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Stabilising before potential rebound in the year ahead

Across the internet space, we expect mixed performance trends. Both Eternal and Swiggy would see their Food delivery (FD) GOV growing c.9% QoQ, while their Quick Commerce (QC) GOV could expand c.20% QoQ each. While Eternal should report margin improvement in both businesses, Swiggy will see margin improvement only in QC as FD margin could be under pressure. Nykaa sustained growth momentum in BPC with Fashion also showing sequential improvement. On the logistics front, Delhivery could surprise positively on EPS shipments growth as well as consolidated margins. PB Fintech would likely see normalised new business premium growth, while benefitting from strong renewals persistency. Paytm would likely turn PAT profitable driven by robust contribution margin and c.7% QoQ revenue growth. Among classifieds, Info Edge saw muted billings growth with margins also likely to be impacted by brand investments. CarTrade is likely to deliver robust growth in New Auto and Remarketing businesses, while OLX growth could decline further. In travel tech, ixigo should continue to report solid GTV growth across all segments, while TBO Tek is likely to see nominal GTV growth uptick on account of H&P segment. However, margins of both will be impacted by growth investments. Among others, Affle may see topline growth from new logo additions in developed markets and BlackBuck is likely to sustain growth momentum in tolling and telematics. We remain constructive on Eternal, Nykaa and Delhivery with Paytm and BlackBuck likely to emerge unscathed from the recent regulatory uncertainty.

Hyperlocal Delivery

* Eternal: In Zomato (FD), normal seasonality should play-out and hence we see sequential GOV growth of 9% (+15% YoY). FD growth on a YoY basis will be tad slower than 4QFY25 on account of broader consumption slowdown and an unfavourable base. We see MTUs growing to 22.1mn versus 20.9mn in 4QFY25. Take-rates are likely to remain sequentially flattish at 21.1%. We expect reported revenue growth of 9.3% QoQ (+15.6% YoY). Contribution margin (as % of GOV) should decline to 8.4% from 8.6% in 4Q, due to increase in delivery costs, while Adj. EBITDA margin (as % of GOV) can expand ~10bps sequentially to 4.5% aided by operating leverage. In Blinkit, we expect sequential GOV growth of 20% led by robust increase of 16% in order volumes (that in turn should be driven by MTU increase to 16.0mn from 13.7mn). However, take-rates are likely to remain flattish QoQ at 18.1% and therefore build 20% QoQ revenue growth as well. We see contribution margin expanding to 3.3% (as % of GOV) versus 3.1% in 4Q, due to higher AOV’s. Adj. EBITDA margin (as % of GOV) can expand c.50bps sequentially to -1.4% due to contribution margin expansion as well as operating leverage. At a consolidated level, we expect reported EBITDA to improve to INR 1.7bn vs. INR 0.7bn in 4Q whereas PAT is expected to improve to INR 785mn vs. INR 390mn in 4Q.

* Swiggy: In Food Delivery (FD), we expect normal seasonality to play-out and hence forecast sequential GOV growth of 9% (+18% YoY). Unlike Zomato, we do not see meaningful change in YoY growth trends due to a favourable base. We see MTUs growing to 16.4mn versus 15.1mn in 4QFY25, whereas AOV’s are likely to decline c.1% QoQ. Take-rates are likely to expand to 22.4% in 1QFY26 versus 22.2% in 4QFY25. Sequential GOV expansion with marginal take-rate expansion, in turn lead to revenue growth of 10.4% QoQ (+18.6% YoY). We expect contribution margin (as % of GOV) to decline to 7.6% from 7.8% in 4Q due to increase in delivery costs, while Adj. EBITDA margin (as % of GOV) will also be under pressure due to fixed cost increase and therefore can decline ~40bps sequentially to 2.5%. In Instamart, we expect sequential GOV growth of 20% led by robust increase of c.8% in AOVs, whereas order volumes can grow 11% led by MTU increase from 9.8mn to 11.0mn. Take-rates are likely to expand sequentially by ~20bps to 14.9%, mainly due to increase in ad income. We expect contribution margin to expand to -5.4% (as % of GOV) versus -5.6% in 4Q, due to AOV and take-rate expansion. Adj. EBITDA margin (as % of GOV) could improve c.190bps sequentially to - 16.1% as fixed costs are unlikely to increase at the same rate as GOV. At a consolidated level, we expect reported EBITDA/PAT to be at loss of INR 9.9bn/ INR 11.3bn respectively versus loss of INR 9.6bn/ INR 10.8bn in 4Q.

