Hyderabad-based fintech company Zaggle Prepaid Ocean Services on September 25 announced the acquisition of stakes in two firms—Span Across IT Solutions and Mobileware Technologies.

Zaggle purchased a 98.32% stake in Span Across for ₹32.07 crore and a 26% stake in Mobileware for ₹15.6 crore.

The Zaggle stock started off with 6% gains on September 26 before paring some gains. By 12:20 pm, the shares were trading at ₹446 on the NSE, up 3.5%.

In an interview with CNBC-TV18, Zaggle’s MD and CEO Avinash Godkhindi outlined the strategy behind their stake acquisition, especially the ₹32 crore investment in Span Across, despite its modest revenue of ₹3 crore in 2023-24.

According to Godkhindi, Zaggle doesn’t view its investment in Span Across (which is branded as TaxSpanner) as a standalone venture but sees significant synergies that can enhance both businesses.

With Zaggle’s large base of over 3,100 corporate customers and 2.9 million users, they can now offer tax filing capabilities to these clients, expanding TaxSpanner’s reach.

This access to Zaggle’s established corporate network is expected to drive growth for TaxSpanner.

Zaggle also has a wide network of channel partners, including dealers, distributors, and retailers, which number in the lakhs. These partners can also help serve TaxSpanner’s audience, creating new revenue opportunities.

As a result, both TaxSpanner and Zaggle’s core business are expected to grow through this expanded access and integration.

“The other factor is GST filing for midsize and smaller companies. We have a whole host of channel partners, vendors, who need support in being able to do this well. TaxSpanner brings that capability. So we have seen tremendous traction in the partnership in the last six months and that’s why we have gone ahead and made the acquisition,” Godkhindi added.

Read Here | Zaggle Prepaid outlines four key levers to sustain low double-digit margins

Mobileware Tech adds digital payment solutions to Zaggle’s portfolio.

Mobileware provides a range of NPCI-certified switch solutions across digital payment services like UPI, IMPS, AEPS, and BBPS.

Span Across’ turnover has grown to ₹4.73 crore in 2023-24 from ₹3.07 crore in 2021-22, while Mobileware’s turnover has grown to nearly ₹17 crore in 2023-24 from ₹6.84 crore in 2021-22. 

Godkhindi said Zaggle is on track to achieve the 45-55% revenue growth target for the current fiscal year.

The second quarter has shaped up well, which may lead to a revision in growth guidance.

Importantly, this growth is expected to come from organic expansion rather than from the recent acquisitions.

The company is also aiming for an earnings before interest, tax, depreciation, and amortisation (EBITDA) margin of around 10%.

The company, which has a market capitalisation of ₹5,609 crore, has seen its shares rise 152% over the last year.

Also Read | Easy Trip Planners Block Deal | Promoter Nishant Pitti likely to sell 8.5% stake for ₹622 crore