Ladies and gentlemen, good day and welcome to the MobiKwik Q3 FY 2026 earnings call hosted by Dolat Capital Market Pvt. Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then 0 on your touch-tone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Rahul Jain from Dolat Capital. Thank you, and over to you, sir.
Thank you, Olivier. Good evening, everyone. On behalf of Dolat Capital, I would like to thank One MobiKwik Systems for giving us the opportunity to host this earnings call. I welcome the senior management of One MobiKwik Systems, represented by Mr. Bipin Preet Singh, who is MD and CEO of the company, and Ms. Upasana Rupkrishan Taku, who is Executive Director and CFO of the company. I would like the management to take us through the Q3 operating results, and now request management to take it over from here. Over to you now.
Hello? Am I audible?
Yes, sir. Please go ahead.
Yeah, hi. Hi and good afternoon, everyone. This is Bipin Preet Singh. I'm the Co-founder and CEO of One MobiKwik Systems. I welcome you all to the earnings call for Q3 FY 2026. Let me start with the summary of what we have done this quarter, and then we can get into Q&A as per the questions that are being asked. Firstly, it's important to rewind and remember that we had given a commitment that we will turn profitable in the second half of FY 2026. I'm delighted to report that we have delivered both EBITDA and PAT profitability in Q3 FY 2026. We have, as you know, two primary business lines. One is the payments, and second is financial services, where primarily it is digital lending. I will cover both of them one by one, and then I will talk about consolidated-level performance.
On the payments side, GMV, which is basically the total value of payments processed, rose to an all-time high in this quarter for INR 481 billion, which is consistent and a record high for the 12th quarter in a row. So our payments business growth is intact. It has grown up 63% year-on-year and 11% quarter-on-quarter, this number. And primarily, it has grown because we have been investing in the growth of UPI, both UPI as well as Pocket UPI, which is our wallet being used on UPI. So UPI transactions for MobiKwik, which are visible also on the NPCI website in terms of the rankings, have actually grown 3.2 times, have actually grown 220% or 3.2 times in the last one year.
Despite the UPI share growing from 32% in the same quarter last financial year to 41% this financial year, we have expanded both payments revenue, which in this quarter is INR 223.7 crore, and payments net margin, which is around 17 basis points, demonstrating that while we are growing UPI, at the same time, we do have certain revenue-making categories within payments. This growth is translating into revenue generation categories as well. Primarily among them are wallet as well as bill payments. On the other hand, in the financial services, if you remember, we had a fair bit of tightening in Q3 of FY 2025. We were down on disbursals also in that quarter. We had change in the way our arrangements with our lending partners accounted for the revenue, leading to most of the revenue coming back-ended.
I'm happy to inform that we have reached a disbursal of personal loans to a high of INR 9,000 million, which is INR 900 crore for this quarter, which is a consistent growth over previous quarter, as well as, I would say, it's a fourth or fifth quarter growth, consistent growth, actually a 126% year-on-year growth. So this is a big win for us, of course, on the disbursal numbers. But as you know, digital lending business, which we do, which is a mix of both FLDG type of business where we do risk-sharing and pure distribution, is not only about the headline numbers, but it's also about the underlying quality of the book. So I'm happy to report that there is significant improvement, consistent improvement, on the back of enhanced credit quality and collection efficiency.
So that has resulted in gross profit for financial services at INR 372 million, which is INR 37 crore, which is up 405% year-on-year and 45% quarter-on-quarter. So it's not just the growth in disbursal and the growth in revenue. Actually, it is the margin, which has expanded in lending, resulting in better profitability. Lending-related expenses came down 57% year-on-year. And this is our approach, that we want to obviously continue growing digital lending, but we will be taking risk-first approach and a core profitable approach over just growth at all costs. Combining both of them at a consolidated level, total income has risen 8% year-on-year to INR 2,972 million, which is nearly INR 297 crore.
