Analyzing...
Ladies and gentlemen, good day and welcome to the Network People Services Technologies Limited Q2 FY'26 earnings conference call.
As a reminder, all participants' lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing * then 0 on your touchtone phone. Please note that this conference has been recorded.
I now hand the conference over to Mr. Harshil Ghanshyani. Thank you and over to you, sir.
On behalf of Kirin Advisors, I would like to extend a warm welcome to everyone for joining the conference call of NPST Limited Q2 FY'26 Conference call.
We are pleased to have with us today the Esteemed Senior Management Mr. Deepak Chand Thakur – Chairman &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. We kindly request that each participant limit their questions to two and this will help the management address as many as possible within the time frame. If we are unable to address any questions during the call, please feel free to reach out to us at research@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.
Hey, Harshil. Thank you so much for the introduction and a very good evening, everyone. We really look forward for this, this connect with our shareholders every quarter.
While we are on a mission to be a leading Paytech coming out of India, your support will definitely take us through this journey. We are sure about that. In fact, as we know, Warren Buffet has stopped writing the annual letter. We live by his point very clearly that someone sitting in the shade today is because someone has planted a tree long time ago. Trust me, we would like to replicate that in India's Paytech segment. We've been through a deep learning curve since last four quarters, and it was all your confidence that stayed with us to pick up the numbers we have today. I will touch base on some of the key business updates and our plan here onwards.
Well, about the numbers are quarterly revenue has increased to 48.61 crore, which is about 39% jump quarter-on-quarter over Rs. 35 crore last quarter, I mean, from Q1. And at the same time, our EBITDA stood about Rs. 15.71 crore, which is again a 40% jump over the last quarter. Our net profit rose about 38%, which is almost Rs. 10 crore in absolute number compared to 7 crore in the previous quarter. Again, maintaining a healthy profitability of about 20.4% over the total
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Page 3 of 16 income. After a revenue impact last year, we committed to de-risk and diversify the business and in a breakneck speed, we picked up from there, arrived really heavy within last four quarters.
I would like to thank my colleagues and everyone in NPST who made sure we are building upward trend there on.
Just to reiterate about our business, we added multiple revenue sources in TSP. Payment solutions to banks, FinTechs, and corporates leveraged our software capability on implementation and bidding for key projects, including Africa, which was based on open banking platform. Launched multiple new products, including Banking Connect. Now that's about the interoperability between net banking and mobile banking, which was envisaged about 1.5 years ago by RBI. We were in fact, one of the first TSP to bring up this solution in market.
Then we saw that there is a need for SaaS-based revenue in the TSP business, and that is where we launched Bank-in-a-Box. We declared about this last quarter, and we have it now. Bank-in- a-Box is more about whatever we have built for the banking ecosystem. How do we create a sachet and take it to small to mid-sized banks, so that it opens up the opportunities around 2,000 banks across India.
Now, Queen's platform, which is an offline payment solution, which we bet about one and a half years back, we got multiple orders there, and that's where the overall TSP business is seeing a lot of SaaS traction coming up on device as a service model. Along with this, all you know is our core solutions, including UPI, Banking Super App, IMPS, BBPS and there are some heavy investments we are doing around large-scale products, including how do we take open banking to the global market. We got new accounts in UPI acquiring for small banks, BBPS, voice-based payments, that's the new venture, payment solution for payment gateway and payment devices for public sector bank. We have also added one more sponsor bank for our payment platform business that will further de-risk our EvoK business. In payment platform, we are on a mission to re-engineer the entire EvoK platform. Our intention is to launch version 4.0 by end or the early next quarter, majorly to address some of the key industry challenges, which we identified in last couple of quarters around early settlement, around the incremental pressure bank has for the CASA growth, and the high success rate for the payment aggregators. We are also focused on launching interoperability in payment platform for payout on autopay. This will increase our traction and the target audience.
