RNFI Services Q1 FY27: Gross profit improves, margins soften as the company invests for scale

RNFI Services Limited reported a steady top-line quarter in Q1 FY27 while signalling a deliberate push into higher-margin businesses. Consolidated revenue for the quarter rose to 269.9 crore from 249.6 crore in Q1 FY26, up 8% year-on-year. The more notable movement was in gross profit, which increased 15% to 43.4 crore, lifting gross margin to 16.1% from 15.1%.

But the quarter also reflected the cost of building new engines. EBITDA declined to 11.5 crore from 12.8 crore, and PAT softened to 5.1 crore from 5.8 crore. Management attributed the margin pressure to front-loaded investments in field force expansion, technology build-out, marketing, and senior leadership hires, especially to scale insurance and delinquent loan collection.

The operating story: revenue mix improving, operating leverage deferred

RNFI’s disclosure breaks the business into non-forex and forex buckets. The difference between the two is important for interpreting the headline numbers. Forex is large in revenue but structurally thin in margins, while the non-forex bucket carries materially higher gross profit contribution.

In Q1 FY27, non-forex revenue grew from 100.6 crore to 114.8 crore, while non-forex gross profit rose from 35.8 crore to 41.7 crore. Non-forex gross margin improved to 36.3% from 35.6%, showing that mix within non-forex continues to move in a favourable direction.

Forex revenue rose modestly from 149.0 crore to 155.1 crore, but gross profit declined to 1.7 crore from 2.0 crore. Forex gross margin, already thin, fell further to 1.1% from 1.3%. On the earnings call, management linked forex margin compression to competitive intensity and broader global conditions.

The company’s explanation for the drop in EBITDA and PAT margin was consistent across the presentation and the call. It described costs as being intentionally front-loaded for growth initiatives, with the expectation that the second half of FY27 should reflect higher scale in insurance and delinquent loan collection.

Distribution: fewer Sahayaks, higher cross-sell intensity

RNFI continues to build around its Sahayak distribution network under the Relipay brand. The company disclosed that it has more than 2.4 lakh active Sahayaks annually and highlighted low concentration risk, stating that no single Sahayak contributes more than 0.1% of revenue.

The Q1 network data showed a year-on-year decline in active Sahayaks for the quarter, but improved multi-product adoption. Total active Sahayaks declined to 142,748 in Q1 FY27 from 167,116 in Q1 FY26. Management attributed the decline to consolidation and regulatory changes impacting parts of the BC and AePS ecosystem.

What improved was engagement depth. The number of Sahayaks selling four or more products increased to 21,445 from 15,689. The company positioned this as evidence of stickiness and a more durable distribution model, even if the near-term headline count is lower.

The same trend appeared in monetisation. Average revenue per Sahayak per month increased to 1,946 from 1,522, a 27.9% rise. Management noted that ARPU is influenced by network churn and expects it to normalise as the base stabilises, but it used the metric to support the thesis that cross-sell and deeper engagement are improving.

Strategic focus: insurance, delinquency, and platform-driven cross-sell

Management framed FY27 around two “key growth engines”: insurance and delinquent loan collection. It stated these segments are gaining traction but are still ramping up in revenue contribution. The company expects Q3 and Q4 to be the strongest quarters for both, with a meaningful step-up in scale.

In the Q&A, management provided a specific datapoint for insurance: it said insurance revenue in the prior quarter was 24 crore and that Q1 FY27 delivered 15 crore, while reiterating that the first quarter tends to be seasonally slower for these businesses. It also confirmed continued investment into Q2 to expand distribution and on-ground capability for high-margin products.

RNFI also reiterated the strategic rationale behind its acquisitions and licences. It highlighted Payworld Digital Services as a distribution expansion and referenced the PPI licence process via Smart Payment Solutions. On the call, management said the PPI change-of-control process is in the last phase of RBI queries and that scaling of PPI and RNFI Money products would become more visible once approvals are received.

Paysprint was described as a diversification layer through B2B API and SaaS-led connected banking. The CFO stated that integration of acquisitions is substantially complete and that the company expects benefits of a consolidated platform to reflect in coming quarters through cross-sell, better monetisation of the agent network, and improvement in margin profile.

Other initiatives and partnerships referenced in the presentation included a CRA tie-up with a large private sector bank, a strategic partnership with Yatra.com, a BC empanelment with a private sector bank, and the setup of regional Learning and Development centres.

On product launches, the company stated that mutual fund distribution should go live at the end of Q2 FY27 or early Q3 FY27 following AMFI registration, initially focusing on the Sahayak base. It also discussed foreign remittances enabled by the AD-II licence, but in the Q&A management said scaling is being paced due to economic conditions, even as platform integration with a bank is near completion.

What to watch next

RNFI’s Q1 FY27 outcome can be read as a mix-improvement quarter with deferred operating leverage. Gross profit growth outpaced revenue growth, but margins compressed due to planned investment in people and build-out.

Management stated that Q2 should be better than Q1 and reiterated its commitment to previously shared full-year PAT growth guidance of around 40 to 50 percent, with a larger step-up expected in Q3 and Q4. The next few quarters will therefore be important for validating whether higher fixed costs translate into scale in insurance and delinquent loan collection and whether new initiatives such as mutual fund distribution and the Payworld PPI licence outcome start becoming visible in reported numbers.