Manipal Payment and Identity Solutions Limited (MPIMANIPAL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Manipal Payments and Identity Solutions Ltd. earnings conference call. As a reminder, all participant lines will be in the lesson only mode, and there will be an option for you to ask questions after the presentation concludes. Please note that this meeting is being recorded. In our hand, the conference over to Mr. Anoop Pujadi from CDR India. Thank you, and over to you, sir. Thank you.

Good evening, everyone, and thank you for joining us on MPI's Q1 FY27 earnings conference call. We have with us Mr. K. Girish Kinney, CEO and Executive Director, Mr. Ramanathan Pai, Chief Financial Officer, and Mr. Mike Votika, Head Strategy, Finance and Treasury. We will begin the call with a presentation by the management, following which we will have the forum open for an interactive question and answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to hand over to Mayan to begin the presentation. Thanks, Anup.

Good afternoon, ladies and gentlemen. Thank you for joining in. So, before we embark on Manipal payments, because this is our maiden call, just wanted to take you all through the Manipal group. So, we represent the Manipal group promoted by Mr. Gautam Pai. Mr. Gautam Pai is a third-generation promoter and has joined the business late 1990s, early 2000s. Just to give you a quick download on the history of the group, Gautam's grandfather was instrumental in setting up syndicate bank before independence. As you know, coastal Karnataka has been a sepheral of banking. A lot of banks originated from that geography, so the Pais originally wanted to formalize banking, and once banking was formalized, the group ventured into other businesses, for example, education, healthcare, media, print, and so on and so forth. Fast forward to today, The group has around 14 plus businesses divided into three major platforms, which is the legacy DLSI platform, where Manipal Payments is a flagship arm, the Kazevo platform, and what we call ancillary platforms, where we house businesses like EPC, print, advertisement, and so and so forth. In terms of how we operate, all of these 14 businesses are managed and operated by individual CEOs running professional teams, and the CEOs own the P&L for the business. Gautam's intervention in the business is predominantly three-folds. For any corporate actions, C-south hiring, which means leadership minus one, and for any strategic direction, which he would embark on the operating entities. So, in that sense, we operate more Like an evergreen fund, Manipal Payments is the first out of many which has now got listed and we believe that the group has the potential for a few more companies to look at the capital markets in the near future. I would now like to move forward and ask Girish to basically take over the business.

