ShareChat’s Microdrama Pivot Fails to Stem Losses as FY26 EBITDA Halves

Mohalla Tech, the parent of homegrown social media platform ShareChat, delivered a mixed financial performance in FY26, with revenue crossing ₹1,000 crore for the first time but losses widening due to aggressive growth spending and currency depreciation. The company’s pivot to microdramas—led by its QuickTV unit—generated nearly a third of total revenue in the fiscal year, but the segment’s reliance on ad-supported models has left its unit economics under pressure.

According to *Inc42*, Mohalla Tech’s FY26 losses were largely driven by a surge in expenses. Employee benefit costs more than doubled year-over-year, while forex losses spiked due to the rupee’s depreciation. Marketing and user acquisition spending jumped nearly eightfold as the company invested heavily in growth. Despite these challenges, the company managed to halve its EBITDA loss to ₹91 crore, a sign that its core business is inching toward profitability. In fact, Mohalla Tech claims to have posted its first EBITDA-positive quarter in Q1 FY27, driven by better monetization across subscriptions, livestreaming, and advertising.

The microdrama push has been ShareChat’s most significant revenue driver in recent years, but the company remains skeptical about subscriptions. Management told *Inc42* that it expects paying users to remain below 100 million even as the market matures, suggesting that most Indian users will not pay for microdramas. Instead, the company is banking on ad revenue to rebound strongly, with AVOD (ad-supported video-on-demand) top line projected to cross ₹350 crore in FY27.

For FY27, Mohalla Tech is targeting an EBITDA profit of ₹25 crore and claims to have already reported around ₹740 crore in revenue in H1 FY27. However, the company’s reliance on ad-supported microdramas raises questions about whether its growth model can sustain long-term profitability. The ban on real-money gaming last year further complicated monetization, forcing ShareChat to double down on ad-heavy content.

The financial snapshot comes as India’s startup ecosystem sees a wave of IPO activity, with 22 companies going public in FY26, as previously reported by *StartupReader* on September 26. While Mohalla Tech has not yet announced IPO plans, its aggressive growth strategy—and the challenges it faces—reflect the broader tensions between scaling and profitability in India’s digital media sector.

What to watch next: Mohalla Tech’s ability to sustain AVOD revenue growth and whether its EBITDA-positive quarter in Q1 FY27 signals a turning point. If ad revenue fails to materialize as expected, the company may need to reconsider its subscription strategy—or face deeper losses in the coming fiscal.

Sources: inc42.com