Contribution profit has jumped 76% year-on-year, which is a significant jump, mainly because of the improvement in margins, both in payments as well as in lending, to INR 1,288 million, which is almost INR 129 crore. Both the margins in payments and lending have improved. Like we said, that as margins have expanded, our growth has continued and cost has stabilized. We had an EBITDA swing of INR 57.6 crore year-on-year, thereby lending at INR 15 crore of EBITDA, INR 150 million, which is a 5% margin. And after the finance depreciation costs, this EBITDA has converted to PAT of INR 40 million, which is again a swing of INR 59 crore year-on-year. Both on the EBITDA level and PAT level, we have big swings.
While the journey continues to expand and grow the business, our endeavor will be to continue this growth in a sustainable manner. We are getting closer and closer to a more stable and sustainable operating model, which we hope to continue in the time to come. So with this, I would like to thank again everyone who's listening into the call, and I'll hand it over to the operator for any questions.
Thank you. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Deepak Poddar from Sapphire Capital. Please go ahead.
Yeah. Am I audible, sir? Hello?
Yes, we can hear you.
Yeah, ma'am. Thank you very much, sir, for this opportunity. Sir, I have a couple of queries. Now, first up, on your financial services. Now, you did mention that there was a fair bit of tightening, right? So how should one look at the trajectory going forward? Because, I mean, earlier, I think before this tightening, we used to do INR 2,500 crore of quarterly kind of a disbursement rate, and currently, it's about INR 900 crore. So how should one look at this trajectory? Are we looking or we aspire to go back to what we used to do earlier? And what's the timeline when we can try to achieve that?
So we have no such idea that we have to go back to a previous number because earlier number that we were doing was also based off another product, which was Buy Now Pay Later product, which, if you remember, if you've seen the performance of the company, was a flagship credit product. But since the regulatory position on this product has not been very clear coming from the market, we had wound down. And if you see, after Q4 of FY 2025, we have no contribution coming from ZIP, which was our BNPL product, which was counted in this disbursal, and that was contributing at one point more than INR 1,500 crore of disbursal in a quarter. So not apples-to-apples comparison.
In terms of the business that we are doing today, it is mainly consumer personal loan and with some bit of secured products also coming in at a very small scale. But mostly, it is consumer PL, which we are trying to do and approaching to do it with a very risk-first approach. So our focus is not that we have to grow this number to a number next quarter or the quarter after that. We are taking a cautious approach because, as you know, unsecured business, you have to be cautious. Plus, also, I think overall, the ecosystem of digital lending has matured. There is not much appetite for any kind of significant risk-taking when it comes to unsecured risk-taking, both in the parts of NBFC banks as well as fintechs.
What you will see going forward is also, I wouldn't say slow, but consistent growth, but making sure that credit quality is maintained and making sure that costs are under control and making sure that profitability is there.
Understood. Understood. I got it. And a second question, I think we have said in the past as well, we are looking at INR 15 crore-INR 25 crore of improvement in profitability every quarter, which we achieved this quarter. So going ahead also, we have same kind of expectation?
So I mean, I wish there was a formula that you could improve 15, 20 quarters profitability every quarter. It will become infinite. But unfortunately, that's not the case. Like I said earlier, we can say that we are reaching a more stable operating model. Is there more juice left in the margins? Yes, there is. There is, definitely, because we do have areas where we are investing but not yet making enough margins or, in some cases, not making revenue. There are areas like UPI where we don't make much in the way of revenue today, but we are hopeful that we will do. There are areas like merchant-side payment business where we are looking at both growth and profitability. There are areas like merchant lending where, again, we are very small, but we clearly see opportunity to expand and add both revenue and margins.
So however, I don't think we should expect significant improvement, more improvement in margins per se. It will be more about growth and growth of revenue and maintaining and growing the margins slowly.
Okay. Okay. I understood. So our revenue growth led what you are looking at, not margin-led growth?
Yes. I think margin-led growth, there is some juice, but it's hard to say right now how much more is left.
Fair point. That's very clear, sir, and very helpful. That would be it from my side. All the very best to you. Thank you.