Good evening. I am Giri, the CEO for the company. I have been part of the group for last 30 years and been part of MTI since the inception. Welcome you all to the first ring call of MPI. I will be covering the overview of the business and later I will summarize the entire Q&A summary. So, we are a leading player in the domestic payment card market with 31% plus market share and trade cards, we have higher market share at 36.4%. We have done more than a billion national ID cards on cell plus languages. As a part of our driving license contract, we have offered multiple services at more than eight RTOs in multiple states in the country. And now we are present in 15 plus countries with four subsidies. Globally, we are ranked in the 10th position in terms of shipment of Visa and MasterCard ex-China. And if you see the global market, close to around 20 million Cards are in circulation, and growing at a carrier of around 2.7%. And top 10 players hold around 71% market share. It's highly gated by certifications and presence in multiple markets. India Businesses, last year close to around 326-7 million cards per ship, and it's growing at a steady carrier of 13.1% in terms of growth. Top 4 players hold share of close to around 90%, and MPI holds share of close to around 31.7%. We have a short video which will give you an overview on what we do within the business. So, our business is highly regulated and we need to have certification from multiple payment schemes. So, entry barriers are very high. The product we manufacture is covered by a secure data which makes it unique. And data is a very sensitive element in the business. We need to be certified by PCI DSS and 13 certified. We have heavily invested in our IT infrastructure and even the manufacturing certification. We just don't offer products, we offer technology, we offer solutions, and we offer services bundled on the overall office. We have categorized our business majorly into two major categories, core business and emerging segments. Within core business, we have our domestic payment cards, followed by government ID, digital automation, and bundle offering and secure logistics are the extended arm of domestic payment cards. Within the emerging business, it's more of So, we have a high growth engine scaling from India to the world. So, major vertical is the exports. Export into more than 15 plus countries, having four subsidies. Then we have metal, both in domestic as well as the global market. We have a tax time business leading into the revenue assurance and revenue savings. And RFID and IoT is a new vertical, which we have started during last year. Overall, MPI as a company has been innovative from the beginning, and when industry evolved, MPI has led the change. When max type cars converted into chip-based cars, and chip-based cars converted into chip-less, your tab-based cars, when metal came into India, and especially in the identity space, when driving licenses were converted onto polycarbonate, plus when tax times were launched with Intaglo, and even with instant issuance when it was launched in the country. So, all these changes were driven by MPI, and today we are a global company offering all these services across multiple markets. So, I would like to cover a glimpse of our domestic business. So, we have a relationship with almost each and every bank in the country. If you see our relationship, it's more than 15 plus years with all the top banks, and our revenue mix is very even between PSU and private banks. We have onboarded more than 60 plus fintechs in the payment card space, and in terms of government, we are having more than 17 plus contracts with both state and central government, and these are all multi-year and long-term contracts in nature. In the NCMC and transit space, we are leaders, and we have rolled out multiple projects for multiple metros and public transports, especially in the state of Maharashtra. So, overall, in terms of operations, we have 19 locations, and four locations, we offer completely one-stop bundled solution from this location. Our long-standing relationship with the customers act as an entry barrier against all the new entrants in the business. Digital automation business, here we help the banks to automate the services in their branches. We have multiple offerings in this space, like instant account opening, instant card issuance, your check depositing, passbook printing, multi-function kiosk, and here we offer hardware plus software, software which is deployed across multiple branches, and the services managed around both the hardware and software, easy software. So, overall, we have more than 500 plus deployments across multiple banks in the country. Globally, we have deployed more than 30 plus kiosks in multiple European airports, where any customer can, for a large new bank, and any customer walking into the kiosk can scan the QR code, can instantly get a personalized card or a forex card or a prepaid card from the kiosk. We have significant demand coming up from tier 1 and tier 2 banks globally. Government ID, we have multiple offerings in this space, like citizen card, voter ID card, driving license, registration certificates, national ID. So globally, driving license was on a material called polycarbonate with laser technology, where the shelf life of the card would last for more than 10 plus years. We were the first ones to launch this in Maharashtra, state of Maharashtra for a period of 8 years, and Chetitgad for a period of 10 years, and Andaman for a period of 5 years. So, it's a big segment and a large offering within the domestic space, and national IDs we have been doing for last year. 1 billion cards we have supplied to the national ID, and it is run on 12 plus languages. This is an unrelated business, when there is an individual born, when an individual turned 18 years, and when the address is changing, these cards are being issued. So, overall, with the warrants we have done in India, today we stand in a very front foot position where to address all the global requirements. And we have participated in more than seven to eight large projects globally for driving license and SLID globally. Exports, we started our journey almost four years back and we have people working, we have a sales team working around multiple markets and partners also in the multiple markets. And we are now present in five regions, APAC, UK and Europe, Middle East and Africa, LATAM and US. So, our whole model here is manufactured in India for the world. So, if you see the card, 90% revenue of the card comes from the base card, which has the bank branding and the scheme branding. This portion of the card gets produced in India, and the remaining 10%, which is the personalization, basically the name, number, and the secure information which goes inside the chip. This gets manufactured out of the local market, as there are data localization laws, and this portion of the activities will have to be done out of the local market. Our Nigeria bureau is fully operational, and we have supplied base cards and personalized cards to multiple banks in this market. And if you see our revenue, it has been growing at a target of 116%. FI26, close to 7% of our revenue was from exports. And in Q1, we are at around 15% in terms of our overall revenue. And 60 crore worth revenue we have delivered in Q1. Very, very confident to expand the export business, our international business, Metal card is a very niche segment, premium segment, and what we are seeing is significant amount of movement is happening in the H&I space, in the payment card space, and the realisation per card is almost 20 to 25 times of the traditional card, and during the last year, close to around 64 million cards were issued globally, which is growing at a CAGR of around 15%, US being the largest market, and in India, the CAGR is around 47%, and And close to around 2-2.2 million cards were issued on metal. And within this space, there are very few players globally manufacturing metal. And this falls in the branded category like the pharma, where manufacturers have patented and have got grants in multiple markets. And today we are one among them. And we have got a patent granted in India and multiple markets. We have supplied cards to all the top four issues in the country, and we have supplied all the top-notch variants like NGSE, Infinia, Dynas, SBI, Orem in the country, and we have supplied to the largest neobank in the global market, plus multiple other customers we have supplied these cards in the global market. And this segment falls in a high margin and high growth segment for us going forward. Tax stamps, each and every state today generates revenue by sale of liquor. And a state like Karnataka would generate close to around 40,000 euros in terms of revenue. And this tax stamp with the intangular technology secures the revenue for the state. And if you see, all the global currencies, including the Indian currency, has this Intaglo technology, and we are offering this to multiple states in the country. And we are just not offering the product, we are also offering the authentication solution, where the movement of liquor from distillery to warehouse, warehouse to retail, and the authentication of the, what is it, tax terms by the inspectors in the field, is completely verified on our platform. And we have significant opportunity coming up even in the global markets, where the governments are looking at protecting tobacco, alcohol and farmer revenue in the global market. This also is a high growth and high revenue segment for us going forward. RFID, we invest, RFID and IoT, we invested heavily during last year for converting, then inlay manufacturing And our whole idea is to offer soft tag, hard tag, hardware solutions and software platforms for multiple segments. Retailers gain significant traction over a period of time. And their large retail customers have got real-time control on their inventory movement from the warehouse to the retail shops to the online store. So, we have done a large business with a large retailer in the first quarter, and we are working with multiple retailers to expand our quota in the RFID space. Plus, we are also looking at other segments like jewelry, logistics, and pharma in this segment. This is growing at a category of around 15%. And we clearly see opportunities outside the domestic market. As we are present in other markets, we are looking at addressing these requirements in the other sector. I will cover now the Q1 highlights. The closed Q1 revenue of 419 gross, this is 48% higher than the last year. Now that is a good number, but honestly, what I am more pleased about is whether the growth came from, because it came from two directions at the same time. Our core business, the business many of you know as for due 22% and our emerging business due 2.3 times. They are now 37.7% of our revenue. So we are building the new without slowing down the old that I think is the real story of this quarter. Within the core business, you know banks don't come to us just for a card. They come to us for the whole job with our bundle offering. A bank gets a card, the checkbook, the welcome kit, and the secure delivery right to the customer grows all from one party. That's why they stay with us. Some of the wins in the first quarter, we won more than nine contracts and renewed one larger public sector contract with small finance bank, ruler, and cooperative bank. We also supported around 10 new card launches, and in the digital automation space, a large public sector bank plays an order for more NCMC card, one area I personally want to highlight is transit. We were among the early players in NCMC transit cards. That is one card for metro for bus for every day payment. Today, leading payment players, including a large prepaid and payment company, issues their NCMC cards with us. As more Indian cities bring the metro and bus network onto this standard, the demand for these cards, Let's grow with them. Now, metal cards, we supply India's four largest card issuers. This quarter, we added three new metal card customers. And now, we have more than 10 metal card designs in the market across leading issuers. International, if you ask me what has seen the most at MBI, in the last three years, it is this. In financial year 23, international was about 1% of our revenue. In FI 26, it was 7.2%. And in this quarter, it is 15.23%. The model is actually quite simple. We make the cards in India at India cost, and we personalize it close to the customer, either in our bureau or with a local partner or inside the bank. In Q1, we have added 10 new banks and fintech customers abroad and entered into 4 new countries. 5 of these customers are in the Middle East and Africa, including a large bank in Africa. Our existing customers in Europe, Africa, Latin America, and South Asia also gave us more business. Our Nigeria Bureau is now fully certified and delivering cards to the banks. And our 31 Q1s are issuing cards in Spain today. So, we are not just exporting a card anymore. We are exporting the card, the personalization, the metal upgrade, and the kiosk. In our tax stamp and RFID, the question we answer is the same. Is this product genuine? By industry estimates, we run one of the largest excise label systems in the world across multiple states. Excise officer checks our labels in the field using our mobile app. This quarter, we have added a new multi-year tax stamp contract. And in RFID, a large detail program scaling up during the quarter. Now, what connects all of this technology we have built ourselves. Our own software personalizes cards securely, issues them instantly at a branch or a kiosk, and tracks every secure delivery across more than 19,000 binoculars. We also built our own rupee chip software, and we have 5 registered patents with more than 30 more files. So, to sum up, we are growing at home, we are growing faster abroad, and the IPO has strengthened our balance sheet to support both. A number of contracts we have won this quarter, and are still in the early stages of billing. So, for us, the focus is very simple, execute quarter-unquarter. With this, I hand over to Ramanath to cover the financials of Q1. Thank you, sir, for providing detailed business ideas.

Before I jump into the Q1 numbers, I would like to give a brief on historical financial performance, so that it gives a fair idea about how our financial has been performing over the last 2-3 years. In terms of revenue, we have grown from 902 crores to 1326 crores. At a care of 14%. And this revenue increase is coming from twofold. It's a combination of value as well as volume. And directionally, we are moving towards high-value products like wheat, RPVC, or bundled offerings, or metal cards. Now, within the revenue, export has increased significantly. It has grown 10x over the last 2-3 years. It has grown from 1.5 crores to 95 crores. And today, we have reached across 15-plus countries through our 4 international subsidiaries and 5 sales officers. EBITDA, it has expanded significantly over the last three years. It has increased from 19 plus percent to 33 percent plus, and the major contributors for this expansion in EBITDA margin is favorable product mix. The share of our revenue in digital automation, metal cards, and tax terms has increased substantially. Economics of scale and the operating leverage which we are getting because of the increased revenue, it is favoring the overall margin expansion. And of course, the backward integration which we have done. Today, we have our own Rupay chip applet. The inlay which goes into the parts, we manufacture it in-house. And the technology platform which is required for running the entire show, it has been built by our own IT team. FAT is increasing in line with the EBITDA margins, with the typical conversion between EBITDA to FAT being 60%, which has grown today from 13% to 18.68% as on F526. And literally, we do not have any funded debt in the balance sheet. Coming to the working capital cycle, we have a standard 70 days working capital cycle, 55 days is the inventory, 45 days is the receivable cycle, minus 30 days of payables. In terms of return metrics, our return on capital employed is upwards of 32%. This is despite the significant investment which we have done over the last two to three years, and the cash balance which we are holding as on 31st March 26, which is more than 220 crores. Over the last two to three years, we have invested roughly around 300 crores into CapEx, which is mainly for increasing our capability or the capacity into domestic as well as international operations. Again, we do not have any debt in the system. We are completely debt-free, apart from the non-fund-based limits which we use for providing the bit security to the customers. Now, we have an IPO process of 320 crores, out of which 238 crores is earmarked for the expansion of manufacturing capacity, which is mainly for metal cards, tag stamps, and international operations. Coming to the customer profile, I think overall, a vintage of the top 10 customer is more than 12 years. So, our customers are highly sticky in nature. Coming to the customer concentration, we have been adding multiple regions and multiple businesses over the years. And accordingly, the customer concentration has dropped from 52%

