Startup Deep Dive : Zaggle Prepaid Ocean Services — a 3.38x leverage ratio didn’t stop this IPO

In FY23, Zaggle Prepaid Ocean Services was carrying an overall gearing (debt-to-equity) ratio of 3.38 times, the kind of balance sheet that usually keeps a company away from public markets, not on the way to one, as per its own audited numbers filed with CARE Ratings. Five months after that filing year closed, in September 2023, the Hyderabad-based spend-management company listed on the NSE and BSE anyway, and by March 2025 that same gearing ratio had fallen to 0.01 times while revenue had gone from ₹553 crore to ₹1,303 crore.

Zaggle now trades with a market value of about ₹2,420 crore ($252 million at $1 ≈ ₹96.0 as of 18 September 2026, Trading Economics), as of 23 September 2026 on the NSE and BSE. It calls itself a spend-management and SaaS company, but for most of its life the bulk of its revenue has come from something closer to payments plumbing: reward-point redemptions and a slice of the interchange fee banks earn on prepaid card swipes. The SaaS subscription fees that give the company its software story are, by its own credit rating agency’s account, a small fraction of the top line. That gap between the pitch and the P&L is where this piece starts.

Quick facts

What they do

Zaggle sells corporates a single dashboard, and their employees a single app, to run the money that moves around a company but isn’t quite payroll: reward points, sales-incentive payouts, travel and expense reimbursement, meal and fuel benefits, vendor payments and tax-saving perks. Under the hood this runs through prepaid cards issued in partnership with banks and card networks, plus software that automates the reconciliation admin teams used to do by hand. Its customer base spans banking and financial services, technology, healthcare, manufacturing, FMCG, infrastructure and automotive companies, and by July 2025 it counted over 3,400 corporate customers and more than 3.2 million platform users, according to a CARE Ratings press release of 16 July 2025 on the company’s bank facilities.

The origin

Raj P Narayanam incorporated Zaggle in Hyderabad in 2011 with a narrower idea than the one it eventually became: replace the paper gift voucher. Corporate reward-and-recognition programmes in India ran on printed vouchers redeemable at specific retail chains, an operationally messy way to pay an employee a bonus or a sales incentive. Zaggle’s pitch was a prepaid card instead of a paper coupon, loaded and reloaded digitally, that a company’s HR or sales-ops team could issue at scale. Godkhindi, a banking veteran with stints at Citibank, Barclays and ING, joined as CEO within a year of incorporation, in February 2012, and brought the payments-rails discipline that a card business, as opposed to a coupon-book business, actually needs.

The struggle years

The first hard lesson came from trying to serve two masters at once. Zaggle initially ran a B2B2C model: it sold reward programmes to companies, but the actual product experience and stickiness had to be won with the individual employees who used the cards, which meant consumer-style acquisition costs. According to a YourStory account of the company’s journey published in June 2020, that consumer-facing business became too expensive to run and the company had to mothball it in 2015 to focus purely on B2B. The arithmetic behind the decision was stark: acquiring an individual consumer could cost on the order of $500 with no guarantee of stickiness, against roughly a tenth of that to acquire a corporate client with thousands of employees already attached. Zaggle rebuilt itself as a pure B2B seller from that point.

The second struggle was less a single event than a multi-year condition: money was hard to raise. A B2B SaaS-fintech hybrid in the mid-2010s was not the profile most Indian venture funds were writing cheques for, and the company leaned on internal accruals and modest private capital rather than large funding rounds to get through the decade. That underfunding shows up starkly in the audited numbers from just before its IPO: as of 31 March 2023, Zaggle’s overall gearing (total debt to net worth) stood at 3.38 times, according to the CARE Ratings press release of 16 July 2025, a level that credit analysts generally treat as stretched for a company preparing to go public. The same filing shows interest coverage of just 4.70 times that year — comfortable, but not a picture of a company operating from a position of strength.

The turning point

The turning point was the IPO itself, on 22 September 2023, and what the company did with the two years after it. Before: FY23 revenue of ₹553.46 crore, net profit of ₹22.90 crore, and that 3.38x gearing ratio, all per the CARE Ratings press release of 16 July 2025, which draws on Zaggle’s audited financials. After: FY25 revenue of ₹1,302.65 crore, net profit of ₹87.48 crore, and gearing down to 0.01 times as of 31 March 2025 — a balance sheet transformation as much as a growth story. The company itself, and the market, appear to have priced this as validation: the stock traded near its issue price of ₹164 at listing, then moved considerably higher over the following two years as the growth and deleveraging numbers came in, per Forbes India’s account of the post-listing share-price trajectory.

