Ladies and gentlemen, good day, and welcome to the One MobiKwik Systems Q4 FY 2026 results conference call. 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 zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Jain from Dolat Capital. Thank you, and over to you, sir.
Thank you, Sapnali. Good evening, everyone. On behalf of Dolat Capital, I would like to thank One MobiKwik Systems for giving us the opportunity to hold this earning call. I welcome the senior management of the company represented by Mr. Bipin Preet Singh, MD and CEO of the company, Ms. Upasana Taku, who's Executive Director and CFO of the company. Now, I would like the management to take us through Q4 FY 2026 result, and I request management to take it over from here. Over to you now.
Thank you, Rahul. Very good afternoon to all the people who have joined, all the participants on our call today. This is Upasana. Q4 FY 2026 was a landmark quarter for MobiKwik. We ended the year with back-to-back profitable quarters. The full year financial year 2026 was an inflection year for us. We achieved an EBITDA of almost near breakeven, INR -5 crores, with a total swing of INR 742 million from INR -794 million in FY 2025 to INR -52 million in FY 2026. The full year PAT halved to INR -621 million, an improvement of INR 594 million year-over-year from the previous financial year, where it was INR -1,215 million.
The payment GMV hit an all-time high of INR 524 billion in the fourth quarter, which is 58% YOY improvement and 9% QoQ improvement. This is the thirteenth consecutive quarter of record high GMV that the company has reported in the payments business. Within payments, in wallet, we remain the largest wallet in India by GTV as of March 2026, with about 20% market share. In UPI, we are the second fastest growing UPI app in India now. Our customer-initiated UPI transactions grew 170% year-over-year versus the industry, which grew at 26% year-over-year. We grew 6.5 times the market rate. In bill payments, Bharat Bill Payments, we are the sixth largest customer operating unit by GTV as of March 26.
In our overall recharge and bill payments business, which is a mature business for us, the total GMV scaled 2.2x to INR 269 billion in the full financial year 2026. We reported a 48% 3-year CAGR in this business. To clarify, the BBPS COU GTV is a subset of the recharge and bill payments GMV that I just cited. In our financial services business, we delivered our highest-ever quarterly gross margin at 59% in Q4, which indicates our objective of disciplined expansion, profitability prioritized over volume. Our focus here has remained on increasing disbursements to Super-prime and repeat users. Super-prime customer mix improved year-over-year from 10% to 32% in the total disbursements, while repeat loans went up from 20% to 63.5%.
At a consolidated level, in Q4, the total income came at INR 2,960 million, which is a 6% improvement year-over-year. Contribution margin expanded to 46%, nearly double of the 23% we had posted in Q4 FY 2025. The EBITDA for the quarter came in at INR 174 million, which is a 5.9% margin, reflecting a INR 632 million year-over-year swing. The reported PAT of INR 44 million for the quarter includes a INR 37.6 million one-time exceptional charge due to the changes in the labor wage code. Without this exceptional item, our underlying PAT would have been INR 81 million for the quarter. In a summary, FY 2026, in the first half, we were catching up. We were rebuilding credit quality, compressing costs, and restoring our margins.
By H2, the business had fully turned. H2 delivered INR 84 million cumulative PAT, and both Q3 and Q4 were EBITDA and PAT positive, as we had committed to all of you in the last few earnings calls. The trajectory entering FY 2027 is therefore much stronger than what our full year numbers indicate. The right way to think about FY 2026 is this: MobiKwik now has a core business which is generating real profits. INR 50 crore of EBITDA is what our core business, payments and lending has generated. Now we are deliberately reinvesting these profits towards building new growth engines. To be specific, we are focused on 4 new growth engines. The first 2 are merchant payments, offline and online. Together, they represent what we believe is the single largest untapped opportunity in the Indian payments ecosystem.