to 58% in FY26. Now move to Q1 FY27. These are our first quarterly results since listing.

And the quarter has seen strong growth across both poor and emerging businesses. Revenue from operations has grown 48% year-on-year to 419 crores. EBITDA has grown 44% year-on-year to 124 crores with a margin of close to 30%. EBITDA has grown to 77.7% which is 2.3x of last year and again a margin is significantly increased to 18.3%. Our share of international business today has reached 15.3% compared to 3.9% in Q1 F526. Coming specifically to international businesses, this year we have added in, specifically in Q1, we have added the Nigeria's region, which is fully operational, certified, and we have started supplying the parts from there. And today in Q1, this is the largest international bureau for our business.

Our core business has delivered a growth of 22% and

emerging business is 2.3x of last financial year. Anyway, I will be taking you through the core and emerging

businesses shortly. Let me now walk you through the P&L for the quarter in a little more detail. Revenue from operations has grown to 419 crores, which is 48% year-on-year. Of this 135 crores of increase over

Q1-FI26, more than two-thirds of the contribution is coming from the emerging businesses. So, the entire quarter is led by emerging businesses, with the core being continuing to grow steadily.

Operational UBDA grew 44% to 124 crores,

which is roughly around 0.8% lower to FY26 Q1 numbers, but it is higher by 1.7% sequentially.

Now, this quarter, we faced a couple of headwinds in terms of input costs. Geopolitical issues have increased our raw material costs.

And also, weakened rupees has increased our overall input-type material costs. Despite this, the overall operating leverage which we are getting has helped us to hold on to our margin, which is at around 30%. Our overall fixed cost has increased from 104 crores to 126 crores, which is roughly around 22 crores, whereas our overall revenue has grown by 135 crores. This is the overall leverage which we are getting. And as a share of revenue, overall fixed cost has grown or decreased

from 36.5% to 30%. FAT grew to 2.3X year-on-year.

FAT margin has increased substantially by 6.7%. And EPS has grown from 1.57 to 3.39. One thing to note is that in PAT, the PAT is after absorbing

7.7 crores of seeding and development costs for our new initiatives. We classify our business into core and emerging to give a better visibility into where our growth is coming from.

We have built our core business over a decade, which has reached a significant around 1000 crores over last 10 years. And now it is compounding at a healthy rate. During the quarter, core business grew at 22% year-on-year. And major growth drivers for the quarter are increased adoption of co-branded cards, NTFT migration, and the bundled offerings.

Emerging business is the real growth engine of the company. It includes international business, metal cards, tax stamps, and IoT solutions.

Emerging revenue grew from 69 crores to 159 crores, and its share of revenue increased from 24% to 37% in one year. Now, internationally, we have reached across 15 plus countries, four global subsidiaries, five sales offices. In terms of tax stamps, we have added a significantly large contract during the quarter, which is again a multi-year contract, runs into five to eight years. Our metal card portfolio has expanded to 10 plus variants across top 10 or top issuers. Here, the beauty is that the ASP leverage which we are getting. While the ASP of the metal card is 20 to 25 times of the regular traditional card. So, directionally, metal cards and tax camps are margin accredited. As a share of emerging risers, these business can potentially yield better margins. And together with the operating leverage which we are getting because of the incremental

revenue, This can support our margin profile over time. To summarize this quarter, core is compounding at 22%.

Emerging is scaling at 2.3x. Operating leverage has absorbed input cost advance. And we have a debt-free balance sheet with IPO proceeds earmarked largely for capex in metal, tax stamps, and international capacity.

With that, I will hand it back to the moderator for Q&A.

Thank you very much. We will now begin the question and answer session. Participants connected through the audio call, please press star and 1 on their test on 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. Participants connected on the Zoom app may click on the raise hand icon to ask your question. Can we accept the prompt, unmute your audio, and proceed with your question? We will wait for a moment while the question queue assembles. Aditya Nandagopal from Aventus Park, please go ahead.

Yes, Mr. Aditya.

First of all, congratulations on your amazing set of numbers. First, my first question is towards the debit card market. Primarily, I would like to ask about how the management is looking into the debit card issued market going forward on a future basis. Considering we are coming out of a lower base in financial year 25, I expect in the near term it is expected to grow. But again, I would also like to ask the management on the onslaught of newer payment methods like UPA and everything. How do you think the debit card market overall issuance is expected to grow according to the management?

Recently, the largest PSU rolled out an RFP, and their overall issuance itself is almost double for the next three years. And what we clearly see is there are multiple use cases coming up in the Davidka space, especially the transit space. All the metros were on a closed-loop network, which is completely getting migrated onto an open loop. There are recordings to be done across all metros, as well as all the fresh issues to be done across the metros, plus public transport, as well as the public bus transport is gaining significant traction for the senior citizens, for the concessions to get on the student passes. All that is moving on the card base, and the government is encouraging to migrate this completely on the card platform. Coming to UPA, see, our UPA is more in terms of the number of transactions which are there, and what we issue in terms of number of cards and number of transactions are two different subjects. So, what we believe is the debit cards will continue to grow at around 13% overall in terms of growth in the industry.

Okay, sir. My next question is on the metal cards. Can you give me a light on how like per unit realization of our metal cards is all possible? And going forward, how do we look into the realization from our metal cards? As we have already told, some around difference, like a magnificent difference between the PVC cards and the metal cards. Is there any number which you can quote on the realization per metal card, if so possible?

Yeah, so when we speak about metal cards, there are multiple types of metal cards today globally. And typical ASP leverage is between 20 to 25 X of our traditional plastic cards. And as we move ahead, definitely there will be significant premiumization factor which we are already seeing in the country, which is led by U.S. currently, where total issuance is roughly around 35 to 40 million cards every year. And in India, last year we have seen hardly 10 to 12 lakh cards being issued. But that significant premarization push which is happening today and the aspiration of the people to have a metal card in their portfolio, which is completely dragging these overall metal issuances. But on the AASP side, definitely it is between 20 to 25 X of the traditional plastic card.

Thank you. Thank you.

That's it from me.

Thank you.

Participants, you may press star and one to ask the question. Next question is from the line of Nitin Agarwal from Motila, Oswal. Please, go ahead.