RegTech, which I spoke about in Q4 last year, is no more a product for us, but in fact, the entire vertical, which we believe will be a big thing in next four quarters. We plan to take it to multiple segments here onwards. Earlier, we were looking just at the acquiring space, but now beyond merchants, can we take it to more markets, more segments? That's majorly because our accuracy rate now in our RegTech is about 90%, in fact, more than that for the fraud prediction. Next 2 to 3 quarters, we'll be spending efforts in establishing the brand and expanding our reach in this segment. There has been a tremendous effort with all of that, there has been tremendous effort in scaling the funnel, which we believe will take us to highest ever performance soon. And we believe that what we targeted for the revenue growth in Q3 is doable. We believe that the
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Page 4 of 16 incremental impact will be carried in multiple quarters there on, that will lead to sustained growth trajectory for the company. We are keen to invest into AI in all our delivery efforts, move our efficiency to industry best practice. Our intention here is to be more productive and performance driven in terms of tech delivery and reduce the GTM for future solution in market.
I know it's a long way, but these steps will create competitive advantage for NPST and reduce the resource dependency for critical growth opportunity. The transition may take 3 to 4 quarters, but we believe it is the right time to invest and build strong delivery fundamentals.
About international, we continue to scout for new opportunities in international market. We're looking forward to another big break similar to the Africa which we had. We intend to carve out a new team and invest in this direction. In fact, only then we can pick up great business here.
Since we now have experience and expertise to replicate, while the journey is slow, but it will increase the opportunity, build better margin and increase our product portfolio along with the revenue growth. In terms of the next focus for FY'26, because we have two more quarters, our focus is going to be completely on increasing revenue stream in payment platform, getting new accounts and executing business in TSP, generate SaaS based revenue for RegTech and Bank- in-a-Box and increase merchant presence through new products, which we launched in H1. Well, my team has put all the efforts to put these details in presentation and floated for everyone's consumption. I hope you have got that. Beyond that, if you still have queries, I'm here, my team is here. We can definitely take it from here. Harshil, over to you.
Yes, The floor is now open to the question-and-answer session.
Thank you very much. We will now begin the question and answer session. The first question is from the line of Agrim Kanungo from AK Investment. Please go ahead.
Congratulations on a good set of numbers. So, what is the revenue projection for the next two quarters? And what do you think, which segment will be driving it, like moving ahead?
I don't think I can give projections here, but there is an incremental growth for sure coming up.
There is no doubt about it. And whatever we committed over the last few quarters, I think all the investors have stated that we are definitely doing it. What can drive us is for sure the incremental product portfolio that we have added in TSP. That's really picking up SaaS-based revenue around devices, around the payment portfolio that is picking up. And we see that our EvoK is also contributing in the coming quarters. That is also a really big contribution coming up. There are some new payments, new revenue stream which we have added, which will start kicking from Q4. So, those are the areas that will be focused on. Some of the accounts that we are focused on right now in the domestic and not very, I wouldn't like to call it right away. But yes, our focus is also there in the global side.
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Page 5 of 16 And one final question is about the margins. Do we expect it to improve with the product diversification that's happening? Is there any recent product or any services which has a higher potential for increased margins for us?
So, we had a very high margin when the EvoK was peaking. And as and when it goes up, for sure the margin will multiply.
Thank you. I'll fall back in the queue. Thank you.
Thank you. The next question is from the line of Gaurav Didwania from Qode Advisors LLP. Please go ahead.
Thank you for taking my question. Congratulations, Deepak, on the great set of numbers. We'd also met earlier this year and you had mentioned that sometime it will take for numbers to get better. I just have a question. Can you give us a split on the different divisions in terms of TSP, PPaaS, RegTech? What's the split of revenue that's there in each segment?
See, RegTech, we have just starved out and we believe like I clearly said that another two to three quarters for sure we want to focus on it. More than revenue, we should see the value creation that RegTech is going to bring in. So, RegTech, let's not count that in the revenue today.
We have a split on the TSP and PPaaS. I think the split around TSP would be around 80%-85% odd. The PPS would be around 15% odd.
Perfect. And earlier you would also quote the numbers that you've done on the TSP side. Are you quoting those numbers again?