Thank you.
Thank you. The next question comes from the line of Sanjay Ladha from Bastion Research. Please go ahead.
Hi, sir. Thank you for the opportunity. Many congratulations on a great set of numbers. Sir, just a bookkeeping question on in the financial business, can we know the share of DLG versus non-DLG?
Yeah. Hi. This is Upasana Taku. I'll take that question, sir. So the FLDG or DLG-led business is 80% of the current quarter disbursal, and 20% is the distribution-led risk-free business.
Okay. Sir, as you already highlighted in your starting commentary that the growth is primarily led to UPI business. Despite that, also, we are seeing revenue growth and margin growth. Just wanted to understand the payment side of wallet and bill payment, which you talked about. What's the strategy for us going forward? How should we look? Is the growth that we are seeing right now in this business has been there for a do we envisage that growth going forward or any sort of strategy for a longer term? I'm not asking for a quarter or two-quarter specific, but from a two-year point of view, what's the approach what we are taking?
Thank you. Got the question. So let me address that. So look, I mean, we all know that UPI is a predominant payment system, payment mode in the country today. And it's grown 29% over the last one year. But at the same time, MobiKwik UPI numbers have grown 220%. So we are growing faster than the overall UPI ecosystem, although we are very, very small. So we have a lot of headroom of growth in users, transactions, and the overall GMV in the UPI. Where we specialize and how we are doing it is by investing more fundamentals like product experience and coming up with differentiators like wallet and especially wallet over UPI, which is Pocket UPI. So that actually is a big reason why we are seeing growth in UPI numbers.
Because we are the largest wallet, and as per industry data, we have 18% share by value, the wallet business is also growing overall for the industry. I think there is more focus by other industry players as well. So I do believe that wallet actually contributes more in terms of revenue, either by MDR because there is some MDR and also in terms of convenience charges. It is also more sticky because pure UPI, bank UPI, it's easily switchable. But when you use wallet and you do full KYC of the customer, you get a more sticky customer who wants to use your wallet instead of using your bank account for all UPI transactions. And that gives us opportunities to cross-sell more services, including bill payments, so we can, in some cases, get convenience fees as well. And bill payments also, you make money from the BBPS ecosystem.
So the whole idea is to grow the topline, headline number of UPI transactions and benefit from the trickle-down of this growth into revenue-generating categories like bill payments, wallet, and other kind of transactions.
Sir, just wanted to have a follow-up on that side. What we know is Pocket UPI and UPI is not fetching any revenue. And you are saying that the cross-sell has been improving on that side. Can you share the numbers on that side, on quarter-on-quarter, that cross-selling, how much? Because what I understand is your UPI and Pocket UPI is growing, but in that space, your revenue is also growing. So you are doing cross-selling pretty much, but wanted to have your more color on that side, how things are happening on that side.
Yeah. So see, like I said, when these UPI numbers are growing as well as Pocket UPI numbers are growing, especially because we have the wallet, we are able to generate higher margins. And if you compare it to the industry peers, we have 17 basis points margin on our payments business, which is considerably higher than what the industry is able to achieve. The reason for that is that it's a sticky customer who is not getting the same option elsewhere, who's not getting the option of a wallet elsewhere. So therefore, the frequency of transactions, average ticket size of the transactions, the propensity of the transactions on bill payments, generating convenience fees via different mechanisms in the wallet, even the amount of money that they keep in the wallet, all of this results in higher revenue. And that is what is actually causing the revenue to grow.
In fact, the second-order effect is that when you see the growth in consumer personal loans, our investment in marketing has actually either been stagnant or declined. It has not grown significantly. But at the same time, our digital lending business has grown quarter-on-quarter simply because of the fact that we have a more sticky customer who's a higher-quality customer, and that customer is actually taking loans as well. So overall, our approach is that we are not looking to compete directly with the very top players just in terms of headline numbers. Our focus is to differentiate using the specific products that we have and make that work for the cohort of customers who wants to use wallet, wants to take a loan, wants to make bill payments using wallet.
