments are being done. People are already in place to do that. Working with the bank, working with the regulated entity gives you the ability to co-create, to be able to get certified technology out there. And naturally, with the payments bank today having 3 million active customers as of September 2025, you also get a base for consumption coming right out over there. So that's the idea. So there is absolute convergence on investment and people and technology stack in that case.

Okay. So no additional hiring will be required, but this will be as a part of your ongoing operations where you will keep developing technology?

Absolutely.

[Operator Instructions] Our next question comes from the line of Nishita from Sapphire Capital.

So I just had two questions. One is like we've currently taken only a stake of 5%. So do we plan to increase our stake going forward?

So Nishita, we haven't looked at that as of now. So currently, the interest was to look at it as a strategic investment, get into a partnership mode and start co-creating and building and rest I already called out where we see the synergies. So as of now, I would say that we are where we are. No future plans immediate to share with you on this.

Okay. And like the INR 30.2 crores of like stake, we are -- like we are funding that through the internal accruals only?

That's right.

Our next question comes from the line of Kush from Ujjivan Small Finance.

I just had one question since you all are building the digital stack. So are you still looking out something AI-based lending or alternate data channels, which you can build in this digital stack? Or it's more towards the like eSign, eProtean or like this type of services only we you're looking as of now?

So Kush, ultimately, as we've been saying earlier also, AI is now becoming a very embedded part of DPI. So event-based having the ability to look at static data and create events-based triggers, be it from a fraud detection perspective, from decision support systems and especially in banking cases when you are talking about rural and underbanked communities, using multilingual interfaces. A lot of these things today are getting powered by AI. So the whole idea is when we are creating something, we are keeping the customer at the center of it. From an inclusion and scale perspective, the payment banks naturally are today reaching out to last mile financial inclusion. And we will try to build the best of tech stack over there. So idea would be clearly to leverage AI to further enhance our sort of products and services and build a full stack of services over there. The other area clearly is the API, right? Because as far as data is concerned, if the right data points come in, then a lot of work can be also automated and a lot of triggers around behavior, fraud protection and all come into play. And when you are talking about rural communities or underbanked or underserved communities, you also want to make sure that you have risk-based assessment where you are able to give them a better experience and outcome from your products and services. So it will be a comprehensive step that we are looking at going well beyond the foundational services of eSign and eKYC.

[Operator Instructions] Our next question comes from the line of [ Neha Sharma from Sharegiants Advisors ].

I just had a couple of questions. In what ways will the collaboration enable these solutions to be extended to the banks, fintechs and other regulated services?

Yes, I didn't get your question. Can you just elaborate, please?

In what ways will this partnership enable -- help us...

Sorry, we are losing you.

She has left the queue. Okay. We'll move forward to the next investor. So our next call comes from the line of Gurvinder Juneja from Fortuna Asset Managers.

Sir, my question is the same outcome in a strategic sense, you could have achieved by not making a capital investment. So why make a capital investment? Why not return to your shareholders? Or maybe I'm missing the point. Maybe the same outcome could not have been achieved if you had not made a capital investment in the payments bank.

Gurvinder, let me put it this way, that ultimately, when you make a capital investment, you're also getting a part of the institution that you're building value in. So you can definitely have a transactional relationship where you build something, the partner consumes and you get paid on a SaaS basis, which anyways will be the case over here also. So by putting a skin in the game, you've also created value in the bank and working with the bank to create outcomes where you can create differentiators. We strongly believe in the synergies we have as two institutions. The payment bank today is clearly focused on building last-mile digital access because their mandate is inclusion and scale. And we are a digital public infrastructure institution. So it's a perfect marriage to that extent. And as we build solutions together, a partnership or an investment like this also helps you to do sandboxes to test new technologies to have a customer base to provide cutting-edge technology and then create value in both institutions to that extent. So by investing, you are able to then get the benefit of the valuation on both sides. A pure-play transactional partnership will only give you a fee-based revenue and nothing more. And clearly, there's more skin in the game and ability to come together and work together and co-create is also clearly driven and agreed between both the parties.

Got it, sir. Sir, maybe just one follow-up. Will this kind of put you in a slightly weaker position when you go and pitch the same product or solution to another payment bank or another bank because you're now a strategic investor in one such entity? Is our independence going to be compromised in any way?