I think I'm not quoting that number now. I'm not quoting that number now because the revenue stream is not absolute to the quoted number. Our revenue stream is multiplying. So, that will be very difficult for someone to calculate right now. So, let's not speculate that.
Got it. And so last September the numbers were close to Rs. 66 crores. That's when the revenue had peaked. What time do you see us reaching those levels again? It's going to take a couple of more quarters or do you have some expectation in mind?
So, I think that's what I've already addressed. I think in Q1 call, I picked up that point very clearly that looking at the funnel that we have, we believe that Q3 is where we will be hitting it. And like I said right now also we are working on that direction already and we see it doable.
I think that's it from my side. Thank you for taking my questions. Thanks.
Thank you. The next question is from the line of Sajal Gupta from S6 Charity. Please go ahead.
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Page 6 of 16 Hi Deepak, I think it is Sajal Gupta, not Sanyukt Gupta. Congratulations for a great comeback in Q2. So I see there's a huge potential in transaction entries, the SaaS-based business. I just wanted to understand the sustainability of this business. How do you see this part of the business picking up now because this is at one point of time, 80% of our business. So, how do you see this business doing and the sustainability of this part of it?
Thanks for that question, Sajal. If you see the presentation we have shared, we have clearly shown the growth potential the market has right now. And we have clearly given the contribution of UPI over the entire digital payment segment in the country, that's more than 90% in fact. So, there is no way that that the volume will go down or there is any impact around it. We have built the entire payment platform with UPI as a center. Now, what we are trying to solve problem here is not just the scale, but also adding more value to banks in the CASA business. And at the same time, solve certain industry problem where there is a revenue potential, including early settlement, including the high success rate, including the interoperability. So, all of these brought together, there's a huge potential that we see coming up. I mean, the volumes here are in thousands of crores when it comes to solving these problems. Moreover, the entire segment is now well regulated, well structured. The regulator has brought in tremendous efforts to bring the entire pieces together in the last 4 to 5 years. And I believe that will be a great advantage for the product that we have right now. So, yes, it has a lot of potential. New revenue stream getting added, volumes are multiplying. And at the growth stage that we are right now, trust me, we will be growing. In fact, our growth rate will definitely be the multiplier of the entire industry growth rate. So, that's what I would like to say.
Okay, wonderful. And Deepak, the second question which I have in my mind is that we have a TimePay which is up and running right now. And we are not talking anything about it. Can you throw some light on this business? And like how many people have on boarded on this? And are we doing any burn on this part of the business, if any?
Great, I got this question last year also. In fact Sajal, for TimePay, we have more than a million customer base right now. We are not burning, that's not the model on which we believe. And our intention to touch base on TimePay was to be on the merchant side of the business. I mean, how do we solve the problem around the merchant because that's where the revenue generation is.
So, there are certain great products that we are launching here is this is so one is about PPI, where there is a great MDR coming up. Then we have, we have B2B merchant product, which we launched, we are the first B2B merchant app in the country. We launched it under NBBL, which is again an NPCI body. So, these are the cases which help us strive the opportunity in TimePay. So, these are the areas where we are focused on. And the incremental number around the user base is a byproduct of these kinds of initiatives. So, that will definitely open up gates and revenue opportunities slowly. I mean, that's where we believe.
Wonderful. You're saying 1 million customers is already on board, right?
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Page 7 of 16 Yes.
And that is without any burn, which you are doing? Yes.
Wonderful. I think that's all from my side. Thank you, Deepak, and all the best for the future. Thank you.
Thank you. The next question is from the line of Harish Kumar Gupta from Nirmal Bang Securities Pvt. Ltd. Please go ahead.
Hello, Deepak sir. Congratulations on good results. So, last time you said that you will cross the high revenue in Quarter 3, and I think you seems to be on track on that. Sir, I would like to know a longer term view, the Q1-Q2 growth is now at 40%-50%, and I am sure that it cannot go for long duration, But still what do you expect, that we can continue such growth for 1-2 years or this is also short of pent up demand? Means, the vacuum that got created because of the business loss, are you trying to recover that or can the growth be sustained for 4-5 quarters?