• Before (FY23, year to March 2023): revenue ₹553.46 crore; net profit ₹22.90 crore; overall gearing 3.38x (CARE Ratings, 16 July 2025)
• After (FY25, year to March 2025): revenue ₹1,302.65 crore; net profit ₹87.48 crore; overall gearing 0.01x (CARE Ratings, 16 July 2025)
• IPO event: listed NSE and BSE on 22 September 2023 at an issue price of ₹164 per share, raising ₹563.38 crore in total (Business Standard and Chittorgarh IPO coverage, September 2023)

The money behind it

Zaggle did not build a venture-scale war chest before its IPO. It funded most of its growth from operations and modest debt, then used the public markets to reset its balance sheet and fund acquisitions. The shape of the capital that did come in:

• Pre-IPO placement, September 2023: ₹98 crore raised from Vikasa India EIF I Fund and Acintyo Investment Fund PCC – Cell 1 (₹73 crore combined) and Value Quest SCALE Fund (₹25 crore), ahead of the public issue, as reported by IndiaInfoline in September 2023.
• Anchor book, September 2023: ₹253.52 crore allotted to anchor investors ahead of the IPO opening, per contemporaneous coverage from SiliconIndia and Startup Story Media.
• The IPO itself, 14–18 September 2023: a total issue of ₹563.38 crore — a fresh issue of about ₹392 crore plus an offer-for-sale of about ₹171.38 crore — at a price band of ₹156–₹164, subscribed 12.6 times, and listed on 22 September 2023 (Business Standard, Chittorgarh, September 2023).
• Post-listing qualified institutional placement, H2 FY25: the board approved a QIP of up to ₹950 crore, of which ₹594 crore was actually raised in the second half of FY25, used for debt repayment, acquisitions and general corporate purposes, per the CARE Ratings press release of 16 July 2025.

What each stage changed: the pre-IPO placement and anchor book validated the offer price with institutional money before retail investors saw it; the IPO itself supplied the fresh equity that started paying down the pre-listing debt; and the FY25 QIP is the capital that funded the acquisition spree — TaxSpanner, Mobileware Technologies (a 38.91% stake), GreenEdge, Dice, Effiasoft and Rio.Money among the targets named in Inc42’s 2026 coverage of the company’s expansion strategy — that pushed the group into new product lines rather than organic growth alone.

How it makes money

Zaggle’s own regulatory disclosures describe three revenue lines, and CARE Ratings’ 16 July 2025 press release names them directly:

• Propel platform revenue (PPR): earned by monetising “Propel Points” — reward points calculated, issued and redeemed on Zaggle’s rewards platform for corporate incentive programmes.
• Program fee revenue (PFR): Zaggle’s cut of the interchange fee that its banking partners earn when a Zaggle-issued prepaid card is swiped at a merchant, online or offline.
• SaaS fee revenue (SFR): periodic subscription fees corporates pay for using Zaggle’s software — the smallest of the three lines by a wide margin.

The part people get wrong is the margin story. A company that describes itself as a SaaS platform invites the assumption of software-style gross margins, but CARE Ratings is explicit that Zaggle “operates with relatively lower profitability margins… owing to its business model, which includes sale of redemptions for rewards, incentives, and interchange fees, activities that are primarily transactional or pass-through in nature.” The company has held PBILDT (operating profit) margins in an 8–10% band for four straight years even so — 9.11% in FY24, easing slightly to 8.85% in FY25 as operating costs rose, per the same CARE note — while net margin actually improved from 5.68% to 6.72% over the same two years, helped by interest income on its cash pile and lower finance costs after debt repayment. Independent analyst breakdowns of the revenue mix show how skewed it is toward the pass-through lines: Propel platform fees made up roughly 65% of FY23 revenue against 22% for program fees, per an analysis published by The Moat Investor, while a Capitalmind analysis of FY24 numbers put Propel fees at about ₹433 crore (56% of revenue) and program fees at about ₹322 crore (41%), leaving SaaS fees at roughly 3% of the total — the line that carries the actual software margin.