Merchant payments, both offline merchant payments and online merchant payments, operate on MDR, device, and settlement economics with significantly less competition than what we see in consumer payments. Our offline merchant payment business is targeting a 5x device scale up to enable a 10x revenue growth by financial year 2028. Our online merchant acquiring business, Zaakpay, housed in our wholly owned subsidiary, is targeting a 10x GMV by financial year 2028. In the payments business, GMV growth precedes revenue. The revenue from what we have already invested is in the pipeline, and it will start reflecting in financial year 2027. Both merchant payment businesses are on track for EBITDA breakeven by financial year 2028. The third growth engine is our NBFC application approval, which is the most consequential regulatory milestone in our lending journey.
The NBFC helps us establish the right foundation to continue our lending scale-up in the most regulated model available in this country. The strengths that we have built in doing digital lending in the last seven years include underwriting and credit risk expertise. Our collections have been tested in stress cycles, and our lender partnerships are in place. All of which will seamlessly transition from our current lending service provider, LSP model, to the new NBFC co-lending model. The NBFC will unlock better economics, both on own book as well as in co-lending, where we will be able to partner with many more partners in the banking and NBFC sector. We will be able to get better terms than FLDG, and we will have an access to a much larger universe of regulated PSU and private sector banks. Beyond just the economics, the NBFC will also provide us product velocity.
As an LSP, every product decision goes through lender approval cycles, and we build what they can sanction. As an NBFC, we will design products on our own timeline. The fourth and final growth engine is AI. MobiKwik, as a company, intends to be an AI-first company by financial year 2028. We are already running AI across the business. 80% of code is AI generated, 55% of early collections are AI driven, and 86% of customer support is self-served by AI. We are going further. AI will own the full lending life cycle. It will identify funnel drops, drive user personalization at scale, and acquire better cohorts at lower spend. It will also help us detect frauds in real time. For us, AI is not just a productivity tool, it is a compounding competitive moat.
With that, I'll end my opening speech, and we'll open it up for questions.
Thank you very much. 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, you are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all, you may press star and 1 to ask a question. A reminder to all the participants, you may press star and 1 to ask a question. We will take the first question from the line of Raj Shah from RK Family Office. Please go ahead.
Am I audible?
Yes, you are audible.
Hello. Yeah. ma'am, our payments business from last four to five quarters is struggling to grow in terms of revenue. What are we doing about this, excluding our new growth engine? Do you expect it to cross INR 220, INR 210 crore revenue per quarter anytime soon? Hello?
Yeah, just one second. As I just explained in my opening speech, in payments, revenue generally follows GMV. There is substantial GMV growth that we are showcasing in the payments businesses across all the businesses of wallet, of UPI, bill payments. The margins that we are earning from payments have also increased. Of course, there is more UPI mix in the overall payments GMV, due to which, so far not been able to demonstrate significant revenue growth. Like I mentioned, we have invested, and we will be delivering growth in the coming years and quarters.
Any long-term guidance for our payments revenue growth?
Basically what Upasana Taku is saying is that here the revenue is gonna lag the GMV growth simply because a lot of growth is happening around the UPI. As we have mentioned, we have grown 170% on UPI over the last year or so. Even our wallet has grown, but the wallet has grown over UPI. That PPI over UPI MDR, you know, which is supposed to come, has not yet come, and we are expecting it to come. Because of that there is a revenue lag. You will see consistent growth in the revenue, follow the GMV growth in the next few quarters.
Okay. I have some doubts regarding FLDG. FLDG cost, which is majority part of our lending related expenses, is actually not a cost, right? These amounts get blocked, and if lender doesn't default, it comes back to us. Am I right?
No, it's not correct. It's actually, you know, you have to bear the up to the 5% kind of a cost. The exact mechanism of how it gets settled is different, you know, but whether it gets invoked or not. Basically the 5%, if your credit cost is 5%, then the 5% has to come out of the economics.
Yes.
come to us also because it's blocked. You are right. it is part of the overall economics.
If it doesn't get invoked, then what happens with that?
Basically it keeps on. As your book is growing, so let's say you have INR 100 crores of book, so against that you have INR 5 crores of FLDG. Next month you have INR 200 crores. You have INR 10 crores of book. You basically against the future losses.
Okay.
that are coming, so you have to keep, you know, depositing more and more FLDG. If, for example, the business degrows for some reason, then you will start getting the money back.