E-commerce

* Nykaa: As per Q1FY26 revenue update, Nykaa reported higher mid-twenties in BPC segment, broadly on expected lines. We triangulate core BPC GMV growth at c.26% YoY, assuming eB2B + Nykaa Man GMV growth at 46%. It is important to note that this growth was slightly impacted due to geopolitical tensions during its flagship sale, causing some loss of business. GMV-NSV conversion is expected to decline from 57.5% in 4Q to 57.3% this quarter, with expectations of a bottoming out. Nykaa’s fashion vertical is expected to deliver GMV growth of mid-twenties, indicating a strong improvement over the previous quarters. The growth was driven by improving traction in the core platform business, supported by an expanding assortment and robust customer acquisition, resulting in revenue growth of c.14% YoY. If the growth momentum sustains, we can expect Fashion to breakeven in FY26, as suggested by the management. Overall, we anticipate Nykaa to deliver c.24%/5% YoY/QoQ revenue growth. Contribution margin in core BPC is, however, expected to decline 30bps YoY with overall contribution profit expected to rise c.23%. With costs below CM unlikely to rise commensurably, we expect c.80bps YoY EBITDA margin expansion (-20bps QoQ), to reach 6.3%. Management’s commentary on industry trends in BPC/Fashion, competitive landscape, continued supply chain investments and international expansion plans should be keenly watched.

* FirstCry: India multi-channel (IMC) revenue growth is likely to be c.13% YoY due to slowdown in offline business, while International multi-channel is also expected to grow at c.11% YoY due to sustained competitive pressures. Consolidated revenue growth is expected to be at 15.6% YoY (-1.1% QoQ) driven by faster growth seen in Globalbees and Others segments. We expect FirstCry to report gross margin improvement of c.30bps YoY (+50bps QoQ) to 38.0%, supported by increase in home brands in overall mix, COGS reduction in home brands, better negotiations with suppliers, and an improved category mix. Consequently, we expect overall Adj. EBITDA margin to rise c.60bps YoY (-10bps QoQ) to 5.1% with IMC margin expansion of 50bps. With growth being hard to come by in International segment, the company is focused on cost control to drive EBITDA breakeven by FY28. Management’s commentary on growth trends in IMC along with potential value unlocking from GlobalBees, offline expansion in International business, growing share of quick commerce and competitive landscape should be keenly watched.

* Delhivery: With Meesho’s insourcing likely to plateau for a few quarters, we expect strong recovery (+9.5% YoY) in Express Parcel segment (EPS) shipments. On the other hand, realisations are likely to remain roughly flat as incremental volume is largely coming from lighter shipments. In PTL segment, we expect tonnage growth of ~15.4% YoY (0.5% QoQ) with realisation expected to improve 4.1% YoY (0.5% QoQ). On a YoY basis, Express Parcel revenue is expected to grow ~10.6% while PTL revenue should see ~20% growth. We expect Supply Chain Services to grow at a tepid 1.4% YoY (+15% QoQ), as the company has lost some key clients. On a consolidated basis, Delhivery should see YoY revenue rise of 11.0% with gross margin improving 90bps YoY benefitting from volume growth. Further, adj. EBITDA margin would improve c.50bps sequentially (+130bps YoY) to reach 3.0%. This margin improvement is a function of sustained service EBITDA margin improvement in EPS and PTL segments. We, however, expect the company’s recently announced acquisition of Ecom Express to be a significant positive trigger (c. INR 2.2bn incremental EBITDA) as it will enable Delhivery to transition Ecom Express’ volumes (30% retention) to its lower cost network. Management commentary on 1) impact of Ecom Express acquisition 2) impact of Valmo and growing share of quick commerce within ecommerce shipment volumes and 3) capitalisation of rapid commerce opportunity should be keenly watched. Classifieds