So in our Q2 call, we have said that our payment business margin or take rate would be 14-15 basis points. Now, it has inched up to 17 basis points. Is it sustainable, or will it be back to 14-15? The sustainable will be 14-15, or if you can.
Yeah. Hi. So you are right. We had guided that 13-15 is the right number last quarter. Even now, if you see the earnings presentation, we have already guided that while we have clocked 17 basis points this quarter, we believe that on a long-term basis, a more sustainable margin in payments is between 12-15 basis point for us given the contribution of UPI is going up and looking at the wallet and the bill payments business. So 17 bps is not what we are also saying is a long-term sustainable margin. But yes, we do believe that 13, 14, 15, which is what we have been doing for the last four quarters, is a more sustainable net payments margin.
Ma'am, just a last question on my side is that since we are focusing on credit business, do we internally see any other business coming forward as you in the previous comment or in the you have alluded to wealth management, mutual fund side, do we see any or do we see any take rate on that side, the improvement on that side as well?
Yeah. So thanks for asking that question. I think we are committed that in the mid- to long-term basis, we will be scaling up our wealth offerings just from a completeness of offering to the user and also from the perspective of strong engagement and monetization. But in the short- to mid-term, we don't expect any significant monetization from our wealth or broking offerings. We are building those products. But in the short- to mid-term, we expect that our existing business of consumer payments, our existing business of financial services that are now demonstrating strong margins will continue their scaling and growth and it adds to the bottom line. We also want to highlight that our current focus in terms of growth is on building the merchant payments category because if you see our entire last year, we are doing very well on consumer payments growth.
While this is accelerating, we also want to build new modes. Merchant acquiring business is a very good opportunity for us because, firstly, this market is substantially large and fast-growing. Secondly, we already have the right foundation in terms of our products and our people in this business. So while we are currently very small, we are ramping up our efforts on offline merchant acquiring. In fact, we have improved our footprint from 366 cities to 1,118 cities because we believe that under-penetrated markets will offer us good upside from a long-term potential perspective. We do want to scale up our merchant business there, the device business, EDC Soundboxes. Then on the back of deepening merchant engagement, we would want to build a merchant lending business also.
Similarly, on the online merchant acquiring side, you would know that our wholly-owned subsidiary, Zaakpay, has an online payment aggregator license from RBI, which we also got in this financial year only. And here also, we are trying to increase our e-commerce merchant base and GMV from those merchants. And in the short term, we expect that our existing business and merchant business, which I just described, are the growth opportunities in terms of scaling up our overall business.
Ma'am, sorry, just a follow-up on that side. In the merchant payment category, so the larger player has already gained the market share. So what are we offered differently compared to the because the base has been quite large for the larger player, and we are very small on that side. So just have your view, ki, what are we doing differently on that side to acquire more customers in the merchant category side?
So sir, you are right. We are still very small, but this market is extremely large from a total addressable market perspective. And despite the fact that there are two, three large players, the market is not fully penetrated. And also, as per various industry reports, the market itself is going to double in the next five years. Given our strong base in the payments sector for the last 16 years, we do believe that we have an opportunity to capture a piece of this market. We have been doing the payment gateway business in terms of online before also. And it is only post-COVID that we had scaled down that business. So that's a no-brainer for us. We already have strong partnerships with more than 150,000 e-commerce merchants with whom we have a partnership for them to accept MobiKwik Wallet and MobiKwik UPI on their app checkouts.
Doing a cross-sell of transaction processing for credit card, debit card, etc., is not very difficult for us. Of course, we have to give them value-added products and services, which will make it sticky for them. On the offline merchant side, I think you missed the point, which I said, that our focus is not so much in the large cities, but we are focusing on more Tier 2, Tier 3 markets where we see that there is a lot of room for growth. And those merchants are not already having one or two soundboxes or EDC machines. So there is a lot of room for growth there. While there are players who have scale, they have not reached all of India.