Okay. Okay. Got it.
Once that comes about.
Yeah. sir, regarding our high debt and interest cost, you have mentioned that it is working capital due to some settlement with merchants. Can I infer that our peer who has zero debt and is funding all these through its cash, and why we are not doing the same? We have also some cash on our books.
Yeah. Hi. I'm happy to inform that whatever long-term debt we had, we have already paid it off. The only remaining and utilized debt as of 31st March is INR 261 crore of working capital lines. These are short-term working capital lines, which we generally use for the weekends and long weekends specifically. You're right, we can fund it with our own cash also because our net own cash is about INR 434 crore. However, not all of our cash, you know, has been available to us at all times. Like, out of this, a good chunk of cash is still, you know, in the IPO proceeds. Therefore, not all of that cash is available to us as yet. We do utilize the working capital lines very prudently.
If you can see the disclosure on the debt, both on quarterly basis and annual basis, you know, has come down significantly from the previous financial year.
Okay. You have mentioned that our merchant business will scale 10x and then we will break even. Why it has to scale 10x and then break even? In between, like 10x is a big number, right? Why break even is taking it to scale 10x?
Yeah. Look, I mean, this is again, it's a more forward-looking longer term projection. But the thing is that what we are trying to say is that obviously you can break even earlier at a smaller scale. You know, and break even here, you know, means that actually it completely turns and it becomes profitable on its own. But if you continue to expand and invest where a lot of the cost comes in terms of how you are expanding the network, right? In terms of the number of people that you have on the ground running sales. Because it's sales heavy and operations heavy.
If you are aiming for a certain scale until you reach that scale and stabilize that scale, until then it stays kind of in the negative territory. Once you have reached that scale, which is what we are targeting, you know, it just immediately is followed by, you know, stabilization of margins and breakeven. To give you an example, we could very well target 3x or 4x growth, breakeven much earlier. Again, if we get into the investment cycle again, we will have to invest because basically the investment, the return on investment in terms of the margins and the revenue, there is a lag. We have taken this call that the right level to target is 10x.
The reason we have taken this call is because, you know, we see enough execution rigor that has been achieved in the business already. Also the product and the competitiveness of our offering has reached a level where we can get to 10x without having to change anything else. We've taken this clear call.
Okay. Fair enough. My last question is regarding interest costs. We are profitable now, so we are generating some cash also. Can we expect that interest costs to come down? Because it is a huge number which eats our profitability.
Yeah. The interest cost, like Upasana Taku is saying, coming from the working capital and that working capital.
You know, is a necessary evil in our business because you have to, you know, fund it with the, you know, bank-based debt lines. Like, say, for example, you have two days bank holidays, then the volume of settlements runs into hundreds of crores.
Just to also explain that we are trying to bring it down. If you see that in quarter four, you know, the finance cost is INR 5.1 crore versus it was INR 7.2 crore in Q3. We are definitely trying to bring down the finance cost.
Okay. Thank you.
Thank you. We will take the next question from the line of Sunil Jain from Nirmal Bang Securities Private Limited. Please go ahead.
Thank you for taking my question. You are venturing into this merchant acquisition process and all. In next two year, how much investment we need to make for that? Will that be routed through P&L or, in fact, I think we had raised money in IPO for this particular object also. Will it be used from there?
Yeah. Hi, Sunil. As I mentioned, you know, what we are doing is we are trying to generate margins from our scale businesses, which are lending and consumer payments. From that we are trying to reinvest into building the merchant payments business. We will continue investing into this for the next, at least, 18 months. We expect that investments will be required before these businesses start becoming close to breakeven. To answer your question, we did raise funds in the IPO proceeds also for this. We will be utilizing it from the IPO proceeds also. In that case also it will hit the PNL because there is no concept of capitalization for these expenses.
You will be giving this sound box and all. That will not be considered capital expenditure. Means that will be more of a subscription base you will be giving to the customers.
