How one minute soap operas pulled ShareChat back from the brink, and what could still go wrong before its IPO

A social app that was supposed to lose

For most of the last decade, the story of Indian social media had a fixed ending. A homegrown app would grow fast in Hindi and regional languages, raise big money, and then run into Instagram and YouTube, which had more money, more engineers and more advertisers. ShareChat was the best known of these challengers. Business Standard described it this month as the Indian social media company that once burned cash trying to take on Instagram.

Now its parent, Mohalla Tech, says it is generating cash. On 4 November the Bengaluru company reported that operating revenue rose 40% to Rs 1,016 crore in FY26, from Rs 723 crore in FY25. The reason is a format that most urban readers may never have opened: micro dramas.

What a micro drama is

A micro drama is a soap opera cut into episodes that last a minute or two, shot for a phone held upright, and built around cliffhangers so viewers keep tapping to the next one. Mohalla Tech runs them on QuickTV, a separate app, and on Moj and ShareChat. Fortune India reported that daily micro drama viewing on Moj and ShareChat grew 6.5 times in 12 months to more than one billion views a day.

The company makes money from them in two ways. Some viewers pay a subscription. Others watch free and see ads. Subscriptions from QuickTV and Moj+ brought in Rs 293 crore in their first full year. Charan told Business Standard that many users are replacing TV time with these vertical stories, so the real competition is linear TV and streaming apps, not only Reels and Shorts.

The numbers behind the turnaround

The FY26 accounts show a business still in transition. Entrackr's reading of the results says the chatroom feature, where users meet over video calls, earned Rs 471 crore, or 46% of operating revenue. Advertising fell 13% to Rs 252 crore. VCCircle reported that the company tied the ad decline to the hit taken by real money gaming companies, which used to be big advertisers.

Costs moved in both directions. Entrackr reported that business development spending rose 8.7 times to Rs 335 crore as the company pushed its new apps, while employee costs, excluding stock options, fell 16% to Rs 220 crore after layoffs. Interest on its debt securities came to Rs 549 crore.

Whether ShareChat lost a little or a lot in FY26 depends on which measure you use. The company's preferred figure, adjusted EBITDA, which leaves out non cash costs, shows a loss of Rs 91 crore, down 58% from Rs 219 crore. The Economic Times reported that loss before tax widened to Rs 1,978 crore from Rs 1,105 crore, and that cofounder and CFO Manohar Singh Charan blamed accounting costs on convertible debt, foreign exchange losses and employee stock options. Entrackr puts the net loss at Rs 672 crore, against Rs 796 crore a year earlier. Readers should treat the adjusted figure as the company's view of its operations, and the reported losses as what the books show.

Why the company says the corner is turned

The more striking claims are about the current year. Mohalla Tech says it turned EBITDA positive in the first quarter of FY27, posted two positive quarters in the first half and recorded four straight quarters of positive cash flow. Charan told VCCircle the company generated Rs 9.5 crore of EBITDA profit in the first two quarters and had already booked about Rs 740 crore of revenue in the half. It expects close to Rs 25 crore of EBITDA for the full year and an annual revenue run rate above Rs 1,500 crore.

Advertising, the weak spot in FY26, is also recovering on the company's numbers. It told Fortune India and Business Standard that ad revenue grew 40% year on year in Q2 FY27, helped by the extra inventory that a billion daily micro drama views create. CEO Ankush Sachdeva said the company is now funding its next phase entirely from its own cash flows.

The cost of a minute of drama

Part of the plan is AI. Business Standard reported that Mohalla Tech pledged Rs 100 crore in August for AI led micro dramas. Charan said a minute of content with human actors costs about Rs 20,000 to Rs 25,000 to produce, while AI has brought that down to about Rs 7,000 to Rs 8,000. He also said the company's server cost per user is now the lowest of any social media platform in the world, below Reddit.

He was candid about the catch. People pay for content they cannot get elsewhere, he said, and if AI floods the market with cheap stories, the reason to subscribe could weaken. That is why he expects advertising, not subscriptions, to bring in most long term profit, pointing to China, where he said more than 70% of micro drama revenue comes from ads.

The road to a listing

Charan told Business Standard the company could evaluate an IPO between October and December 2027. That timing depends on filing with FY27 results, after a full year of profitability and six consecutive quarters of positive cash flow by March 2027.

What could still go wrong

Several things. Most of the profit story rests on the company's own adjusted figures and forecasts for a year that is only half over. The reported losses are still large, and the debt that created heavy interest and accounting costs has not gone away. Competition is crowded: Business Standard listed Instagram Reels, YouTube Shorts, Kuku TV, Story TV, JioHotstar and DramaBox as rivals. And Charan himself said social media is a scale game where only three or four companies survive. ShareChat has bought itself a second chance with stories that last a minute. The next two quarters will show whether it lasts longer than that.