Further, the market itself is expected to double in the next few years with seamless transaction processing and seamless transaction settlement to these merchants and the additional advantage of doing value-added products or services for them, whether it is in terms of merchant loans or whether it is in terms of giving them advertising or other revenue streams. We have a lot of opportunity to create our own space in this sector.
Thank you so much, Ma'am, for answering. All the very best. Thank you.
Thank you.
Thank you. Participants, please restrict yourselves to two questions. For any more questions, you may rejoin the queue because of paucity of time. Thank you. The next question comes from the line of Vinit Gala from Xylem PMS. Please go ahead.
Hi. Congrats on a good set. In continuation of the previous discussion on the multiple businesses we are incubating, can you let me know the OpEx of payment and lending business, what would be the incubation cost that is hitting our P&L? And how are we budgeting this for the next year? Hello?
Yeah. Hi. Sorry. Yeah. Just to repeat, your question is that how much are we burning on incubating new businesses?
That's right. So X of payments and lending business, what would be the cost that is hitting our fixed cost element in the P&L?
Yeah. So the merchant business that I just described, which we are trying to build, merchant offline devices and also online merchant, I think put together would be around INR 13 crore-INR 15 crore of burn every quarter.
So how are we budgeting this for the next year? Next year, are we expecting a break-even on these particular businesses?
So multiple subsegments within these businesses are already approaching break-even. We have been investing in these businesses, building up the tech stack, the product sales muscle over the last couple of years, trying to perfect it. And I think we are getting close to a place where both of these businesses will break-even eventually. It may take a couple of quarters, 2 or 3 quarters. But our hope is that they will break-even. And then based on that, that benefit will start coming up both in our bottom line as well as in our top line.
Fair enough. Fair enough. Also, on the payments business, we've optimized a lot on the payment gateway cost. So if you can help me understand what percentage of our own internal transactions are we processing internally via Zaakpay, and is there any further room of reduction from the gateway cost of, say, like 27 basis points?
So we at MobiKwik use multiple payment gateways, which include Zaakpay. Currently, over the last many quarters, the share of Zaakpay for MobiKwik has been anywhere between 30% all the way up to 50% depending on the commercials that are available. There are obviously good payment gateways available outside of Zaakpay as well, which we also use at scale. We use that to make sure we get the best benefit of performance and commercials for the MobiKwik business.
So, is there any further room of?
I'm sorry to interrupt, Vineeth. I would request you to rejoin the queue for any further questions. Thank you.
That's okay. So I think there is not much more room available. I think we are operating there, especially from card transactions point of view. However, like I said, for the UPI transactions, we're still not making money. So we do expect that for UPI transactions also, we will start getting the benefit over the next few quarters. But that will necessarily not come via the online payment gateway.
Thank you, sir. As the participant has dropped, we will move to the next participant, who is Atul Godse from JM Financial. Please go ahead.
Hello, team. Thanks for the opportunity. I had two sets of questions. One is on the recent that we were talking about offline penetration that you are doing on the merchant side in terms of devices. Could you shed some light on how many devices we have deployed so far, active devices, or the geographies we are targeting? As you said, you are mostly expanding into lower-tier cities, considering there is uncertainty regarding the PIDF incentives. Do you think this move is right? And the second one is basically a clarification on the BBPS transaction value that we have. So does that also include the rent payments, considering RBI has banned the rent through credit card? Thank you.
Right. So we'll take your first question first. So we've already informed as a first step that we have scaled up from about 300 cities to 1,100 cities. And you said that PIDF is not coming. So does that make sense? So I would like to firstly clarify that PIDF as well as consumer-side UPI incentives put together are only 0.4% of our revenue this quarter and also for other quarters. So these incentives are very small compared to our overall revenue and are therefore not material to us. So our offline merchant growth strategy is also not linked to these incentives. Rather, we are building the business for core business fundamentals only. That's the first piece. We would not like to give any more numbers in terms of scale of devices or geographies where we are strong. It's a little too.