No. The devices piece we are putting it in depreciation, which you can see the depreciation costs are going up only. Only the device piece. Outside of that also there is investment in manpower, there is investment in the product that we are building. Outside of the device capitalization, which goes into the depreciation cost, everything else is directly hitting the PNL.
Can you quantify how much could be the investment?
Yeah. For financial year 26, which we are just closing, we have mentioned that we have invested INR 55 crores. Had we not invested that, you know, our EBITDA would not be negative INR 5 crores. You know, it would be positive INR 50 crores.
Okay. For coming year, any figure?
in similar range.
Okay, fine. Great. Thank you very much.
Thank you. Before we take the next question, a reminder to all, you may press star and one to ask a question. We have the next question from the line of Ankush Agrawal from Surge Capital. Please go ahead.
Yeah. Hi. Thank you for taking my question. Firstly, I'm just trying to get a sense that, you know, last quarter, we had this commentary that the fixed cost base is expected to settle between INR 105 crore-INR 110 crore, and that we are investing around INR 10 crore-INR 15 crore. Like we are burning INR 10 crore-INR 15 crore on the merchant business, which we expect to sort of reach breakeven in 3-4 quarters. If I look at this quarter, I think the fixed cost base has grown to like about INR 120 crore. The commentary now is that we expect the merchant business to sort of reach breakeven in FY 2028. Just wanted to get a sense of what has changed and, you know, what is driving this.
At the same time, one of the commentary that you specifically mentioned in the presentation is that we expect to remain baseline profitable over next 2 years. Can you highlight what do you mean by this?
Yeah. Hi. Actually these are two different questions. Firstly, yes, we are saying that we are making fixed cost increases on purpose to build the new businesses, which I highlighted at the beginning of the call, and it's also detailed out in our earnings presentation. To qualify, if I tell you that in Q4 we have reported INR 117 crore in fixed costs, which is about INR 4 crore higher than last quarter. And we've also mentioned that in this quarter we have taken the new wage code related hit, which is almost INR 4 crore, INR 3.8 crore, if I'm not wrong. The gap between Q3 and Q4, you know, is just that much, which is the new wage code related provision that we have taken.
Outside of that, when we are saying that we will be baseline profitable, what do I mean by that? What I mean is that we are generating profit margins from our baseline business of consumer payments and lending, which are our scale businesses. We are redeploying, reinvesting some of that and building the new businesses. Despite that, you know, despite making that investment, we have ensured that we are, you know, PAT profitable for the quarter by INR 4.4 crores. What we are trying to say is that in financial year 2027, we will have these new businesses which will scale, which we want to build new moats, new verticals. Those businesses also, as they scale, their burn will keep going down. At all times, we intend to be profitable, you know, at the bottom line.
That is definitely our intention, is what we are saying. Which means that same thing that I'm saying this financial year, had I not invested in building a merchant payment business, I would have reported an INR 50 crore EBITDA instead of reporting a negative INR 5 crore EBITDA for the full FY 2026. I'm trying to say that in FY 2027, let's say hypothetically, I could have reached a 2x positive EBITDA. I may not reach 2x. I may reach X or X plus something because the balance between X and 2x, I would have invested in continued investments in building these businesses so that in 2 years' time they will also become 10%-20% of the revenue pie of the company.
Right. Right. The broad sense would be that, I mean, I think to the earlier participant you said of, sort of mentioned that you expect similar kind of investment in the merchant business as FY 2026 going into FY 2027. If that is going to be the case and the fact that you mentioned that as this business scale, you expect them to sort of reduce the burn. Ideally the profitability should see sharp improvement going ahead, right? Despite this investment being there. Because the core business either way is substantially profitable, assuming that the fixed cost doesn't improve on that basis.
Yeah, I think we're both saying the same thing.
Okay. Okay. Maybe I have a different read of the wording.
No, I am trying to say that the core business will also scale up. The net new businesses will also start generating revenue. As a result of that, we expect that the company's overall revenue will grow while maintaining the current profitability, which is baseline profitability. You know, we are not reporting right now 10% PAT. We are reporting 1% PAT. That is what we are trying to say, that with a very moderate baseline profitability, we will further scale up the business, both existing businesses and net new businesses.