* Info Edge: Segment-wise billings were reported by the company on 7th July. Recruitment segment billings decelerated to 9.0% (-36.5% QoQ due to seasonality), the slowest in the last 4 quarters, despite a relatively favourable base. We believe the growth slowdown was broadbased across IT as well as non-IT as macros remain muted, which in turn would have led to recruiters pushing out their subscription renewals. 99acres billings was up 16.5% YoY (-40.9% QoQ). Others (includes Jeevansathi and Shiksha) billings grew 18.8% YoY (-5.0% QoQ). Overall, standalone business billings grew 11.2% YoY (-34.5% QoQ). Standalone revenue should see growth of 14.3% YoY, led by 12.7%/18.5%/19.4% YoY growth in Recruitment/99acres/Others segment respectively. We forecast EBIDTA margin to decline by c.70bps YoY to 38.3% (37.7% in 4QFY25). Segment-wise, PBT margin for recruitment business could decline 150bps YoY to 52.5% (54.5% in 4Q) due to branding spends during IPL. We, however, see material improvement in PBT margins of 99acres and Jeevansathi by 200bps/250bps YoY respectively, due to tighter control over A&P spends. Overall, we forecast EBITDA/Adj. PAT growth of c.12%/7% YoY. Management commentary on 1) demand environment in IT and non IT recruitment, 2) 99acres/Jeevansathi path to operating profit break-even and 3) investee companies likely to go public in the next 12-18 months should be keenly watched.

* IndiaMART: INMART’s paying supplier growth has been muted since 1QFY24. Our estimate of 1.2k QoQ paying supplier additions in the core classifieds business is well below the long-term historical average of ~4.5k. We expect cash collections growth of 10% YoY in 1Q as muted subscriber additions and fewer up-sells continues to hurt collection growth. While revenue growth could be better than collections at 11.1% YoY (+3.7% QoQ) due to robust deferred revenue, it has been on declining trend from 30.8%/21.5%/16.0% in FY23/FY24/FY25 due to continued pressures on collections growth in recent quarters. On the other hand, savings on sales incentives/servicing costs in the absence of material improvement in paying suppliers could lead to EBITDA margin expanding by 95bps YoY (sequentially margins will expand c.20bps). As a result, Consol. EBITDA could expand ~14% YoY in 1Q. Management commentary on paid subscriptions churn trends and investments in accounting services segment should be keenly watched.

* Just Dial: We expect 7.1% YoY revenue growth supported by c.5%/2% YoY increase in paid campaigns (period-end) and average realisations, respectively. We forecast sequential addition of c.7.3k in paid campaigns from ~8k/12.2k in 1QFY25/4QFY25. Improving productivity of the sales team, tight control over A&P spends and declining investments towards new initiatives (such as JD Mart, JD Xperts and JD Shopping) should lead to EBITDA margin expansion by c.110bps YoY (+6bps QoQ) to 29.8%, which in turn should help reported EBITDA to expand by c.11% YoY to INR 896mn. PAT is likely to decline c.6% YoY to ~INR 1.3bn, due to higher tax rate.

* CarTrade: We expect CarTrade’s new auto business to grow c.27% YoY (though slower than 4Q but still robust growth) considering the favourable market dynamics - muted demand and normalised supply is leading to rise in ad spends as a % of revenue across OEMs. With sustained bottoming out of repossessions along with low base, remarketing segment is expected to recover and deliver a revenue increase of c.20% YoY (-9.1% QoQ). However, OLX is expected to be lagging with revenue expected to grow at 5% YoY (2.7% QoQ), even slower than that in Q4FY25. Overall, CarTrade should deliver c.18% YoY revenue growth with Adj. EBITDA margin (excluding ESOP expense) expected to improve 394bps YoY to reach 23.5%.