Hi, team. Congratulations on good results and a good start as a listed company. I have a couple of questions. One is on the international business. If you can talk about as to what kind of order book you have, this business has been growing very fast, already forming 15% of revenues. So within the total order book, that is outstanding. What is the mix of international order book? If you can comment on that.

We are now present in more than five regions, APAC, Middle Eastern, Africa, Latin, US, and UK and Europe. And the revenues are coming from all the five regions. And we are looking at expanding into growth markets. And it will be both for traditional payment card as well as metal. And we clearly see an upside coming from our international business side.

Right. Sir, but from 15% revenue, say, next couple of years, where do you see this number climbing in terms of the overall revenue mix for international?

Thank you, Nithi. Excellent question. So, as you know, we are kind of focusing on international business, which is currently 15%. And this will start as the revenue profile grows. The international business would also grow at a faster pace. We believe that it should be around 20-25% of our total revenue profile moving forward in the near term.

Okay, okay. And will it also be possible to share the EBITDA margin? Because we have been guiding 30% EBITDA margin, which is similar to what we have done in the past. And while the mix of high-growth, high-margin products is increasing, but we are – so I just want to assess, like, is it a conservative guidance of 30% or do you see upside risk to this number, some color between international EBITDA margin and domestic EBITDA margin? So some color around this, if possible, you can share.

Yeah, so missing here, I'm going to hear. On the EBITDA margin, specifically between the products, we do not compute mainly because there are a lot of common infrastructure, common cost, common raw metal which we use across the product. So, it is not possible for us to compute properly the EBITDA margin for each and every product. Okay. But having said that, as we move ahead, as the mix changes, I've already indicated that directionally, metal card and tax stamps are the margin-accredited businesses for us. And also, as the revenue is increasing, that operating leverage is working in our favor. However, having said that, global geopolitical issues could be there. So considering all the things, we have guided roughly around 30%. But I will leave it to the market to get the overall numbers.

Sure. And the other question is on the Nigeria business, which has fully come on stream and started, like, delivering all the revenue lines. So what is the capacity transition in Nigeria? And likewise, if you can also share the timelines of what other capacities are coming over the coming quarters.

So, here, one thing to be noted is that the model which we have is a hub-and-spoke model, where the majority of the manufacturing is based out of India, which is a common infrastructure altogether. And for plastic cards today, for Q1, the capacity utilization is roughly between 75% to 80%. 80%. And specifically in Nigeria, we are handling the personalization of the part, which is around 60% as we speak today.

Okay.

And overall, as the demand increases, we will definitely increase our capacity. That is not a challenge at all.

Okay. Okay. And the timelines of the upcoming capacities, because we did talk about the other Europe and the U.S. capacities. So, any timelines if you can give fresh on where are we on that?

Yeah. So, multiple things here. One is that we are increasing the overall capacity requirement for our international operations in India for base card manufacture. We are also significantly increasing our capacity into metal cards. And in the developed markets, we'll be having a personalization bureau. And each personalization bureau will cost roughly around 30 crores for us to establish and start operations there. And this year, we might add one more international bureau in development market. And to cater those volumes, we will increase our capacity here in India as well. And overall, if you see, in the IPO process, 238 crores has been a year mark for capacity increase itself. And out of that, roughly around 100 to 120 crores is set for current financial year.

Right, right. Got it. Thank you so much, Ramirath, and wish you all the best. Thank you.

Thank you. Next question is from the line of Deepak Azarwal. Kindly accept the prompt. I'll announce your company name and proceed with your question.

Yeah, hi, I'm audible.

Yes, go ahead.

Yeah, yeah, yeah. Hi, this is Deepak from Param Capri. Congrats, Manipal team on the listing and good set of numbers. A couple of questions from my side, just to understand. So last year, how many debit cards were printed in India? And of that, I believe we have shared in the presentation in terms of about 31-32% market share. So, just as a, India as a country, how many physical plastic cards were manufactured as an industry?

See, overall around 327 million cards were shipped during the last year. And our share will be close to around 31% of the shares.

Okay, so about 11-12 crore kind of cards and maybe a realization of about 90 rupees or so, roughly about 1,200-1,300 crores of top line is explained by that, right? In my understanding, right?

So, Vipassi, so broadly, in that range, in terms of volume, in terms of ASP, broadly, if you look at it, we won't be able to give the individual ASP for the business, but broadly, if you look at it, in terms of volume, that is the number.

Got it. And total debit cards in force in India would be about 150-160 crores as an industry is what I understand, right?

So, no, no. So, debit and credit combined, the industry is around 120 to 125 crores, out of which debit cards are approximately 107 to 110 crores, and credit cards are between 12 to 15 crores currently. Well, as we mentioned, when we say we are growing at around 8 to 10%, we are obviously assuming that the credit card market would grow at a higher tagger, which is the debit card market.

Fair enough. And just to understand, so in terms of the replacement card market, right, the very large part of your growth would be the replacement that, as I understand, now it is up to the bank in terms of the expiry of the card. But roughly, say, four years is what the, when you send a new card. In four years, give or take, a new card has to be issued.

So, see, now we operate in multiple markets, and the renewal cycles are different in different markets. For example, Nigeria, the renewals are in, say, 3 years, 4 years. U.S. co-operated cards are just 2 years, 3 years. So, on an average, I would say close to around 4 to 5 years would be the renewal cycle for the renewals.

So, essentially about, if you have to understand your growth levers for next couple of years, that 120 crore, 125 crore cards and say 5 years. So, 25 crore new cards are just by the renewal of what is the existing stock in the system, right, as an industry. And then, obviously, that is one is your natural market share of what you have and how much more you can grow on the market share. Yeah.

Typically, one-third of the card base will be re-regulated.

So, Deepakji, you are absolutely right. So, which is where we kind of keep highlighting that the domestic plastic card business and the core business has become like an annuity business, which is growing at a certain, let's say, around 8 to 10% factor. And while the growth businesses and the emerging businesses is basically generating the incremental growth going forward, which is why we have divided the business into core and emerging as we speak.

Got it. Interesting. So, second question comes in terms of the margin profile. We have been close to that 30% margin profile in the last three, four years. Now, if you go back a little bit in history, we used to be a little lower in terms of margin. So, can you share with us in terms of what explains this margin expansion? And as I understand, we seem to be pretty confident that 30% kind of margin profile should be sustainable in the short to medium.

Maybe I would like to give answer in twofold here. One is that historically, if you see, the product has evolved continuously. When we had started the business, it was only a max type card, which was sold at around, let's say, a single digit in terms of realization. Then we moved to EMV-based contact cards, which were the realization increased by 4x. And then we moved to roughly around 2023-2024, we moved to dual interface cards, where both contact and contactless features are enabled in the card. Again, the realization doubled from EMV cards. So there is a continuous technology enhancement which has happened in the card. And similarly, at the same time, our volumes have grown significantly. If you see FI 21 to FI 26, our overall production has doubled, right? So that operating leverage coupled with the technology announcement which has happened, that has led to the overall interest in the margin and also the backward integration which we have done in the entire business. Now, to benchmark the overall margin profile, if you see the top four payment card manufacturers in the world, right, their margins are in the range of between 30 to 35%. So, we strongly believe that the range which we are there currently, it is benchmarked as per our industry standards.