Got it. Got it. The second thing that I want to understand is, in a payments business, the GTV ex of UPI is still north of 30% is the growth that we have seen for last many quarters. Obviously, the revenue hasn't been growing, but obviously the profitability has been improving. Except for UPI, in the remaining business, are we seeing some sort of mix change into certain products which are, you know, sort of lesser revenue, higher margins? Because if the GTV ex of UPI is still growing in north of 30%, the revenue is not growing, but the profitability is growing. That means there should be something more than UPI that is driving this sort of change in the product mix in the payment business.
See, basically what is not currently broken down fully and it is shown in some places. Basically, we have started making some revenue in the UPI business also in some parts on the consumer side. Even though the PPI over UPI, MDR has not come, once that comes it will completely add on to that. Even on the bank UPI side, the 170% growth that happened over the last 1 year has started generating revenue in small amounts in different pockets. As it scales, that will directly flow into the bottom line of the company. The other segment which is showing a lot of promise is bill payments. In bill payments, you know, like Upasna mentioned, we've already reached a decent scale in terms of bulk bill payments.
There the revenue contribution is also picking up. We expect that in 12 months' time, both of these, both UPI, as well as bill payments will be contributing significant amount to the growth of the revenue of consumer payments beyond what you see today.
I mean, I get that, what I'm trying to understand is, if the last three, four quarters we are seeing ex of UPI GTV growth being, say, north of 30%, ideally it should start reflecting in revenue growth, right. In the payments business. That divergence, something that I'm not able to understand because obviously the total GTV growth is much stronger because of UPI and assuming that UPI doesn't make any revenue. Even excluding that, I mean, revenue being flat and, you know, ex of UPI GTV growth being north of 30%, that is not adding up, honestly.
No. Look, I mean, there is been obviously moderation of the take rates in some of the existing business also that we have seen, because of which you see the overall payments business, the take rate, gross take rate has come down. At the net level we are still making money, but at the gross level, there is a mix that change that has happened thanks to UPI, thanks to addition of some categories which don't make as much money as possible. So that's how much what I can tell you today. Because of that, you see that the revenue growth in the non-UPI part is also, you know, not as much as we would have expected in the past.
Okay. Okay, lastly, just any sense of what kind of fixed costs you can expect going ahead? Rough sense would help. Hello?
Hi, I'll just take this question. This is Soham from MobiKwik. Fixed costs, right now we are on the INR 115 crore-INR 120 crore per quarter range. As the merchant business keeps growing, obviously there will be increases in depreciation, as well as we will also increase the people cost for further distribution of those devices. You can roughly assume a 15%-20% increase in fixed costs in the next year.
Okay, got it. That was it. Thanks.
Thank you. A reminder to all, you may press star and one to ask a question. We have the next question from the line of Smit Shah from GHP Securities. Please go ahead.
Yeah. Hi. Basically on the NBFC side, from when can we start our own lending, and how will we arrange for the funds for that particular lending?
Yeah. Hi, Smit Shah. This is Upasana Taku. On the NBFC side, as we have detailed out in the earning slides also, currently the diktat from the regulator is that we have to first move our existing digital lending LSP business to a wholly owned subsidiary of MobiKwik, which we intend to finish in the next 2-3 months. Post which we will start the NBFC setup work, which we expect that if I count from today, then, you know, at least 3-6 months is the timeframe in which the NBFC will be set up. After that, in the 6-9 month timeframe is when I expect that we will launch the operations and start disbursements in the co-lending model.
This is sort of the high-level guidance that I can give, but these are the steps that I just mentioned. First, we have to move our existing business from the parent to a wholly owned subsidiary, and only then we can start the NBFC operations in yet another wholly owned subsidiary. With regard to the capital allocation, because it's a wholly owned new subsidiary of MobiKwik, we will be shortly going through the board and shareholder approval process to infuse funds into this entity.
