BlackBuck reported a strong quarter with an even stronger margin expansion. As discussed in our IC note, the company continues to demonstrate the advantages of a recurring revenue led business model with cross-sell driving rampant operating leverage. BlackBuck reported INR 1.22bn revenue (+31% YoY / 7% QoQ) with strong growth in its Core business (+28% YoY) further amplified by 50% YoY growth in Growth businesses. Company also delivered strong operating metrics such as 17%+ YoY growth in monthly transacting truck operators (0.77mn as of 4QFY25) and 26% growth in truckers using 2 or more services. BlackBuck’s Adj. EBITDA margin expanded ~16ppts YoY (~3ppts QoQ) to 31.8%. Furthermore, Adj. PAT stood at INR 2,865mn vs. loss of INR 872mn in 4QFY24, mainly due to INR 2.4bn deferred tax credit assets created in 4QFY25 on account of carried-forward losses. BlackBuck has received in-principle approval for PPI license which will allow it to issue FASTags itself, driving significant jump in tolling take-rates overtime. We believe BlackBuck can be a strong compounding play with significant optionality if Load Brokerage business ramps up profitably. Reiterate BUY with Mar’26 TP of INR 590 (28% upside), implying 42x / 33x FY27E EPS / Adj. EBITDA multiple.
Top-line growth momentum continues: BlackBuck continued to deliver strong revenue growth of 31% YoY (+7% QoQ) reaching INR 1,218mn. Core businesses (which includes Tolling and Vehicle tracking solutions), contributing c.87% of total revenue, delivered ~28% YoY growth. Management noted that as of Mar’25, company reached c.45% market share in Trucks’ Tolling from 37% in Mar’24. Growth businesses delivered a strong growth of ~50% YoY, mainly driven by Fuel sensor business (which has doubled its sales on YoY basis in 4Q) and Load Matching business. Management noted that most of its bandwidth is now focused towards driving Growth businesses with high opportunity pools such as Load Matching, Vehicle Financing and Fuel sensors.
Strong margin expansion driven by operating leverage: Blackbuck, being a pureplay platform business, has high contribution margins with major direct expense being employee cost associated with delivering service activities. In 4QFY25, contribution margin (CM) improved by 110bps YoY (-80bps QoQ) to 91.9%. Employee cost, including manpower cost, (as % of revenue) has declined to 53% vs. 68% last year due to variabilisation of the workforce and lean & execution focused teams. As a result, Adj. EBITDA margin has improved ~16ppts YoY (~3ppts QoQ) to 31.8% in 4QFY25, a beat of 100bps on JMFe of 30.8%. In 4Q, there was ESOP reversal of INR 11mn on account of ESOPs cancelled / surrendered. As a result, Adj. EBITDA stood at INR 388mn in 4QFY25 vs. INR 149mn / INR 331mn in 4QFY24 / 3QFY25. With recurring revenue driving high CM and operating leverage, we expect Adj. EBITDA to reach ~ INR 3bn in FY27.
Maintain ‘BUY’ with Mar’26 TP of INR 590: BlackBuck’s revenue has grown at FY22-25 CAGR of 53%, roughly 3.5x in 3 years. Moreover, the company turned adjusted EBITDA profitable in H2FY24 and has maintained the trajectory to turn PAT positive this quarter. We forecast the company to maintain the momentum with 33%+ FY25-27 Revenue CAGR and Adj. EBITDA margin reaching 39%, effectively delivering incremental EBITDA margin of 58% over the coming 2 years. We value the company using DCF-based valuation, resulting in Mar’26 TP of INR 590, 28% upside at CMP. We maintain ‘BUY’ and believe this to be a robust compounding story with significant optionality if the company manages to crack the large opportunities in Load Brokerage or Vehicle Financing businesses.
Minimal customer acquisition cost due to significant cross-sell opportunity: BlackBuck’s strong operating metrics such as a 21% YoY growth in monthly transacting truck operators (0.72mn in FY25), 31% YoY growth in monthly transacting users using at least two services (0.34mn in FY25), and an 8.5% rise in daily time spent on the app (~43 min as of FY25) reflect a deeply engaged and loyal customer base. This robust platform engagement reduces the need for heavy investment in new customer acquisition. Instead, BlackBuck can efficiently cross-sell its expanding portfolio of services to its existing network of truck operators. This creates a moat for the company as CAC for additional services is not much, giving a competitive advantage over its competition.
Key updates: 1) TZF Logistics Solutions, a 100% subsidiary of BlackBuck, has received inprincipal approval for PPI license, which will help the company to get end-to end ownership of the payments stack. This license will allow company to issue FASTags itself. Management noted that PPI license won’t lead to immediate take-rate improvement, though there will be gradual improvement in take-rates while lowering the impact of downtimes with partner banks. Management also noted that even at a small scale, cost benefit due to this will outweigh the incremental cost expense. 2) In Telematics, company has developed a new hardware (ICAT certified) to build the end-to-end supply chain to improve customer experience and gain price advantage.
Supply overhang remains but expect supply to be absorbed: As highlighted in our recent note on BlackBuck’s pre IPO shareholders’ lock-in expiry on May 20th, there is 56% of the company’s share capital that has become available to trade. We do expect significant supply to come due to a combination of profit booking and technical reasons (fund tenure and mandate on fund allocation). However, considering the strong operating performance and triggers such as PPI license, we believe the company can sustain the profitable growth momentum. Furthermore, with CMP implying c.25x FY27E EBITDA multiple, risk-reward also remains significantly favourable. Hence, exiting investors would certainly face a significant dilemma.