Great question. That is a great question. Before 4 quarters you will see that we told people that there was an impact by which challenged our business, that we launched back to back product launch and focus on new geography and new accounts, and we increased our business. So whatever growth you are seeing, that growth creates a great traction. So the growth which we had, which you are saying vacuum, that is today also 10%-15%. If we prefer that journey, then there is more work to be done to fill vacuum. So if you see like that, these are all new opportunities where we are trying to foray, look at new products, like BBPS we were not there, we brought in BBPS. Banking Connect who focus on 2,000 banks where we did not have traction at all. So that was the traction we built in. So like that, in Banking Connect around net banking, mobile banking, interoperability gap is there in market, that is completely new gap. Hardly 10- 11 bank goes into pilot stage in that. Complete banking industry is remaining in that. So all that we are touching these are all the vision and the push which the payment and the digital banking industry has right now in India. So we have attained growth in that. Just now Sajalji asked about platform and all that, that kind of traction as it builds up, the revenue creation gets pushed much more. So I think in next 2-3 years, Company needs to put more effort and the journey is long and the growth continues.
I am invested in your industry for a long term. I am attending important calls, but I am not able to understand your business completely. But I understand that there is something exciting.
There is a presentation in public, please go throught that. And if you have any more issues, then reach Kirin Advisors and they will definitely help you understand business better. Please try.
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Page 8 of 16 In this as you are bringing in new products, now the growth rate will become stagnant, So as in the beginning I used to track, that UPI growth we will get and also inaddition get growth from product, so that UPI growth is going down. So do we have product or visibility that we can continue for maybe 5 years. Not 40% quarter-on-quarter, but at least double year-on-year.
So, that is why, in order to give clarity to investors we have published the report. The The report is very clear. Where the analysis is From RBI. CWC. Based on industry analysis today the UPI is at 20 billion per month and it will go to 60 billion. Almost 300% growth in next 4 years. So this is not going to taper down. The reason is you are doing only account based transaction.
Tomorrow if you do credit card based transaction in that MDR will come. And when you do transition on credit line, MDR will come. So after that UPI Global gets added. Cross border transaction will get added. So if you see the roadmap of RBI vision map and all that, if you pick that then this growth is not going to taper. It will continue for 3-4 years, user base, yes, absolutely right, user base around urban Indi and semi urban India has been well captured. But taking this to semi urban and rural India because of that we focused on voice based payment. So that feature segment is still pending. And the product launches that is going to come that is still pending, which we are saying NACH mandate and all is pending in UPI. So the journey is long, it will take time.
Thanks for clarification. One last one, this international, how big you see this, it is in multiple of India's opportunity or small scale?
Revenue per ticket is definitely much larger than India. Margins are good. Secondly the contract size is also larger because there the size of one state or one city in India is as big as the country itself. So the potential investment demand is very high there considering the problem they have to solve. So I cannot give you exact figures because we have also ventured new. But for sure the initial traction and whatever we have got as the feedback the size of the contract and the revenue per ticket is very high, because ability to pay or I would say that the user potential to pay is very high versus India where people hesitate to pay.
Thank you. The next question. Is from the line of Niral Gangar from Neev Financial Services LLP. Please go ahead.
Hello. Congratulations on. Great set of numbers. And. I would congratulate. Also that you achieved. What you promised. So that is very good. Because what you have said is done. On the new products. I wanted to understand a little what are those products. If I have missed, maybe at the start you would have said. That is one question. And second is. I wanted to understand.
The receivable cycle because what I am seeing is 115 days close to receivables of sales outstanding. So I don't understand. Why is it so high in a service industry?