Okay, understood. Our digital credit GMV growth on a sequential basis has been subdued this quarter. What are the reasons for the same? On this days, like, driving single like high single digit or 10% kind of sequential growth wouldn't be too difficult. What were the reasons for the subdued growth?
Smit, the high level answer to that is that we are prioritizing quality and profitability over volume. Like I mentioned, you know, we have increased our loans to repeat customers from about 20% to 63%. We have also increased our loans to the Super-prime users, which used to be 10% of the disbursement to now 32%. We are moving a lot of our lending focus towards prime and Super-prime customers. Of course, we have about 20% near-prime customers also. Therefore, the larger point I want to make is that the portfolio is tilting towards repeat and Super-prime cohorts.
We will be continuing to grow in this manner, where the focus is more on higher quality book resulting in higher net margins instead of just focusing on higher disbursements.
Okay, understood. FY 2026 digital credit GMV stands at, roughly around INR 3,200 odd crores. What should be the growth rate in FY 2027?
I think, broadly 30%-35% is what, you know, you can assume.
Okay. Can you guide on the, like, a broad EBITDA margin range for FY 2027?
Similar to the 5% range that we are at.
Okay, understood. Thank you so much. That's it from my side.
Just to clarify, Smit, we are saying that we will make better margins, but we will be making more investments and therefore the net EBITDA margin that will be reported will be in the same broad range of 5% where we are.
Thank you. We will take the next question from the line of Shlok Akolia from Xylem Investments. Please go ahead. Shlok, you may proceed with the question. Due to no response, we will take the next participant. We have the next question from the line of Divyansh Thakur from Fininterest Capital. Please go ahead.
Hello, am I audible?
Yes, you are audible. Please proceed.
Yeah. Congratulations on a great set of numbers. Actually I had the same question and I was not able to get the answer. Why are we not using our cash and using the short-term facilities for the loan to meet our working capital requirements? I missed the answer.
Hi, I'll take the answer. Effectively what we are saying is, out of the total unencumbered cash, significant portion of it is still part of our IPO proceeds, which we do not have access to yet. The IPO proceeds keep trickling in as and when they are used. Secondly, you know, the working capital is required more so to fund during the weekends, when two to three days we do not get the funds from the banks, but we have to make the payments to the merchants and our customers. In those days, the usage is more, which typically tends to be higher than our remaining cash. Hence, our working capital requirement there helps us to maintain the balances. Nevertheless, we have tried to ensure that we keep this working capital under check.
If you see our, you know, our payments GMV has exploded. It has grown multi-fold, but our working capital has remained stable over this period.
Actually, it has come down from Q3 INR 7.2 crore. In Q4 it has come down to INR 5 crore in terms of finance cost.
Okay. Got it. Thanks, and all the best for the future.
Thank you. A reminder to all the participants, you may press star and 1 to ask a question. We have the next question from the line of Shlok Akolia from Xylem Investments. Please go ahead.
Good evening, ma'am. First of all, congratulations on the strong set of numbers. Ma'am, I have two questions. First, for FY 2027 and 2028, what is the revenue growth trajectory that we anticipate for our payments business as well as lending business? Another question around the sustainability of our margin. Like our lending spreads are at 5.4%. Is that sustainable? I think we had guided that 4%-4.5% was a sweet spot for us. Around that, if some guidance please.
Yeah. Hi, Shlok. Thanks for asking the question. We do expect that our GMV growth will be in the range of 30%-35% in both of our businesses, payments and lending. In terms of the lending margin, we have shown that the performance of the cohorts is coming stronger, where, you know, 35% lower credit cost is coming on the maturing portfolio. We also have some, you know, previously matured cohorts from which we are getting gains due to superb collection effort. Given all of these, you know, we have landed at the 5%, 5.3% margin. From a long-term perspective, you know, we are not guiding 5%. We are comfortable with the 4% range.
We do believe that that is the sweet spot. I think that we have done well, and we have collected deferred revenue also from previously maturing portfolios. I am not sure whether we can commit long term that we'll be able to deliver these margins. I think 4.5% still sounds more sustainable.
Okay, ma'am. Ma'am, just around payments margin, is the 16 basis points workable number for next 2 to 3 years?