Early.
early to give that information. The second question that you had on Rent Pay—yes, Rent Pay as a category has been shut down across all the players in the market. So yes, it has been shut down on our platform as well. Yes, the revenue coming from Rent Pay would have been there in the bill payments category in the previous quarters. But in this quarter, it is negligible, if not zero.
All right. Thank you.
Thank you. The next question comes from the line of Smit Shah from JHP Securities. Please go ahead.
Yeah. Hi. Am I audible?
Yes.
Yeah. Firstly, congratulations on a good set of numbers. My question would be that lending-related cost has gone down to 3% of the digital credit GMV in this quarter. So what would be a sustainable range for FY 2025? And this quarter, we have clocked 57% gross margins in the financial services vertical. So if you can provide guidance for FY 2025 in terms of gross margins and lending-related cost.
Thank you for that question. We can't provide a specific guidance. Like I said in my summary, where we are today in terms of margins in the digital lending and financial services is kind of in a stable zone. Assuming that we can continue to maintain the credit quality and collection efficiency, which we do believe we can, this is the kind of decisions and investments we have made both at a risk policy level as well as setting up the collection infrastructure. We have seen the cohorts of static pool risk performance continue to improve and maintain over the past many quarters. Therefore, we do believe that we can continue to maintain this margin. Whether it will improve significantly from what we have just reported, that remains to be seen. I cannot comment on that. It will definitely be in the same zones.
Okay. Got it. Fair enough. And out of the 21% sequential growth in the UPI GMV, how much growth was driven by Pocket UPI?
So currently, we are not disclosing the split between UPI and Pocket UPI given that, look, we are still a small player in this. We will do that in coming time. But what we do believe is that people who choose UPI, bank UPI, or MobiKwik app, part of the reason why they choose that is also because Pocket UPI is available to them. So when they want to do a small transaction, they end up using a Pocket UPI. But if it's a large transaction, they end up using bank UPI. So that combination works for people who understand that. And therefore, we are seeing the kind of growth that we are seeing.
Okay. Got it. But just qualitatively, was it like more than half of the growth was driven by Pocket UPI?
No. It's not the case. We have consistent growth in Bank UPI as well as Pocket UPI. In fact, in Bank UPI, our investment in the product and tech stack, which we have built, is actually giving us very good results.
Got it. Got it. Thank you so much. And all the best.
Thank you. The next question comes from the line of Ankush Agrawal from Surge Capital. Please go ahead.
Yes. Hi. Thank you for taking my question. Firstly, just a clarification. The Pocket UPI and RuPay credit card is still not being monetized, right? I'm assuming the total money that we are making on the payment side is largely the wallets and the bill payments.
True.
Okay. The second thing I want to understand is, on your presentation, you've stated that the Zaakpay GMV has grown about 236% YOY. Whereas if I look at a KPI book, that number is around INR 1,000 crore for the quarter. And the same number was INR 943 crore Q3 FY 2025. So I'm not able to understand why the difference?
Yeah. Thanks for that question. On the same slide that you are looking at, which is the building new mode slide, there's a star mark with the GMV. So the GMV here excludes MobiKwik-related GMV. And also, it excludes loan repayment-related GMV, which we think of both of these as pass-through transactions. And so we are looking at growing the net new business in GMV. So for example, what are my new.
Yeah. I understand that. But I think the KPI book number is net of these pass-through only, the INR 1,000 crore Zaakpay payment GMV.
No. No. The loan repayment pass-through is still there in the KPI. But for business purposes, we are business growth purposes, we are netting that off. So this number excludes both MobiKwik as well as loan repayment-related.
Okay. So the KPI book number is including loan is what you're saying?
Yes. That's right.
Okay. So would it be possible for you to start sharing that net of the core Zaakpay outside business GMV?
We will. We will eventually start sharing it. But you should know that right now, the net contribution of Zaakpay or the devices offline business is still very small to the overall, it's not even a decent number. That's why we are not giving it. But point taken.
Got it. Thank you. Thank you.