So when it comes to product. I think. I will shorten it down. Because I think I have already said this couple of times. So in product there is Banking Connect which is about is about bringing
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Page 9 of 16 Interoperability in net and mobile banking. And all the products that we have UPI, IMPS, Super App, BBPS all of that we are creating a hosted ecosystem. We have created in fact and we have deployed that in our environment and we are giving it as Bank-in-a-box. So that means, short plug and play, fast ATM, low cost model for mid to small size bank. So these are major. And when it comes to payment platform, December end to early January is where we will be launching a new version all together, where we are solving problems around early settlement and we are solving problems around interoperability in autopay and payout. So this will open up gates for multiple new target audience. So that's in summary that's the product. But there is more to it. But I'll touch base on the second question straight away. Four quarters our shift from payment platform to TSP is completely derisking and diversifying our business. That is what we have done. So what has happened, by the nature of the business and the billing cycles that we have, we see that our cycle is lengthier compared to what we initially had in payment platform.
There the cycle was literally running in within months. Now, this is somewhere like 60 to 90 days old. So that will settle down as and when we grow, as and when we add more and more multiplier to it. That is the difference between last year and this year.
Great. Thanks. That was my question.
Thank you. The next question is from the line of Anand Kumar, an individual investor. Please go ahead.
Thanks for taking my question. Can you hear me? Yeah, Anand, tell me. Yeah, a couple of questions. The first one is when is MDR kick in, say it in the credit card, in the credit line. This will be margin-accretive or will be margin-dilutive? Can you repeat that?
When the MDRs kick in for the credit card and the credit line business, will they help our margins further grow or will they contact our margins?
No, it will increase the margin because right now we do not have the line of revenue coming in from credit card on UPI or credit line on UPI. As and when the traction increases, right now the credit card on UPI, if you go to a merchant today and you transact on your credit card, on UPI Scan and Pay, then there is an MDR which gets generated. Now that will multiply as and when the customers using credit card over UPI will multiply. So that revenue is not accounted yet. I mean that growth will ultimately give a growth to the merchant revenue, which will add through the interchange income of our customers. So that will obviously kick in. Same way, credit line is long-term. It will still take time. The question, I don't remember, Harishji, from him was majorly around the UPI going down next three to five years, what are the potential. So credit line is again a great long term potential, wherein lending based impact in the ecosystem will kick in and that will generate a lot of revenue, of course, MDR is one of that.
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Page 10 of 16 In summary, Deepak, what you are saying is that once these two products kick in, right, revenues for sure will go up, but there will also be more margin accretive as well.
Absolutely. Lucrative margin, incremental revenue.
The second question, I believe, which is completely as Deepak aside around the opposite side is, foreign side, is Africa business and Dubai business. Will the revenue, when it starts, will it be in the TSP side or will it be in the BBPS side?
So the Africa entry was the TSP side, but it's more of SaaS based revenue, where after implementation, we get fixed set of revenue every month. And Dubai, we have just opened the operation and we are participating in a lot of enquiries right now. We're trying to see how quickly we can close some of the accounts, but I hope what we have done in Africa is what we'll try to do in UAE or the Southeast Asia market.
So the summary you're saying is mostly the TSP, but in the SaaS mode?
TSP, but it's a hybrid one where we get paid for the delivery implementation and then there is a monthly revenue coming in.
And purely from a number of banks perspective, right, like we don't have that much exposure to the Africa business, will they be similar to the Indian number of banks or they are like half, one fourth?
No. So honestly, the territory that we operate in, you have 10 to 20, that's the number of usual banks. And then like we have cooperative segments here in India, cooperative bank segment, you have very small accounts there, like the size of credit societies that we have in India is the size of cooperative banks that they have. So, yes, that's the major, because there again, it's a concentration of business amongst top 10, top 20 odd banks. And that is what you will see in India account also, The huge concentration around PSU private sector banks. So you can consider that mix for any global market.
And I'm just trying to sneak one more question if the operator allows. I think it's a follow on to one of the other gentleman asking. Outstanding growth, right, like 50%-40%, 50% quarter-on- quarter is absolutely like in the dream shelter is not possible. But if you have to draw like a five year vision, what would you draw for yourself?