You know, from my perspective, I would have loved to say that. Of course it's not in my control. As you know that, India is a very healthily regulated market. You know, we have various licenses also in payments business. The various regulatory changes can impact that, which is why from a longer mid to long-term perspective, we are guiding 12 to 15 basis points even though every quarter so far we have been doing better than that. I don't think from a 2-year timeframe I would recommend modeling for 16 basis points because we really can't tell if and when any regulatory change could, you know, change that. Therefore, we always recommend a more conservative approach.
Okay, ma'am. Okay. Thank you. All the best for the next quarter.
Thank you. We have the next follow-up question from the line of Smit Shah from GHP Securities. Please go ahead.
The merchant partners currently are INR 4.9 million. Where do you see the merchant partner number going in FY 2028? Like this year we grew at a mere 7%. Like now we are going to aggressively onboard a lot of merchants. Where do you see this number in FY 2028?
We are not, you know, obsessing about the number of merchants. I think what we are looking at is we have looked at our offline merchant partners in terms of different categories, especially 3 different categories. 1 is the organized retail, 2 is petrol, and 3 is small mom-and-pop stores. Our aim is that, you know, we get to, like, maybe between 10%-20% of the market leader size in the next 18-24 months or perhaps before that. With that view, we are investing in building this business.
Okay, understood. Yeah, that's it from my side. Thank you so much, and all the best.
Thank you. We have the next question from the line of Rahul Jain from Dolat Capital. Please go ahead.
Yeah, hi. Thanks for the opportunity. Basically, I want to understand, on your strategy on the merchant acquisition side, we have this, goal of increasing, our Zaakpay revenue meaningfully and also on the offline side of it. If you could explain what kind of investment that could entail, what could be the easy picking relatively for us, to have that kind of a growth potential. Is it more like reviving the same customer, or it is led by more customer acquisition? Any color on those factors would help. Thank you.
Yeah. Thanks, Rahul, for the great question. What we are doing is, you know, both the merchant side, both on the online and as well as offline side, obviously, the businesses have become very, very big in the market, I mean. What we are looking at is identifying specific categories within which we will try to gain a meaningful share of the market. For example, in the offline space, our business is divided into three categories. One is small mom-and-pop stores, second is oil and gas, and third is organized, which is basically, you know, mid-market and above. We are not necessarily focusing too much on enterprise.
In at least 2 out of the 3 categories we are focusing and identified that, combined with the better product experience, end-to-end, and great service, we can get to 10%-20% market share, or at least 10%-20% of the market leader size in the 18-24 month mark. And with that aim, we are investing in this business. On the online piece, Zaakpay again, we have identified few categories. We have identified, for example, education as a great category. We have identified, you know, government as a great category. Some of these categories are really very big.
Even a double-digit share, percentage share in these markets will easily help us reach the goals of 10x that we are targeting for the next 18 months. BBPS is another category, the Bharat Bill Payment System, where our PA or the online PA Zaakpay is going to be particularly relevant. It's a category that we are scaling very rapidly. Because our scale is less right now, so for us to get to 10x in the next 18-24 months looks doable by just identifying the right categories and investing and going deep into it.
Sure. One question on the lending side of the business. Since now we have this NBFC route also to tap into this opportunity. Is there a change in strategy on the LSP side of the business or that remain as is and this could be an incremental thing? Is there any kind of a conflict of interest that we need to identify on the user acquisition side, or we just become one of the another lending partner and rest everything looks same from an LSP point of view?
Yeah. Look, I mean, from a regulator point of view, you have to ring-fence the businesses. Therefore, as you know, NBFC has been received in one of the subsidiaries, and the LSP business is being migrated to another subsidiary. The holdco, which is One MobiKwik, will not have any LSP business or will not have any NBFC business. These businesses will sit separately in two subsidiaries, you know. And they will have all have basically agreements with each other on how the sourcing of customers is there or how the billing of customers and revenue happens. This is all how it will be set up.