Thank you. The next question comes from the line of Rahul Jain from Dolat Capital Market. Please go ahead.
Yeah. Hi. I hope my line is okay.
Rahul, sir, please go ahead.
Yeah. Thanks for the opportunity. Congrats on strong performance. Firstly, in our shareholder letter, you have expressed your focus on merchant acquisition both online and Zaakpay. So in that light, can you share what are your top priorities here in terms of spend, CapEx or the merchant count addition? And how do you think it feeds into our merchant advantage business on the credit side?
Rahul, thank you for the question. We are trying to build the business in a slightly more sharper fashion compared to how it has been built by the very big players in the offline merchant space, where their focus is primarily to acquire as many merchants as possible, then identify those merchants where they can monetize either through soundbox or through merchant loans or devices, etc. Because we are not in a position to invest that much capital into the expansion of the merchant business, we have to take a more profitable and sustainable approach. The way we are going about it is more scientifically identifying those merchants and those categories of use cases where we have a much higher propensity for the merchant to be monetized, primarily through merchant loans but also through devices.
With that, we can achieve break-even at a much smaller scale compared to what the incumbents have achieved over the past many years. We have taken the same approach, as you know, on the consumer side where we said that we don't need to be the largest UPI app in order for us to have enough customer stickiness as well as enough monetization to be a profitable business. We have demonstrated that. We are taking on the same learnings to be very cautious and very sharp about how we build the business on the merchant side. Our strength is primarily on the technology side. Our strength is on the data intelligence and data analytics. So we are taking a very clear but sustainable approach towards this business.
More questions from my side on the lending business. How we see this lending operational cost to and out on a more sustainable basis? Or what kind of margin we are looking in the lending business?
So I think Partner already answered this. We are in a fairly stable zone when it comes to the lending margins, the financial services margin that we are seeing. We are operating with a stable credit quality, stable credit cost, a stable take rate. So we are not charging too high to the customer. We don't have very high margins as well. We are not operating with high credit costs. So it is a very careful balance that we are maintaining. And hopefully, that will continue to give us similar kind of margins in the coming quarter. Will this improve significantly from where it is? It's very hard to say. I don't think there is that much juice left.
I think the growth in the financial services business now will come from the growth of the top-line numbers, growth of revenue, with margins being in the similar zone. But because the margins are so good in the financial services, that will obviously impact the profitability and bottom line of the business. And in terms of older loans, the loans that we have already disbursed, we do believe that pre-approved as well as repeat loans will be helpful in further reduction of credit cost beyond what we have seen already.
Thank you. That's it from my side. And best wishes for the time ahead.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Ram Sinha, an individual investor. Please go ahead.
Hello.
Ram, please go ahead with your question.
I want to ask what is realization in bond?
I'm sorry. Can you repeat the question?
हमारे बॉंड कितने रेवेन्यू जनरेट कर रहे हैं, उसमें realization कितना-कितना है? बॉंड का जो नया प्रोडक्ट लॉन्च हुआ है, उसके बारे में पूछ रहे हैं।
Okay. So the bond product that we have put on our website, abhi it's an experiment. It's too early to say ki uska kitna revenue realization hai. But we expect ki 0.5%-1% ke beech mein usmein revenue realization hoga.
Thank you. Thank you very much.
Thank you. The next question comes from the line of Sanjay Chawla from Renaissance Investment Managers. Please go ahead.
Thank you for the opportunity. On the lending side, the lending take rate continues to decline. So where should we assume the steady state would be given your mix is 80/20 in terms of FLDG and non-FLDG?
So currently, it is 80% FLDG and 20% distribution. We think this will continue or will slightly continue to move more towards distribution. But FLDG is where our sweet spot is. We do make a good amount of money there. But also, certain kind of loans like higher ticket loans, we don't want to do in FLDG. So we end up working with certain lenders like L&T or Poonawalla and some of these guys to do higher ticket loans for higher tenures. We do it in distribution model. So there again, take rates are 2.5%, 3%, 3.5%. Those are the take rates that we have. It's the same as the margin that we are making overall in our lending business because there are no direct costs there for collections or any responsibility for credit quality.