I mean, honestly, there is so much potential left in it. But it's more of the combined effort of my team and everyone put together because we see huge potential across the segment. And that was the reason why we wanted to educate our shareholders very clearly. We broke our entire target segment. We gave the clarity on the potential industry growth, the CAGR growth for next four years, the absolute growth for next four years in each segment. So if we intend to capture that area, for sure, this kind of number is not impossible. But the kind of reengineering, reinvention,
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Page 11 of 16 rethinking and the effort required by the organization will be humongous. So all that put together is where numbers should be there.
Thanks Deepak for taking all the questions and really good luck for the future. And we really want to work along with you for the foreseeable future. Thanks.
Thank you. The next question is from the line of Abhishek Sharma, an individual investor. Please go ahead.
Thank you. So the first question is that NPST has chosen all three engines like TSP, PPaaS and RegTech. So which vertical is expected to drive the highest incremental revenue over the next upcoming 12 to 18 months? Which vertical is expected?
I mean, which vertical is expected to drive the incremental revenue over the next 12 to 18 months?
I would say at top will be TSP and PPaaS because that's more matured. TSP for sure is definitely there. PPaaS will again be an absolute multiplier. And then RegTech, I think maybe six months later, we'll have to really look at how it is shaping up the market. But if you ask me, 12 to 24 or maybe 18 months later, then for sure the maturity curves for PPaaS and the RegTech will definitely be a much better contributor.
Okay. And my second question is, how is the company balancing its growth between SaaS-based recurring revenue and implementation-led revenue?
To focus on that balance, if you see the business update slide that we are given, on one side we are calling out the areas of investment where we are focusing on SaaS-based revenue even in TSP. And on the other hand, we are also talking about launching new initiatives which will add more revenue to PPaaS. That's majorly to focus and increase the share around SaaS. I would say we have enough business around TSP and SaaS is where we are also focusing right now. That's why all the products brought into a single box and then see how we can monthly generate revenue out of it. At the same time, for pay-per-use model for all our products, right from RegTech to PPaaS to even Bank-in-a-box or to any new launch that we are doing right now, even voice payment that we launched, all of them are built on pay-per-use or MC model. So, I think it will take some time to bring a fair sum of balance, but that's the effort that we have already poured in, a couple of quarters.
Okay, great. And how is our Company's upcoming RBI and NPCI compliancy changes, especially around data localization and digital lending guidelines?
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Page 12 of 16 We are not in lending. Neither we have product around that right now. If it is UPI-led, that's where we are focused. When it comes to data localization and all, I think if you are referring to regulated entities, we are not the regulated entities. However, being a TSP and being core to my customers who are all regulated entities, all our systems are rightly driven as per the RBI compliances. So, that's never a challenge. We have our internal risk committee. We have our audit committee. We have a CISO in the organization. And then all our products are compliant as per the banking guidelines. In fact, that's the fundamental basics. Without that, we cannot even sell the product in the market.
Okay. That's it from my side for now. Thank you for answering. I'll get back into the queue.
Thank you. The next question is from the line of Srinivasu K. from TIA. Please go ahead.
Hi, sir. Thanks for the opportunity. My question is, recently, one of your competitors like Paytm introduced AI-based soundbox with analytics to help the merchants. So, are we also thinking about this kind of AI-based intelligence in our Qynx product?
See, we actually wanted to solve the problem around the fraud analytics, which we have been able to brought in very well in the RecTech segment. That we've already done. When it comes to soundbox business, the model in which Paytm operates is they will be investing their own money to deploy soundboxes across merchant and generating revenue out of it. So, our model is purely based on providing our device as a service platform and devices to our customers. They deploy it and they pay us. So, it purely depends on the demand, which will keep multiplying over it. So, if Paytm has taken that step, it's great for the market because it will start calling out for the innovation and it will start calling out for such kind of requirement in our products as well. So, as and when the demand starts pouring in, as and when our customers start requesting for it, our innovation lab will definitely add to it and give it to the customer. But it's way too early right now. I mean, right now it's all about looking at the size of the market. Each of these accounts have like, right from central bank, IOB, all these customers and then deploying the soundbox. And then the next level will be scaling it to the new designs, like AI that you mentioned.