The numbers

Figures below are audited annual revenue and profit after tax, in ₹ crore. FY23–FY25 are standalone figures as reported in the CARE Ratings press release of 16 July 2025; FY26 is consolidated (including subsidiaries acquired during the year) as reported in the company’s Q4 FY26 results, covered by EquityBulls and other outlets in September 2026.

• FY24 revenue grew 40.1% year-on-year and net profit grew 92.2% (Business Standard, citing exchange filings, 2024)
• FY25 revenue grew 68.1% year-on-year and net profit grew 99.7% (Business Standard, citing exchange filings, May 2025)
• FY26 consolidated revenue grew 46% and consolidated PAT grew 52% year-on-year, with adjusted EBITDA up 51% to ₹192 crore (EquityBulls and Whalesbook coverage of the Q4/FY26 results, September 2026)
• Management guided FY27 standalone revenue growth of 25–30% and consolidated revenue growth of approximately 40% (InvestyWise, citing the company’s FY26 results commentary, September 2026)

Where the money comes from

The clearest way to see Zaggle’s mix is to watch how the three revenue lines have shifted, and where the newer, acquired businesses now sit:

• Propel (rewards/incentives) platform fees: roughly 65% of revenue in FY23 (The Moat Investor analysis) narrowing to roughly 56% in FY24 (Capitalmind analysis, ~₹433 crore of ₹776 crore) as other lines grew faster.
• Program fees (interchange share): roughly 22% of FY23 revenue, rising to roughly 41% in FY24 (~₹322 crore), reflecting growth in card spend volumes.
• SaaS subscription fees: the surprise line — only around 3% of FY24 revenue by the Capitalmind estimate, despite being the part of the business that gives Zaggle its “SaaS” identity and its stock-market multiple.
• 86400 (fintech/payments subsidiary): revenue of ₹74 crore in FY26, up 118% year-on-year (EquityBulls/company FY26 results, September 2026).
• GreenEdge (acquired business): revenue of ₹103.7 crore in FY26, up 184% year-on-year (EquityBulls/company FY26 results, September 2026).
• Geography: overwhelmingly India-domestic through FY26; the company has flagged MENA and US expansion as a forward strategy rather than a reported current segment (Inc42, 2026).

The surprise, in short, is that the fastest-growing pieces of Zaggle’s business in FY26 — the acquired 86400 and GreenEdge units, both growing well over 100% year-on-year — are not the SaaS subscription line at all, but adjacent payments and fintech businesses bought rather than built, which is also where a large share of the FY25 QIP proceeds were directed.

The risks

• Structurally moderate margins: because reward-point redemption and interchange-sharing are pass-through in nature, PBILDT margin has stayed capped in an 8–10% band for four consecutive years (8.85% in FY25) even as revenue has scaled sharply, a mechanism CARE Ratings flags directly as a rating constraint in its 16 July 2025 press release.
• Acquisition-integration risk: Zaggle has been acquiring companies (TaxSpanner, Mobileware, GreenEdge, Dice, Effiasoft, Rio.Money) to add product lines and geography, and CARE Ratings explicitly names “challenges in integration, unforeseen expenses or hidden liabilities, potential legal issues” from this inorganic-growth strategy as a key weakness, despite the company’s stated due-diligence process.
• Regulatory exposure to interchange caps: a meaningful share of Zaggle’s revenue depends on interchange fees its banking partners earn on prepaid card transactions; the RBI has already capped interchange fees on debit cards, and CARE Ratings notes similar limits “could potentially be extended to prepaid cards in the future,” which would compress the program-fee revenue line directly.
• Dependence on third-party banks and networks: Zaggle does not issue cards or move money on its own licence; it relies on partner banks and card networks (Visa, Mastercard, RuPay), so any deterioration in those relationships or in third-party processing and logistics providers can flow straight through to Zaggle’s operations, per the same CARE Ratings note.

The takeaway

Zaggle spent roughly a decade being the wrong kind of startup for the market it was in — a B2B fintech-SaaS hybrid, in a period when Indian venture capital wanted consumer scale, running a balance sheet stretched enough that it entered its IPO year with debt nearly three and a half times its equity. It did not fix that by finding a bigger cheque; it fixed it by staying alive on a low-CAC, high-retention B2B model long enough to reach the public markets on its own terms, and then using the proceeds and a follow-on placement to delever and buy the adjacent businesses that are now growing fastest. The transferable lesson is not “pivot to B2B” as a slogan; it is that a business model unfashionable enough to be underfunded can still compound quietly for years, provided the unit economics of serving one corporate client instead of a thousand consumers actually hold up — and that the moment to raise real capital may be well after the founding insight, not at the start.