So in terms of total take rate, we think that it's stable. The 7% number, it is in the ballpark. It may also reduce a little bit. But if it reduces, it means we are giving loans at a, let's say, lower price. Our partners are giving loans at a lower price. But that also will mean that the credit cost will be lower. And therefore, the margin will be similar. So the margin will not get impacted even if the revenue gets impacted slightly.
Okay. Okay. You've indicated the normalized contribution margin in lending business would be in 3%-4% range. This quarter, you've done 4.13%. So is there any one-off anything on the collection side you had one-off which will probably not continue and then you get into the 3%-4% zone?
See, these are broad numbers, 3%-4%. It can be 3.5%. It can be 3.25. It can be 4%. And some of that can be a function of a slightly different commercial model we may have with the lenders that we have in place. So it's mostly a function of that rather than any change in the underlying credit quality or underlying any assumptions.
Just to clarify, there is no one-off in the current quarter.
Okay. Okay. My second and last question is, have you started doing merchant loans also? Or you're waiting for a certain minimum scale of whitelisted figure to start offering it?
We are operating merchant loans, but it's at a very small scale.
Okay. Okay. Are you?
We have been testing the grounds for past many quarters, collecting data, perfecting the model. We do hope to scale it up in the coming quarters.
So is there a minimum period of data that you look at in terms of look-back data before you put it in the whitelist and start offering it?
So hard to say that, I mean. But you are right. There has to be a minimum few months of merchant being active before he can be given a loan he or she can be given a loan. However, this is with the assumption that the credit quality or the credit score of that merchant is same. But for better quality merchants, these periods can be either reduced or can be increased also.
Okay. My last question is, when do you see an inflection point on the merchant loan side in terms of the loan amounts and the number of merchants who can be borrowed?
Hard to say. It will start having some numbers in the next financial year, for sure. But it's not possible to give any particular prediction right now.
Currently, it's too small. We should treat it as experimental right now.
Okay. Okay. Great. Thank you and all the best.
Thank you.
Thank you. We take a last question from Umang Patil with Nuvama Wealth Management. Please go ahead.
Yes. I'm audible?
Yes.
Yeah. Evening, ma'am. Happy on good results for MobiKwik. I thank you for the last question. Just one question from my side. How do you decide, I mean, to do FLDG? And how do you decide which one to pass to the distribution model in your lending business?
We have a sweet spot of ticket size and tenure. Typically, if it is a customer who wants a loan of up to INR 1,000,000, give and take 10,000-20,000 up and down, if that is the requirement of the customer and if it fits in the credit profile and if the customer can pay back with an EMI of roughly INR 10,000, then it falls in the FLDG category for us because that's a business that we have done. We have seen the risk rewards, and we are confident about collections.
If it is too small, let's say INR 10,000, INR 20,000, INR 30,000, or if it is much higher than INR 1,000,000, let's say if it goes above INR 2,000,000, INR 3,000,000, in both cases, for the reasons that we are not comfortable with the risk profile of that customer or the tenure of the loan, we don't take any credit risk. We end up passing the leads to our partners who are better equipped to assess the customer. We are happy to make just a pure distribution margin on such products.
Okay. Thank you, sir. Yes. Congratulations on good results. Thank you.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, that concludes the question-and-answer session. I would now like to hand the conference over to the management for the closing remarks.
It's been a great pleasure updating all of you on our results this quarter. I do believe that with a lot of heads-down work, the company has delivered on its commitment and has come back into the black after a few quarters of struggle. We hope to continue growing from here in a very thoughtful and responsible manner across payments and financial services. Thank you so much. We'll see you again next quarter.
Thank you, ma'am. Ladies and gentlemen, on behalf of Dolat Capital Market Pvt. Ltd., that concludes this conference call. Thank you for joining us. You may now disconnect your lines.