As far as the NBFC is concerned, look, LSP is still lightly regulated, but NBFC, the regulator expects proper governance, proper compliance, especially as you become bigger. Therefore, we expect that these companies will, with their management, will be operating independently in their interest and in the interest of the holdco, which is One MobiKwik, with their own individual managements. I hope that answers your question.
Just last piece, which you didn't answer, Bipin, is that Rahul, we expect that the LSP.
Will continue in the similar fashion in the wholly-owned subsidiary, and the business generated from the LSP Oh, sorry, from the NBFC will be incremental to the business that we are already doing as an LSP.
NBFC will be one of the partners for the LSP. It doesn't mean that other lending partners will obviously go away.
Sure, sure. Just one, further, product into the point you raised within that, since both of the business would work in their own interest. The customer acquisition side of the NBFC will completely rely on the app, or they might find business opportunity outside the One MobiKwik app ecosystem.
This level of detail we haven't figured out, you know, we have to expect that NBFC will be built as its own independent company, which initially obviously will work with MobiKwik. Eventually, if it follows its own independent trajectory, will be able to work in the market openly.
Sure. Thanks for the color and best wishes for so many new things that you are working upon. Thank you.
Thank you.
Thank you. We will take the next question from the line of Ankush Agrawal from Surge Capital. Please go ahead.
Thank you for the opportunity again. Just 2 quick clarification. On the merchant side, when you sort of give a sense that, you know, you will be investing INR 50 crores, INR 60 crores or whatever that amount will be, is it just the OpEx or it also includes the capital investment in the devices?
This is just the OpEx we are talking about.
Okay. Okay. Secondly, on the lending business in the medium to long run, what would be the, say, targeted split between the NBFC piece and the, you know, the pure distribution sort of mix, any sense?
I think it is too soon to say right now. [Foreign language] we have to first set it up and launch it. Maybe in a couple of quarters you can ask this question.
I mean the sense is that since you have taken this decision of starting an NBFC, you would have some idea, you know. If it's going to be just 10%, 20%, then ideally, the kind of investment and the infrastructure that is needed and compliance that is needed for an NBFC might not really make that much sense. Just was trying to get a sense that, you know, you might have some bigger plans to, you know, go ahead with this.
We may have. I think it is too soon to reveal. First we want to reveal that we have completed the setup. We will talk about how we will deploy it to grow the company overall.
Cool. Thank you. That is it.
Thank you. We will take the next follow-up question from the line of Shlok Akolia from Xylem Investments. Please go ahead.
Yeah. I had a follow-up on the previous question. We wanted to understand what are the target unit economics for the merchant business side. Also, how are you tracking the efficiencies of our investments in the merchant business till now? Like, are there any signs of early wins as you've already invested about INR 50 crores in that?
I think that, this is the first quarter we have, where we have actually broken down and given some little level of detail in terms of the various subcategories within payments, whether it is bill payments, whether it is merchant payments, et cetera. I think in the coming quarters we will be revealing more. Needless to say, we are, we have revealed it as a growth engine, so you should be assured that the management is looking at it with a hawk eye. We would also like to mention that the investments that we have already made are panning out in terms of certain, growth KPIs, and we will start disclosing them in the rightful manner in the upcoming quarters.
One should be clear that, especially on merchant payments also, transactions, you know, don't generate MDR. It is the credit on UPI rails, the RuPay credit card transactions that generate the MDR. There is a device rentals. After there is a strong merchant engagement, then one can build the merchant credit pipe also. That is the long-term build-out of the economics from a merchant business perspective.
Fair enough. I am looking forward for the next quarter. Thank you.
Thank you so much.
Thank you very much. Ladies and gentlemen, we will take that as the last question. With that concludes the question and answer session. I now hand the conference back to the management for closing comments. Thank you and over to you.
Thank you so much for hosting us, Rahul and the Dolat Capital team. Thank you to all the participants who actively engaged with us in understanding how MobiKwik is building the future of fintech in India. Thank you. Have a good evening.
Thank you, members of the management. On behalf of Dolat Capital, that concludes this conference. Thank you all for joining with us today, and you may now disconnect your lines. Thank you.