Infibeam Avenues – A Fintech Play

Infibeam Q2 results

To me it appears to be a mixed bag:

Positives

1. NTR of India Payments on the rise (7.2 vs 6.9). The bad days of sub 6 NTR are gone. Mangement expects further improvement which should aid margins.
2. GEM volume growth continues (39,840 vs 36,300 Cr). See further rampup in next 2 quarters to hit 180-200K Cr for the FY.
3. Tappay launched (no revenue/NTR shared) and active on 15K terminals. To be ramped to 100K by year end (or is it Q3 end?). Management maintain significant volume addition from this over next 2 years (~20% of TPV).
4. Clearer commentary for international expansion provided. Money raise from preferential warrant allotment and sale of investment would provide necessary support for such growth. Take rates are higher in international markets.
5. In principal license/approval for payment aggregation is welcome and removes risk from mind for some investors (I never thought it to be a risk though). Conversely, not anything great either as RBI is likely to give such approval to all existing significant players.

Negatives

1. Sequential India Payment Volume growth is muted not keeping with industry growth (45,364 Cr vs 43,736) – indicates minor market share loss, given higher overall market growth.
2. Platform revenues and profit not keeping pace with GEM growth, basically indicating some other platform revenues (and margins) are getting lost. Segment profit are flat YOY despite GEM nearly doubling in volume. Entire gains from GEM volumes ceeded, due to loss in other parts of platform. This is continuously impacting bottom line over last 3 quarters.
3. No commentary on loan intermediation (Trust Avenue). In investor presentation – no news is bad news. Hence, I assume, no further progress worthy of getting mentioned in the presentation or concall has happened during the quarter.
4. If Onetime profit is excluded – then PBT(and PAT) would be sequentially lower.
5. Industry wide -ve – UPI has literally eaten away debit card spend (online and POS). YoY debit card spend values have declined !!!. This has taken out a large chunk of revenue accretive business of payment aggregators and replaced it with zero revenue business. This reflects in overall sluggishness of payments growth for Infibeam as well.

Overall a mixed bag. For next couple of quarters, while topline growth will continue at some level, I expect bottomline growth to be muted/-ve, given investments in launching and scaling up Tappay in India and payment business in International markets. Eagerly await some numbers of Tappay in Q3 investor presentation – this is possibly the most exciting thing/value driver at Infibeam right now.

Disc : Invested. No Reco. DYOR