Great, great. Got it. Got it. Yeah. Interesting. Also, in terms of you didn't mention on the KPEX side, so as a part of the IPO proceeds, we have, I think, 240 crore kind of fresh money we raised for KPEX. So, we have roughly about 13-14 crore card capacity, right? How much is our existing capacity after this 240 crore KPEX? Where does our card capacity go in next two years?

So, basically, we are significantly increasing our capacity chain to metal. So, if you see our RHP also, as on 31st March 26th, our capacity is 670,000 cuts. From here onwards, we want to at least increase it by 3x. And traditional plastic, as on 31st March 26th, it was 12 crore cuts, but overall requirement for the international market will be increasing the capacity, but the foremost, first and foremost focus will be on the metal cuts, as we move on.

And you are seeing enough visibility from both international and domestic chains in terms of order book and all.

Yeah, we are getting clear visibility from the major markets like U.S. and LATAM and this market. And the growing market, there is a significant demand coming, including the domestic market. And also, if you see India today, the debit card platform also has moved on to metal. Large PSUs have started issuing on metal. Large private bank has issued significant volumes on metal. So, we clearly are seeing a, what do you say, transition happening on to the premium agents in Madrid.

Great, great. In Q1, I see that revenue is up 48% year on year, and EBITDA is about 44%. So, now, as an investor, if I have to see, so this full year, can you help us understand how should we look at growth both in revenue in EBITDA? Anyway, you are saying it will be closer to this 30% margin profile. So, this growth should continue, it would slow down, anything you can share on growth? How should we look for FI27 full-year growth?

So, before we answer that, Deepak Ji, we wanted to give you a go back to the basis and give you an idea about how the business operates. So, if you look at the company is generally into multi-year contracts, and these are lumpy in nature, which essentially means that once the contract is won by it, these are multi-year contracts, which are long-tenor, which leads to lumpy growth in the businesses. Having said that, obviously, there is visibility in terms of the business, which is why currently we are confident of having a, you can say, this year we believe that the top line will increase around 30-35% visa with FY26. In terms of, if we have to give an estimate of growth for next two to three years, because the lumpy nature of the business, there could be timing But broadly, if you look at it, we look forward to a potential target growth of around 20-25% over a three-year horizon moving forward.

It would be a really good number if you deserve it, because for a services business with this kind of an ROC profile, it's exceptional in terms of the operating leverage which will be visible in your numbers in the next couple of quarters.

So, we second you on that, Deepakji. We are pretty hopeful on that. And as you rightly mentioned, in terms of margin sustainability, we believe that, you can say, the EBITDA growth would be in line with the, you can say, revenue growth. And as the operating leverage starts coming in, there could be a potential increase moving forward. Got it.

And also on the tax temps side of the business,

can you share a little bit more of like as of now for how many states we do, how many states actually use tax temps and any pipeline you are seeing or more and more states adapting it just to understand what could be the overall time. I understand one is the entire generic of entire liquor is converted into it, but in foreseeable future, anything can you share how the pipeline is building up?

If you see the domestic market, there are two types of products in the market. One product is, what do you say, holographic features with your paper-based features, and the other tax temp is a policy-based tax temp. So, close to around 15-16 sets on a polyester-based tax stamp and remaining are only paper-based tax stamp. And due to the plastic ban which has come in, where any polyester below 50 micron, the state governments have started banning this product because it is not collectible. So, there is a good opportunity of a lot of transition happening from polyester to paper. And today, we are the frontrunners offering this today, along with this high secondary features in the market. And globally, Africa, African continents, and especially Middle East, these markets, we clearly see significant opportunity coming in the tax time space.

And as of now, how many states in India are actually done with the contracts in terms of how many actually use these paper stamps as of now, a number of states?

There are close to four to five states operating on the paper-based tax time. And with our cooperative technology of Intanglo, we are the only ones offering this today in the country. And there is a good amount of traction which we are getting from the polyester-based states.

So, again, going back to the fundamentals, if you look at these are multi-year, long-term, typically monopolistic or, let's say, bilateral contracts, which are long-term in nature. So, the idea is, once you start, you can say, having a state, it gives us lumpy business, it gives us annuity business, which are long-tenner. And typically, let's say, if you look at states, typically in a cycle of five years, three to four states come for renewal. And the endeavor is, as we start moving forward, to start gaining states year on year when the renewal cycle starts coming.

The margin profile for this would be closer to your existing business. How should we look at margin profile? Anything you can share on that?

Again, we do not have exact numbers computed for this segment, but going through the overall high-level numbers, it is more or less in line with the blended numbers, but slightly, I think, elevated to the existing numbers.

Thank you. Deepa Agarwal, I would request to come back for a follow-up question. The next question is from the line of Abhay Shoshi from Baroda BNP Baraba Mutual Fund. Please, go ahead.

Hi, Tim, and congratulations on the great sets of results. A couple of questions. First, we'll be on this metal card business. Any colors in terms of how much countries we are at present, and what are the order pipeline building in terms of, let's say, highly considered by U.S. versus Africa?

Today we are in five regions, and if you see five regions, we are addressing multiple countries in the APAC region, yeah, and we also have significant traction coming up in the developed markets like UK, Europe, US being the largest market, we have our sales force deployed in the market. It is a very mature market for metal, and we see very good traction coming for metal even from this market. In India, obviously, we are using to all the top four issuers, and there is a good traction coming on metal. And globally, there are limited players offering metal, and the reception is very high when we are meeting customers in the global market, and it's giving us a significant entry in terms of making entry into new accounts in all the global markets.

Okay, fair enough. And the second question is on this tax times and all. See, what I'm interested in is more of a technological mode rather than a product. So, any use cases similar kind of between the same technology, we can have a different kind of product and we can pitch on to the government side. Just on the product pipeline with a similar technology, are we building some different products and which can have a different use cases as well?

So, in the government domain, we are looking at tobacco and the alcohol. But in the retail, we are looking at a lot of FNCG products, as well as in the automobile space, we are looking at spare parts and other things. So, we clearly are seeing traction coming even in this, in the news.

So, as you rightly asked, basically if we have to look at the IoT and the solution, there are two solutions which we are speaking about. One is the tax stamp, and second is the RFID foray, which we forayed last year. Within tax stamps, we have proprietary tech, and we are one of the leading private players in India within that particular technology and offering. And now we plan to go global. In India, currently, the usage is for alcohol as well as liquor protection. But going forward, globally, we see use cases which is into tobacco and pharma. Coming to the RFID side, currently we are into, we have basically targeted retail, but we believe there is opportunities both in India and globally into apparel exports, high-end jewelry, as well as defense and pharma as we start building this business in the near future.

Sure. And the last question is on this COGS. You mentioned that there is an increase in the raw material prices as well in the deficient of currency. Going forward also for this quarter, we are expecting the COGS to expand because if you look at on the QOQ basis, it has expanded sharply. So are we expecting similar level of trajectory going towards the Q2 or it will normalize in Q2?