Fintech

* PB Fintech: With Policybazaar’s high growth in 9MFY25 being largely driven by certain IPO-bound insurers as well as strong equity markets driving demand for ULIPs, we believe the company would now gradually shift to 24%-26% new business premium (NBP) growth. Consequently, we anticipate a more normalised growth trajectory going ahead, with 35% YoY growth in overall insurance premium (vs. 48% growth in FY25), driven by 32%/41% YoY growth in core insurance premium / New Initiatives. In NBP, auto is expected to be weaker with marginal recovery in ULIPs, while health and term could also see some growth normalisation. Paisabazaar disbursals are expected to decline c.13% YoY (+14.8% QoQ) with muted environment in unsecured loans while secured loans (via agency channel) might compensate for this dip. We expect revenue growth of 34% YoY (-10.1% QoQ), driven by 35%/26% YoY growth in Policybazaar / Paisabazaar. Group contribution margin should dip 140 bps QoQ to reach 27.3% (-80 bps YoY) due to lower mix of renewals and relative deleverage. Additionally, we expect adj. EBITDA margin expansion of c.130bps YoY (-620bps QoQ) to reach 3.7%. Management commentary around healthcare foray, premium / disbursals growth expectations and contribution margins trends going forward should be keenly watched.

* Paytm: We expect Payments services revenue (ex- UPI incentives) to grow at c.6% QoQ (+21% YoY). This is driven by 27% YoY GMV growth at a relatively lower take rate due to rising share of lower yielding UPI in the mix. Merchant subscriber base is expected to grow c.7% QoQ (22% YoY) to 13.3mn as the company is focused on new merchant signups as well as reactivation of dormant merchants. In 1Q, loan disbursals are expected to grow at 8% QoQ (c.23 YoY) mainly driven by merchant loans with significantly lower mix of Default Loss Guarantee (DLG). Moreover, personal loan disbursements are expected to remain slow on account of tightened unsecured lending. Revenue from Financial services is expected to remain flattish sequentially due to lower take rates on account of decline in FLDG based loans. Revenue from marketing services is expected to grow at 3% QoQ. On a consolidated basis, revenue (ex- UPI incentive) is expected to grow c.8% QoQ. Contribution margin is expected to improve 80bps QoQ (ex-UPI incentive impact in Q4FY25). Despite the impact of wage hikes, improved operating leverage will result in Adj. EBITDA of INR 211mn. We also expect the company to turn PAT positive with a PAT of INR 189mn as treasury income is likely to compensate for the impact of ESOP expense and D&A expense. Any updates on the three regulatory triggers and increasing customer acquisition would be keenly watched. 

Travel-tech

* TBO Tek: We expect consol. GTV growth to marginally improve to c.8% YoY in 1QFY26 (up from 3.7% YoY in 4QFY25), as we expect Air Ticketing business to remain weak declining 12.5% YoY in 1Q. GTV growth in the H&P segment could accelerate to ~23.5% YoY (from 17.4% in 4QFY25). Revenue growth, however, is likely to be meaningfully ahead of GTV growth at ~22% YoY mainly due to mix change and improvement in take-rates in the H&P segment. We expect gross margin to expand c.320bps YoY to 70.1% in 1Q, aided by growing contribution from the high-margin H&P segment (86.9% of total gross profit in 1QFY26 vs. 81.3% in 1QFY25). However, EBITDA margin is likely to decline c.166bps YoY to 17.1% due to recent investments in feet-onstreet sales in developed markets in addition to incremental tech investments. Consequently, EBITDA growth will likely be ~11% YoY. PAT is expected to grow 6.2% YoY in 1Q.

* Yatra: We expect consol. gross bookings to see improvement of 15.8% YoY (+2.4% QoQ) in 1Q mainly due to growth of 10.3% in air ticketing GBR. Hotels & Packages (H&P) is expected to grow c.49% YoY due to acquisition of Globe Travels. Consol. revenue is likely to grow 142% YoY (+11.2% QoQ) due to increase in H&P contribution to GTV (19% of total GTV in 1QFY26 vs. 15% in 1QFY25) and Globe Travels M&A. We factor-in EBITDA margin of 5.8% during the quarter versus 4.6%/7.8% in 1QFY25/4QFY25. As a result, we forecast EBITDA of INR 141mn (versus EBITDA of INR 46mn/INR 171mn in 1QFY25/4QFY25). Adj. PAT is expected to be at INR 85mn in 1QFY26. Management commentary on revenue and cost synergies from acquisition of Globe Travels should be keenly watched.