Okay. So, then what was the initial, in your initial remarks, you talked about working on AI?
RegTech. AI for our internal efficiency is what I mentioned. So that we can increase the organization's productivity and faster GTM when it comes to deliveries and scaling the organization's competitive advantage. That is internal to us. Second is obviously when it comes to product or the market, RegTech is where we are focused on, which is about fraud prevention.
Okay. So, just to follow up on that, there is a lot of buzz in recent GFF that there is a conversation commerce within apps like ChatGPT. So, if discovery and checkout happens inside the ChatGPT
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Page 13 of 16 agent, then banks and merchants also, merchant acquirers will also want this agent-ready APIs, right? So, what is your plan? Are you thinking in this direction also? Or is it too early?
I mean, that will be like another. So, assume that you are currently transacting on Amazon or Flipkart. Tomorrow, you have ChatGPT with you and you are transacting on ChatGPT. So, that's the new platform that will get created. However, the payment requirement of a merchant still remains. So, for us, I believe that it's more about the merchant ecosystem where we exist.
Secondly, payment links, payment being derived over ERP. These are the areas where we have already invested. So, we are already stepping into those directions, like payment over WhatsApp, payment over SMS, payment over voice, IVR. So, these are the areas which we have already caught, payment over ERP. So, these are all additional efforts that we are pouring in. And that's why I said that we are re-engineering. And we are bringing absolutely new products to the market by maybe, you know, early next quarter. Okay. Thank you and best of luck.
Thank you. The next question is from the line of Ashish Soni from Family Office. Please go ahead.
How much of impact you had because of the gaming ban on your UPI transaction revenue?
We had zero merchant on gaming MCC. We did not have any. And I believe the impact will be more on the payment aggregators than us. We did not have anyone right now from any of the payment aggregators on our platform. I think that clarity we have very clearly given on the share market, I mean, to the NSE. We uploaded that. I believe there may be an industry-wide impact where there can be a sense around it. But when it comes to very specific, I would say no.
Okay. And you are using AI internally. So how much of cost optimization or profit improvement it can give to the company in next 2-3 years?
Our goal is to, you know, optimize by about at least 40% when we began about two quarters back. I mean, we're thinking about it when we built it. But I believe our calculation may be misjudged when it comes to 2-3 years. It will be much larger than the 40% goal that we have.
But that's the lowest that I think we should consider.
So in terms of percentage points of the margin, how much can it boost up the margins in 2-3 years? Due to AI?
Yes. Internally, we're using AI right now. Employee cost will come down.
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Page 14 of 16 So more than that, we should see that the employee... So it has two impacts. One is, today if I'm doing some delivery to my customers with 100 mandates and I have a revenue coming in for 100 mandates. Now my competitor may end up doing it in about 50 mandates. And if I'm still sitting at 100 mandates, then I have lost the competitive edge. So I believe that, you know, it cannot be an absolute figure. We need to understand that when the entire ecosystem moves towards AI-based development, then the efficiency is across the industry. So I believe that the efficiency will definitely be there. But it will be not so high. In fact, what will happen is your delivery per person will multiply. That is definitely going to happen. And your revenue, when it comes to for a particular change request, that may go down. So you end up picking more business. So if my competitor is doing it for 50 mandates, my job is to bring it to 40 mandates from 100 mandates. So that's one area that we need to look at immediately. So improving cost efficiency will not directly add to the margin. But yes, I would say that margin will definitely improve because of AI.
One last question. Government is thinking of merging the public sector banks, a few of them together. So will that give a flip up to whatever the base business initially you had in future?
Honestly, I've also read in the articles and I'm also reading more about it as and when I go to my customers. But I have not got much insight into it. Consolidation will definitely help the entire banking fraternity or I would say that, you know, the banking pillars that we have in the country.