So, overall, Forex is in the similar range. And also, if you see the overall geopolitical extensions, it has not yet settled down properly. So, overall, if you see, Q2 could be in the similar range. But as we move ahead, we will have to see how it unfolds.

Just to clarify, in similar range, we are talking about a percentage of revenue, right?

Correct.

Okay, fair enough. That's it from our site, and thank you all for answering my question, and congratulations again to the team. Thank you so much.

Thank you.

Thank you. Next question is from the line of Pinaki Banerjee from AUM Capital. Please go ahead.

Good evening, sir. Thanks for the opportunity. Sir, actually, if you look at your revenue share, your share of credit cards was about 60% in FI24, which came down to 58%, and now in FI26, it is 57%. So, sir, can we interpret that you are going to look forward into diversification into other services also from your core business?

Well, share of emerging should increase as we know that.

Sir, regarding your exports, which is now about 15% of your revenues, so any scope of increasing that further?

So, yes, so as we move ahead, we believe that within next two to...

Sir, and one last question, sir, about five patents have been accepted, so 30 are in the time.

Did you know a response? We move on to the next participant. Next question is from the line of Anshuman Day. Okay. Can we accept the prompt and answer your company name and proceed with your question?

Yeah. Hi. Am I audible? Yes. Yeah. Hi. This is Anshuman from ICC Securities. Congratulations on a great set of numbers. My question was on the cost front. In terms of the global business, with all the rising crude prices and other cost-related matrices, how to look at the possible change in costs over the next, you know, considering the regulatory environment, or sorry, the geopolitical environment? How confident are we to be able to maintain the cost and such?

Yeah, thank you for that question, Anshin. So, overall, if you see this year itself, in the Q1, there was a significant impact because of two factors. One is the forex impact, which was average USD was 86 rupees compared to USD last year, which is today it is around 95 to 96 rupees. That is one aspect. Second is that overall, be it crude prices or logistics prices, because of the global unrest which has happened, there is a significant impact which has happened in our business as well. Okay. However, to negate that, today we have a significant operating leverage which is working in our favor, as well as our overall share of emerging businesses are increasing, which is slightly margin-accreditative. That is all working in our favor. Sure. Having said that, the cost angles, which are currently external factors, we may not be able to exactly predict what might happen in future. But as the company, the contracts which are with the PSU or private banks today, we have a force majeure clauses. If there are any significant impact in the cost, then definitely we can go back and renegotiate the prices.

So, further adding to Ramla, as we had mentioned, the proportion of exports as a function of the total revenue profile, exports are increasing significantly, so that obviously gives us natural edge. And the company also has a board-approved forex policy, which insulates us to any significant adverse effect on the rupee deposition in terms of, since we are a net importer currently.

Understood. Net importer in the sense, your revenue provides a hedge, I understand. So, that is a hedge, right? You don't have a separate forex hedging program, right?

No, so we have a separate forex hedging policy, where we basically, sans of timing difference, we basically hedge the net exposure, which is basically the imports are for raw material, predominantly for chicks, and exports is through revenue generation through global subsidies. So, net of water is what we basically hedge through the board of food forex.

Oh, I understand. That's very helpful. And to be on, just to clarify a little bit more on this part, in the sense, if, for example, the rupee kind of settles down or appreciates a little bit or maybe settles down, the current costs, the current quarter will kind of, is it in a scope to improve further? If the geopolitical situation kind of normalizes, or you think there will be offsetting factors to kind of balance as it is today?

So, Anshubh, to be frank, a very tempting question. But if you ask us, honestly, we are in the business of manufacturing and issuing cars and other global solutions. So, we do not speculate. Which is where we have a board-approved policy, and we ensure that meticulously the policy is adequately adhered, and hedges are taken accordingly. Great. No, I understand.

Thanks a lot. Thank you. I'll get back in the queue.

Thank you. Next question is from Nailog Mohit Sukhani. Kindly accept the prompt. Announce your company name and proceed with your question.

Hello, ladies and gentlemen. I'm Mohit Sukhani from IFL Capital. First of all, congratulations for a great set of numbers. And a question from my side is that you have provided the revenue breakup into core and emerging categories. So, can you further break these core and emerging categories into metal cards, RFIDs, and other segments specifically in terms of numbers for first Q current year as well as for the last year?

Yeah, thank you very much for that question. So, see, to give you a background on this, statutorily, we are not required to provide any further breakup on the segment reporting. Okay. Just for better understanding of the business, we have been bifurcating the business into core and emerging businesses. And just emerging businesses are all the new growth engine of the company. And which includes metal card, international revenue, tax stamps, and the IoT solutions. But further drill down into the revenues, at this point of time, it is not possible. Maybe at an appropriate time, we will provide that. But of course, the international business breakup, anyway, we have provided.

Okay, great. And another question from my side is like, in terms of global subsidiaries, like currently we are having four subsidiaries outside India. So are there any plans to acquire any other companies or open any new subsidiaries for capacity expansion or any other purposes?

So excellent question, Mohit. And just to give you, again, going back to the basics, how our thought process is in terms of cash utilization generated to internal accruals. The idea is we would first want to deploy capital for growth capex, as we have announced from the IPO proceeds, as well as going forward. Then, as you would appreciate, since the revenue base is increasing, which will entail a higher working capital, so we want to utilize it for that. We also want to be a dividend-paying company. Currently, the board is deliberating what should be the dividend policy, but we definitely want to be a dividend-paying company in the future, and once all of these users of capital is there, if there is a possible, the company is open to looking at inorganic growth also. So, if there are any acquisitions which are worthwhile within our segment, the company will be open to it. And this is how we think in terms of capital allocation going forward.

Okay. And on the dividend, can we expect a dividend in this financial year, for this financial year?

So, as you would appreciate, we have just got listed, and because of which, the board is currently deliberating on the scene. We would come back subsequently in a few quarters on how we would be looking towards dividend, but we want to be a dividend company moving forward.

Okay, okay. Great.

Thank you. Thank you, ladies and gentlemen.

Thank you.

Thank you. Next question is from the line of Nitin Jain from Fair Value Investment Advisory. Please go ahead.

Yeah, thank you for the opportunity. So, my question is, what is your growth and margin guidance for the next two to three years, and which businesses specifically you think will be the growth drivers in that time period?

So, thank you, Mitin, for the question. See, basically, as we had kind of mentioned earlier in the call, we believe that companies should grow around 30% to 35% regardless last year. And because, given the lumpy nature and multi-year contracts, we believe that the company should grow at around 20% to 25% potentially from a three-year cashier perspective. But it will be difficult to give individual guidance year-on-year at this point, given the lumpy nature and contracts which come. In terms of margin profile, we believe that the margin, the EBITDA would be in line with the top-line growth. As objecting leverage starts coming into business because of the higher revenue base, There could be some margin accreditation, but that is something which we will come back in the, you can say, coming quarter. From an overall perspective, we had already mentioned that some of our emerging businesses, specifically into metals as well as the tax stamp business, those are further, those are high growth businesses which are more margin-aggressive than the core business.

Right, and there will be the revenue growth drivers as well, is it, going forward?

These emerging businesses.