No, I don't think so because end of the day, these are not exclusive tech stack that we are building. Whatever we built will ultimately be regulatory certified because it's a banking tech stack and our ability to take it to other institutions, and we have enough and more examples other than us, which are out there in the market. Where either the banks have a strategic investment or vice versa. So I don't think there are any sort of barriers to engagement with other institutions, which gets created with it. It's only that you have a much more comprehensive teamwork, which comes into play in designing and building solutions, taking it to other institutions and creating a wider leverage will always be very much there as part of our strategy.

Our next question comes from the line of H. Shah from Dalal & Broacha.

Just a very basic question. I just wanted to get an understanding in terms of layman, how different is it from our current offerings? And how -- I mean, how further it will enhance our capabilities in terms of what I have understood is today, we are offering X with the partnership with NSDL, probably my offering would be tested on that platform and then it will be offered to some other bank. So there's some bit of confusion happening. So I just wanted a basic understanding in that sense. Yes, that's it.

See, where I'm coming from is, as I mentioned, that foundational services anyway where we are offering core digital rails for banks to do eSign, eKYC are all over there already in place, right, with NSDL Payments Bank and a lot of the other industry, we have a dominant sort of position over there. What clearly this drives is to co-create banking technology. So if you're building an end-to-end, say, a digital lending journey and you want to bring into it analytics and data algorithms to bring credit surrogates, to create real-time online frictionless journeys, or, for example, we've done work in the place of agri stack. And today, that is a potential to be realized, right, because agri stack creation has led to easy ability for the farmer to share consented data digitally for consuming, say, credit services or insurance services and so on. So there are a lot of things which still need to be built and taken to market at the last mile. A lot of the digital rails are getting laid. But ultimately, if you're looking at somebody offering a loan, a financial institution, a bank or an NBFC has to come into play. Similarly, if you're talking about insurance, insurance partner comes into play. Likewise, on the consumer side, you need to build applications for consent data sharing to be able to access credit. And naturally, there are triggers to say how does it become static data can be triggered to provide financial information. So all those things is something which we will be able to now jointly co-create because the bank has a very well-rounded product and compliance team. Likewise, we bring a strong tech and digital understanding. So a lot of this co-creation can happen together. And whatever solutions we built for one set of customers, one set of institutions can easily be replicated with other institutions. So there's a lot of work still to be done. I mean we are not at a stage where all sort of consumer enterprise applications are already there running well as new things, new ecosystems are getting created, be it agri stack, be it education for education loans, so on and so forth. So there's a lot of play in the financial services sector to further fine-tune your products and offerings. And you heard me earlier talk about the fact that today, AI is becoming a very critical component to bring further triggers into it. So again, building those interfaces will become very critical for fraud detection, for decision-based -- decision support systems. So all that we have to build together, and that's where we see the leverage coming into this partnership.

[Operator Instructions] Our next question comes from the line of [ Neha Sharma from Sharegiants Advisors ].

I just had a couple of questions. Firstly, what will be the role played by both the companies in distribution networks expanding across India? Can you help us a bit on this?

Sure. So today, as you are aware, we have a national network where we provide PAN services. That was where we also started the journey for the company. So we have a national network. We have around 400,000 points of active services -- service every month. What we are looking at with our pan-India distribution and the bank today is running with almost 1 million points of service where they are offering banking services at the last mile. So there's a lot of ability to work together. We have a product stack which we can take to the last mile through the bank's distribution network. So the complementarity comes in, whether it is products related to MSME credit, products related to pension. And likewise, on the other side, as a partner to the bank, we can also open our network to distribute banking products. So instead of, as we've been earlier also saying, we have a strong distribution, but rather than being a single product distribution network, we want to then again expand our bouquet of services at these points of reference. So that is where we see the synergies in us using their network and them using our network to mutually expose our products at the last mile through a digital and assisted mechanism.

Okay. Sir, one more question. How will the NSDL Payments Bank function as an anchor banking partner in scaling Protean's digital certified solution? If you could explain.

So when I use the term anchor, [ Neha ], the point is, again, when you are strategically aligned with the bank, what I mentioned earlier, co-creating solutions. We can work with the bank in sandboxing some of the solutions, getting regulatory approvals, certification. So that is where the anchor comes into play. You're dealing with an institution which is regulated. You are dealing with an institution which is today serving over 3 million customers. So any solution you build, you have the ability to work with them jointly to take your product to market. And therefore, it becomes your anchor customer in whatever product delivery and development you're doing. So that is the call out in that case, and we see synergistically working with them to take this to market.

As there are no further questions from the participants, that concludes today's conference call. On behalf of Protean eGov Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you very much. Thanks for your time. Thank you.