At the same time, the incremental demand for digital products, that will be very high. I mean, although there will be consolidation, but you cannot expect that one single vendor will have an ability to manage 20% of the country's entire population on a digital platform. So there you need to have a very different method altogether. RBI talks about, you know, de-risking your entire technology stack that your entire business bringing in redundancy. So I would say that it's way too early for us to comment. But that's the situation right now, wherein the incremental digital demand will pump up for this banking segment. Okay, sir. Thanks and all the best. Thanks.
Thank you. The next question is from the line of Shilpa Naik from Aarti Finance. Please go ahead.
Thank you for this opportunity. So my first question is, NPST recently won an order from a large PSU bank with 3,300 plus branches. So what portion of this is expected to be recognized as revenue in FY'26?
Well, this is about the Queens platform where we are selling our product on a device as a service model. I would say that we have just got it. The execution will take this quarter very well. And the incremental scale will come in the next financial year. This financial year, we will be able to
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Page 15 of 16 move maybe 10%-15% of the total order, not much. So I think we should look at the next financial year.
Okay. So my second question will be, what is the average implementation cycle for Banking Connect and Bank-in-a-Box?
Bank-in-a-Box is targeted to be less than 30 days, maybe even lesser than that. Banking Connect, depending on if at all it is Bank-in-a-Box, so anything that we bring in Bank-in-a-Box, our intention is to be 30-45 days flat for these products. So if Banking Connect is launched in Bank- in-a-Box, it will be 30-45 days. When it comes to large banks, it can take about 90-120 days.
Okay. Thank you, sir. That's all from my side. Thank you for questioning my answer. You're welcome.
Thank you. The next question is from the line of Prateek Chaudhary from Saamarthya Capital. Please go ahead.
Sir, more on slightly longer term potential for our TimePay app. You had briefly mentioned on MDR potentially being introduced for PPI. So I just want to understand what is the current status in terms of the approval of this or where the industry is at in terms of agreeing to this or from the NPCI's level. And say two years down the line or three years down the line when we would have much larger consumers on our app, what might it mean? Because I understand that even this MDR will be shared between the acquirer, the issuer, the bank, and the app. So any broad thoughts on where are we in terms of this getting implemented by NPCI or the government and what it could mean for us in the next 2-3 years?
So MDR exists. It's not that it will be launched. It exists. Minus UPI, every product has MDR.
Your CC, your PPI, your credit line, everywhere there is MDR. It is just that UPI being such a mass focus and solving such a big infrastructure problem across various parts of India. So that's a different point altogether. But PPI, when it comes to solving very specific use cases, when it comes to solving wallet-based transactions, MDR exists around it. So that's not a new thing. Our intention here is to see how we can be on the B2B side of the business with this particular product. In a sense, are we able to capture the wallet-based transactions in the corporates? Are we able to capture the wallet-based transactions in the ERP segment? And that is where we intend to introduce PPI. And that's how we want to explore the opportunity in time. Rather than simply distributing cards or simply running behind cash on the user acquisition side, it's more about tying up with the potential corporates, tying up with the large entities where we can solve quick payments with the wallet-based transactions. And that's leading to the MDR revenue in the ecosystem. I would say that in the next 2-3 years, this will be one of the key contributors in the PPaaS revenue source that we have.
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Page 16 of 16 Of course, I cannot give the number right now because it has just launched. So it's not good to start putting the numbers to it. But we have already got the order from one of the ERP vendors.
We are working with them. One stage, if we are done, we have got great success. Then we'll start multiplying it with the other ERP vendors in the country. Okay, sir. Thank you for your response.
Thank you. As there are no further questions, we have reached the end of the question-answer session. I would now like to hand the conference over to Mr. Harshil Ghanshyani for closing remarks.
Thank you, everyone, for joining the conference call of NPST Limited. If you have any queries, you can write to us at research@kirinadvisors.com .Once again thank you, everyone, for joining the conference call. Thanks, Harshil. Thanks, everyone.
Thank you. On the behalf of Kirin Advisors Private Limited, I conclude this conference. Thank you for joining us and you may now disconnect your lines.