Yeah, see, overall, again, if you have gone through the presentation, we have divided the entire business into two, core business and the emerging businesses. While core is basically the traditional plastic carts, bundle services, and the digital automation services which we are providing today, the emerging businesses are basically metal carts, international businesses, tag stamps, and IoT solutions. Which are basically the growth engines of the company. And we believe that as we move ahead, there will be significant growth coming from this emerging business.

Okay, that's very helpful. And my last question is, what are your margins on the export business? Are they significantly different from the domestic margin?

So, at this point of time, we do not have exact margin breakup between the products. Mainly because the majority of our infrastructure or costs are common in nature. However, if you see our entire product portfolio, metal card and tax stamps are the slightly margin-accredited businesses compared to others.

Thank you. Thank you very much. That's all from my side. Thank you. Next question is from Manavya Shah from Equity Investment Managers. Please go ahead.

Hi, I'm an auditor.

Hello. Can I register to speak through the handset, please? You're sounding distant.

Hello. Yeah. So, firstly, congratulations on a great set of numbers. My first question is that we are currently shown in the presentation that we have close to 60% of customer concentration. Top 10 customers contracting to 60% of our revenue. Going forward in the next 18 to 24 months, what are the plans to reduce this concentration, considering that we have relationships and partnerships with a number of entities?

If you see our international business, in the current quarter, we have added more than 10 plus guys from multiple regions. And we strongly believe that we will be adding more and more customer base from multiple regions. And the concentration risk will significantly reduce in terms of concentration from our customers.

And to second guess, the other thing is that though in our top 10 customers, we say that it is 58% revenue concentration, but if you see the products which we serve within the customers, right, let's say a bank, we will be supplying the cart, We could be supplying kiosks, we could be supplying metal cards, or we could be supplying logistics or checks books solutions. So, in a manner, it is already concentration risk has been taken care of, but further as we move ahead, as we increase our multiple regions, multiple products, it will be further diluted.

Okay, fair enough. My second question, is there any cyclicality in the business? What quarter is a strong performing quarter for us, considering there is lumpiness in the business?

Yeah, very good question. So, again, as we said earlier, majority of our businesses are large contacts, and generally there will be step-up increase of the growth which has happened, okay? Whenever we add one more customer, let's say it could be a very large customer, and at that point of time, there could be sudden increase in the revenue coming up. But having said that, overall, if you ask me about the card issuances, yes, there could be some seasonality within the quarter. It all depends on the issuance program by the issuing partners like banks or NBFCs or the FinTech. But as we move ahead, as we are increasing our overall market, we are now into international market, there the cyclicality is completely different. So we'll have to wait and watch how it unfolds over the next two to three years.

Okay, thank you. That's it from him.

Next question is from the line of Sunil Chain. Can we set the prompt, announce your company name, and proceed with your question?

This is Sunil Chain from Nirmalba. Set me three questions. First is about the gross margin. You said that it will be impacted in the near term. But as the things normalize or you start passing on the cost to your customer, Can it go back to your earlier margin of 63-64% say after 3-6 months?

Thank you very much for that question. See, we are not able to predict exactly how it unfolds today. But exactly, see, these are all industry-wide situations which are there currently. But as we move ahead, the thing is that overall, if you see our overall market model, right, there is a significant tech change which is happening in the business. When we had started the business, it was just a master card, then we moved on to the EME-based contact card, then it is a dual interface card. Now we are messaging recycled PVC because of the ESG mandates, which the banks want. And let's say in 2030 or 2032, there is an industry-wide news that it will be more towards quantum cryptography, right? So the entire dynamics are changing as we move ahead. And overall, whenever there is a tech change which is coming in, there is a significant margin increase which is coming in the business which we have seen over the last 10 years. So this is, I think, I will leave it here and to the overall.

Yeah, okay. Really, I am not able to get how you are getting such a good pricing power in your business because of less competitiveness or less competition or customer can't shift to some other supplier. What is the reason?

If you see our purchases, the top three or four major items which we purchase, we procure So, multiple geographies. And we are all, we fall in the firewood category, and we have significant leverage in terms of the prizes being offered to other players. And with a scale of purchases we do here in India. And based on the volumes we do, we get a volume-based kind of a discount on all our purchases. And we leverage this on our purchases.

Okay, because of the size, you meant to say you are getting some advantage. So my second question relates to your core business, which has grown by around 22% in the current quarter. Is there any one-off or any new contract started because of that it has moved up by 22% and whether this can sustain in the coming period?

Very good question. I think, see, one thing we have to note is that there was a base effect which has happened in FI26. And FI27, as we are in Q1, the kind of issuances that happen are at regular basis. And also, we have added a couple of contacts, again, multi-year contacts, which should be there for at least two to three years as we move ahead. And, overall, the number which we have shown in Q1 for FI27, these are at normalized levels.

And, we have today multiple segments which we operate in our emerging businesses and within the core business. If there is a shortfall in one business, we cover it up with other business. And there is a clear plan A, plan B kind of a planning in terms of ensuring that revenue is higher.

So, Sunil, we also wanted to give you a color. As you rightly mentioned, what is basically giving us this margin? One, I have to again go back to the basics. See, this is a highly regulated business. There is a lot of certification which is required, and there are high entry barriers. As you would appreciate, there is data sovereignty, data security becomes a key theme. Because of which there is high entry barriers in the business, and banks also want to typically, within an entire customer profile, either these are bilateral or oligopolistic or monopolistic contracts. They typically work with two, three vendors, and they are also wanting continuity and supply from vendors, reprimanded vendors globally. Globally also, if you look at, there are around, as we mentioned, as Girish alluded in his opening remarks, around top 10, you can say players hold around 70% of the market. And India, again, it's a holistic market, which is why it becomes difficult. And these are the modes which helps for the margin which you see in the business.

Great, great. So, second question, third question is related to your emerging business, and export is one of the part of that. So, we can see that export has grown substantially this quarter, but even if we exclude export, the other two business, like what I understand is metal card and the RFID or stamp card, So, that has also shown good growth of almost around 60%. So, which one has shown good growth or both the business has shown similar type of growth?

So, overall, again, as we said earlier, we will not be able to give exact breakup of the multiple products within a business segment. However, if you see, again, our presentation, we have added one large customer for tax time business in the Q1, which is also giving us the incremental revenue.

Okay, so the customer which you added in Q1, that will keep on giving revenue for the coming whole year until the day?

If you see our tax term business, these are all multi-year kind of contract and long term in nature with clear visibility. So typically the new contract which we have won is 5 plus 3 years kind of a contract, which is there for 8 years. So there are similar contracts which we are targeting both in domestic and export market protection. Even in metal, all the top-notch banks, if you work in domestic as well as global market, we have long-term multi-air contact chain, and based on their demand, every month we get clear projections, and we deliver this.

Okay, okay, great. Just a last data question, if you can tell me, how much is CAPEX planned for FY27 and FY27?

Yeah, so overall, out of the issue proceeds, 238 crores is the year mark for the CAPEX, which should be spent over the next three years. Specifically for the current financial year, we are looking at deploying roughly around 100 to 120 crores.

Okay. Great, sir. Thank you very much.

Thank you.

Next question is from the line of Rajeshwara. Kindly accept the prompt. Announce your company name and proceed with your question.