Frequently asked questions

What does Zaggle Prepaid Ocean Services actually do?

It runs a spend-management platform for corporates — prepaid cards and software for employee rewards, expense reimbursement, tax-saving benefits and vendor/accounts-payable payments — serving more than 3,400 corporate customers and over 3.2 million platform users as of July 2025, according to CARE Ratings.

Is Zaggle profitable?

Yes. It reported net profit of ₹87.48 crore on revenue of ₹1,302.65 crore in FY25 (year to March 2025), and consolidated net profit of ₹139 crore on consolidated revenue of ₹1,908 crore in FY26, per CARE Ratings and the company’s FY26 results respectively.

Who founded Zaggle and who runs it now?

Dr Raj P Narayanam incorporated the company in Hyderabad in 2011 and serves as Executive Chairman; Avinash Ramesh Godkhindi, a former Citibank, Barclays and ING banker, joined in February 2012 and is the Managing Director and CEO.

When did Zaggle list, and at what price?

Zaggle listed on the NSE and BSE on 22 September 2023 at an issue price of ₹164 per share, after an IPO that raised ₹563.38 crore and was subscribed 12.6 times.

How much of Zaggle’s revenue is actually software subscription revenue?

A small share. Independent analyst estimates put SaaS subscription fees at roughly 3% of FY24 revenue, with the rest split between reward-point platform fees (roughly 56%) and program/interchange fees (roughly 41%), per a Capitalmind analysis of the company’s FY24 numbers.

Sources

Figures are as of September 2026. Currency converted at $1 ≈ ₹96.0 as of 18 September 2026 (Trading Economics).

• CARE Ratings Limited, press release on Zaggle Prepaid Ocean Services Limited’s bank facilities, 16 July 2025
• Zaggle Investor Relations, “Brief Profile of Board of Directors and their Other Directorships,” ir.zaggle.in, accessed September 2026
• Business Standard, IPO coverage of Zaggle Prepaid Ocean Services Ltd, September 2023
• Chittorgarh, “Zaggle Prepaid Ocean IPO Date, Price, GMP, Review, Details,” September 2023
• Business Standard, “Zaggle Prepaid Q3 results: Profit rises 92.7%,” February 2024
• Bizzbuzz, “Zaggle Prepaid Ocean posts Rs 273 cr revenue in Q4FY24,” May 2024
• Business Standard, “Zaggle Prepaid Ocean Services consolidated net profit rises 62.53% in the March 2025 quarter,” May 2025
• Business Standard, “Zaggle Prepaid gains after Q1 PAT spurts 55% YoY to Rs 26 cr,” August 2025
• EquityBulls, “Zaggle Prepaid Ocean Services Ltd Q4 FY26 consolidated net profit up at Rs. 40.60 crores,” September 2026
• Whalesbook, “Zaggle Prepaid FY26 Revenue Soars 46% to INR 1,908 Cr; Profit Jumps 52%,” 2026
• InvestyWise, “Zaggle Reports Robust FY26 Results: Revenue Surges 46% to ₹1,908 Crore,” September 2026
• Screener.in, Zaggle Prepaid Ocean Services Ltd company financials and shareholding pattern, accessed September 2026
• YourStory, “How fintech startup Zaggle pivoted from B2B2C to B2B SaaS platform,” June 2020
• Finshots, “The Zaggle IPO — a unique fintech + SaaS?,” September 2023
• Capitalmind, Zaggle business and financial analysis, February 2025
• The Moat Investor, “Zaggle Prepaid Ocean Services IPO Analysis”
• Inc42, “Inside Zaggle’s Push Towards An Agentic AI-Powered $1 Bn Enterprise Platform,” 2026
• IndiaInfoline, “Zaggle Prepaid Secures Rs 98 Crore Ahead of IPO Through Pre-IPO Placement,” September 2023
• SiliconIndia / Startup Story Media, coverage of Zaggle’s anchor investor allocation, September 2023
• Forbes India, “From a flat IPO debut to nearly 2X share price: What is Zaggle getting right?”
• Sharekhan and Tickertape share-price and market-capitalisation data for Zaggle Prepaid Ocean Services Ltd, 23 September 2026

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