* Ixigo: We expect ixigo to continue its strong growth momentum in 1Q across all key business segments delivering ahead-of-OTA market growth. ixigo’s flight segment GTV is expected to grow c.61% YoY (-4% QoQ) led by passenger segment growth of c.53% YoY (flattish QoQ) and ATV (average transaction value) growth of 5% YoY (-4% QoQ). We expect ixigo to continue to gain meaningful market share in 1Q by benefitting from new flight supply addition in lower-tier cities, increasingly expanding its customer base in Tier 1 cities. Trains GTV is expected to grow c.32% YoY (-1.2% QoQ) led by passenger segment growth of c.28% YoY (+2.9% QoQ) and ATV growth of c.3% YoY (-3.9% QoQ). Bus GTV is expected to grow c.57% YoY (+6.6% QoQ) led by passenger segment growth of c.55% YoY (+9.2% QoQ) and ATV growth of c.1% YoY (-2.3% QoQ). Overall, we expect GTV growth of c.46% YoY (-1% QoQ). Revenue from operations is expected to grow c.50% YoY (-3.7% QoQ). Contribution margin is expected to decline 460bps YoY to 43.1% due to accelerated growth investments. EBITDA margin will decline 175bps YoY to 7.5% due to increased branding and tech cost. We expect company to deliver PAT growth of c.31% with PAT of INR 145mn.

Ad-tech

* Affle: We expect revenue to grow 19% YoY (2.7% QoQ) on the back of new logo additions in developed markets (ex-India). We expect gross margins to expand 99bps YoY (flattish QoQ) to 39.4%. Also, EBITDA margin could expand c.169bps YoY (-44bps QoQ) to 21.8% due to operating leverage, whereas EBIT margin is expected to expand c.103bps YoY (-40bps QoQ) to 17.4%. Accordingly, we forecast EBITDA/EBIT to grow c.29%/26% YoY. Nevertheless, PAT should expand c.18% YoY (flattish QoQ) to INR 1,022mn, as strong operating performance will be partially offset by lower other income compared to last year.

CPaaS

* Route Mobile: 1Q is expected to be a weak quarter for Route. We expect revenue to decline 1.9% YoY (-7.9% QoQ) as CPaaS industry continues to face headwinds in the form for growing curbs on artificially inflated traffic, large global enterprises considering alternate communication channels and pricing pressures in some new communication channels. Also, we see deterioration in gross margin by 163bps YoY (+110bps QoQ) to 20.4% on account of lower margin profile of Telesign business. Subsequently, there will be 234bps YoY EBITDA margin decline leading to EBITDA margin of 10.0% versus 12.4%/10.3% in 1QFY25/4QFY25 due to increased employee costs on account of higher ESOPs. Furthermore, PAT is expected to decline by c.19% YoY (-20% QoQ). We reckon the market will focus on management commentary on 1) expected revenue synergies from Telesign, 2) industry headwinds in the form of curtailed spends by OTT’s and geopolitical issues in some countries, and 3) operating margin guidance.

Logistics-tech

* BlackBuck: Payments business (which includes Tolling and Fueling) is expected to deliver ~35% YoY (+7.6% QoQ) growth driven by sustained tolling industry growth along with market share gains. We expect the company to continue to further gain market share considering the value proposition comes at no incremental cost to the tolling customers. BlackBuck has received in-principle approval for PPI license in 4Q25 which will allow it to issue FASTags itself, driving significant jump in tolling take-rates overtime. Telematics business is expected to remain flattish QoQ, though still resulting in healthy YoY growth. Overall, we expect strong revenue growth of 39% YoY (+5% QoQ) in 1QFY26 to reach INR 1.3bn. Blackbuck, being a platform business, is a high contribution margin business with major direct expense being employee cost associated with delivering service activities. However, with wage hikes in BlackBuck only happening in 2Q, we expect Adj. EBITDA margin to improve ~20ppts YoY (~160bps QoQ) to 33.4% in 1QFY26, resulting in absolute EBITDA profit of INR 427mn. We expect the company to deliver PAT profit of INR 394mn. Commentary on newer businesses such as vehicle financing and load brokerage should be keenly watched.

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