Yeah. Good evening, gentlemen. Congratulations.

Rajesh, sorry to interrupt. Can you speak through the handset? Your voice is echoing. Sure. Can you hear me? Yes. Go ahead.

Yes. Good evening, gentlemen. Congrats on successful IPO and a great set of numbers. Your company has a pretty interesting business model. If you could care to explain what is the competitive advantage that your company enjoys vis-a-vis other competitors that gives you such a high market share, and can a startup or a new company, what are the barriers to entry for a new entrant in this space would be very good to understand.

So, this is a highly regulated business, and you need to have certificates from all the global payment schemes. Every year, the facilities are audited, and you cannot have any major non-government, and you need to get even references from the top banks and top customers. Only such kind of, what do you say, partners or vendors are capable into addressing this kind of segment. Plus, data also is a very, very sensitive element in the business. We have to keep on investing in the IT infrastructure on a continuous basis, and we are monitored and sensitized, monitored by the RBI and the regulators on a continuous basis, as this is a very sensitive kind of an operation. So, entry pair is extremely high in this business.

Very good. That's very useful. So, who is the closest competitor of your company in India and globally, and what would their market share be?

So, Azishi, if you look at it, see, this is a very consolidated market. So, as we mentioned, we have different competition for different business lines within the business. You cannot identify a single competitor across a business line because, as you would understand, The business is into payment solutions, identity, traceability, and security solutions. So, within the payment cards, if you look at it, there are global listed multinationals who are there. Top 10 players hold 71%. If you look at, you can say the identity players, there are a different set of global competitors. In India also, we have competitors, again, into varied business segments. But broadly, if you look at it, because the entry barrier is so high, we would be competing with two, three, four large vendors in each business segment in India as well as globally.

So, can you give a couple of names there?

We will abstain from giving any particular name. Okay, okay. No problem. No problem.

In your opening remarks, you explained very nicely about metal card where your company is building intellectual property and having a lot of patents. So could you give a little more granular insight as to how this intellectual property is being built? And of course, if you build certain intellectual property, there is a great pricing power that comes along with it. So it will be very nice to understand that.

So, globally, there are a handful of people manufacturing metal cars, maybe three or four, and people have registered patents for the process of manufacturing the cars, and typically, if you see the entire ecosystem of the cars, it was built for plastic, and with the metal coming into the entire ecosystem, creates a completely different kind of a situation, and these cars are typically valid for plastic. For, say, five to seven years, and when the cards are used, it has to consistently work across the global market when it is being used by the customers. So, the important thing here is in terms of the process of manufacturing, the patents are typically vetted against all the existing patents which are there in different markets, and then the patents are granted. And only then, you are kind of allowed to manufacture the card. So, without a proper patent and proper grant, there is a possibility that the competition may go and file a suit against the manufacturers.

Interesting, interesting. And you gave the idea of number of cards globally on the metal card in India, 64 million globally, 35 million in the US. So is there a possibility that your company can win a big customer with issuing this metal card and it can change the whole trajectory of your metal card business over the next three, four years? Is that a possibility?

I'm sorry, we are not able to get the question because if you look at it, in India, we are already supplying to all the large private banks as Kirish alluded, the top four banks in India. In fact, we've been at the forefront of launching, whether it is ICSA, Metal Black, Dynos, SBA, Aurum. And now globally, as we mentioned, there are limited players. So, as we move forward, global banks are also looking for diversification in terms of vendors, as well as given the low-cost manufacturing we have in India, there are propositions where we can look at global exports within metal. But those are discussions which are currently on. As we move forward, if there are material contracts, we would definitely come back and keep appraising in our quarterly calls and our wins for the quarters.

That's very useful. Last question from my side. Would you care to give what emerging segment is growing very rapidly? After three years, four years, five years, can it reverse the current composition? Is there a potential to reverse the current composition?

No, sir. Excellent question. I think, Rajuji, we will have to again give you basics about the company. The company has been at the forefront and the bellwether in terms of innovation driven by R&D. So, as Girish mentioned in his opening remarks that we were the first one to launch MaxDrive, DuPay cards with the interface of PMB as well as dual interface. And now we do RPVC as well as quantum crypto. So, the company has been at the forefront of innovations across cards and all our sectors. So, as you rightly put in, three to four years, we believe there could be other form factors if it come in. But the company basically starts seeding all of those in advance and you will see that this is an innovative company which comes at the helm of technology and so would the revenue profiles change. Going forward.

Wonderful. Thank you so much for your answers, and all the very best. Thanks.

Thank you. Next question is from Lainaf Utkarsh Sumeya from iCoke Quantum Solutions. Please go ahead.

Thank you for the opportunity. Hi. I just wanted to understand more about the lumpiness in your business. Can you please help me understand that?

Once you have won the contract, the business is sequentially growing depending on the overall volumes. So what we need allured by lumpinesses to basically win contracts, which are long-term large value contracts.

So quarter to quarter volumes, are they dependent on consumption of cards? And that's how orders are placed with you by banks?

So how does the ordering We have rate contracts for multi-year with the bank, and there is a clear visibility given by the banks quarter-on-quarter, and the purchase orders are leased by the banks for the requirement.

Okay, so we shouldn't expect one variability in your revenue number.

Yeah. So, basically, as we said, these are long contracts, which means there is visibility. Basically, what we mean by lump in is getting new contracts. See, two broad principles. Broadly, as we mentioned, the average validity of a card, this is only the payment card business which we are speaking, is around 4-5 years, and around 65-70% is renewal and rest is basically new issuances. So, given that, there is renewal demand both as cards expire and it comes for renewal as well as new cards which get issued. What we mean by lumpiness is, this is the demand which is already forecasted. What we mean by new lumpy businesses, whether it is, let's say, the tax term business or as we are targeting new banks globally for our payment card solutions and other verticals, those are contracts which takes a particular time because as you mentioned, there are high entry barriers, there are development works and gestation which has to be factored in. Once you get those incremental new contracts, then those become long-term and multi-year contracts for us.

Okay. So, so far, the gross guidance for 25% for the next three years that you've given, it's basically the contracts of the order book you already have in hand. Is that right?

So, as you rightly said, we have a certain, see, the company has been growing into multiple, you can say, segments. So, which is where there are contracts which are already in hand, and there are contracts where we have a very high visibility. Once those contracts are materialized, that basically adds to the revenue profile, and that becomes the regular quarter-on-quarter revenue moving forward.

Okay, and just one last question. Do you see yourself being a 500 crore paid company

So, we have given you a clarity multiple times on the call that we believe that this year could be a 30-35% revenue growth. From a three-year perspective, the company could grow around 20-25% cattle. And the bottom line growth should be in line with the revenue growth. If there is operating leverage with kick-sync, that will be further margin accredited.

Okay. Thank you so much, and best of luck.

Thank you.

Thank you very much. I now hand the conference, O2B Management, for closing comments.

Thank you all who have joined on the call, and thanks for joining, and we will continuously work on ensuring that we deliver the Q&A numbers, and thanks for joining the conference.

Thank you very much. On behalf of Manipal Payments and Identity Solutions Limited, that concludes today's meeting. Thank you for joining us and you may now disconnect. Thank you.