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Earnings Call Transcript

Earnings Call Transcript
2025-Q2

from 0
Operator

Ladies and gentlemen, good day, and welcome to CarTrade Tech Limited Q2 FY '25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performances and involves risks and uncertainties that are difficult to predict.

[Operator Instructions]

Please note that this conference is being recorded. I now hand the conference over to Mr. Vinay Sanghi, Chairman and Managing Director of CarTrade Tech Limited. Thank you, and wait to you, sir.

V
Vinay Sanghi
executive

Thank you. Good afternoon, everybody, and welcome to CarTrade's Q2 earnings call. I want to -- of course, we've uploaded our presentation and the financials for all of you to see in advance. I just want to start off with saying that it's been a good quarter for the company. In this quarter, we achieved the highest ever revenue and profit before tax in any quarter. .

We're the #1 automotive platform in India across use classifieds, horizontal classifieds and of course, vehicle auctions. We received almost 77 million monthly active users on -- across all our platforms, CarWale, BikeWale, OLX, et cetera. We -- I think what is more remarkable that drives the performance of the company, 95% of these users come to organic sources, which means we don't pay for these users to come on to the platform.

We are now covering almost 150-plus physical locations. The auction at a rate of 1.4 million vehicles a year. Revenue for the quarter is at INR 172 crores, which is highest, as I said, adjusted EBITDA is at INR 57 crores, INR 56.8 crores is also our highest ever. Profit after tax is almost INR 31 crores. And as you know, we have a strong cash balance debt free with about INR 832 crores of surplus cash.

If you go to our consolidated results, which is on Page 6. As I said, our revenue is INR 172 crores. Revenue has grown by 27% in Q2 over last year. Half yearly revenues at INR 328 crores, which has grown by 35% year-on-year. So the 6-month results showing a 35% growth in revenue.

You see our margins, our EBITDA margin, EBITDA is up at INR 32.7 crores for the quarter and EBITDA margin jumped from 15% last quarter to 21%, which shows the leverage in the business. When increase in revenue, what we demonstrate an improvement in our operating and EBITDA margins. As you can see, even the EBITDA is up from 21.5 last quarter, which is almost a 50% jump in EBITDA quarter-on-quarter, 54% jump from last year. And half yearly EBITDA jumped 104%, INR 54.8 crores consolidated from INR 26.65 crores last year. And therefore, you see the margin gone up 11% to 17% half yearly.

PBT is up by 44% to INR 37.14 crores for the quarter and INR 61.29 crores for 6 months at 48% half yearly from last year. And that's what showed the leverage of the business, a 35% increase in revenues resulting in a 48% growth in the profit before tax. PAT for the year -- for the quarter first time the INR 30.72 crores, which is up 500% from last year and 53.62 half yearly which is up 189% from last year, INR 18.55 crores. So generally, you've seen a very strong set of revenue and profit growth with increase in margins across all periods.

If you look at adjusted EBITDA, which is just moving the cost and adding the interest income, it's at all time high of INR 56.81 crores, up from INR 42.8 crores last quarter and 37% year-on-year growth and almost INR 100 crores for the 6 months ended, which is up 38% from last year.

So this is on the consolidated results. We got the stand-alone results, which is for the consumer group contains CarWale, BikeWale, some of these brands. Revenue was up -- operating revenue is up 23%, which is INR 55.62 crores. Other income is down because of the acquisition of OLX last year, our cash balances have gone down, and therefore, see a slight dip in interest income, but operating revenue is up 23% for the quarter, 20% 6 months INR 106 crores.

It's been a strong quarter performance of the Consumer Group. I think the highest ever revenue in any quarter. You see the employee costs and other costs well in control now, which shows the operating leverage even though the revenue is up quarter-on-quarter and year-on-year. You see the actual costs, overall expenses are flat or close to flat, which is really resulting in the massive 464% growth Q-on-Q on EBITDA and last year becoming INR 18.4 crores of EBITDA in the first 6 months here. So massive growth in both EBITDA over the small increase in revenue increases in revenues. PBT, again, is showing a 71% up to INR 19 crores and half yearly up at 30% to INR 32 crores.

When you look at profit after tax, INR 15.75 crores versus INR 12 crores last quarter and INR 10 crores last year was up by 55% and INR 28 crores for the 6 months on the stand-alone side, it's up by 27%.

So you see a strong operating performance here, slightly lower other income just because of the reduction in cash balances due to the acquisition of OLX. But overall, again, very, very strong operating metrics being reported in the stand-alone results. When you look at the remarketing result, which is on Page 8, you had a modest growth of about 3% and 57.24 and 3% for the year at 105.84. But we've kept our expenses under control, and there's been slight cost reduction, which has resulted in a 34% growth in profit before tax at INR 10.26 crores and INR 14 crores for the half yearly, which is up by 29% to last year.

PAT is also up 32% at INR 7.59 crores and INR 10 crores for the 6 months ended at 26% up from the last year. So generally a strong financial performance. We like the revenue growth by stronger, but the financial performance has been quite strong even in Shriram AutoMall and the Remarketing Group.

When you look at the OLX results, which is on Page 9. OLX, obviously, there's a growth over the previous quarter from 49.48 from 48.23. It is difficult to compare over last year just because only 2 months of operation during the first half of last year. But at 6 months now, we've achieved 97.72 revenue for the 6 months ended September '24. EBITDA is up at Q-on-Q from INR 8.05 crores to INR 8.55 crores and half year is now at INR 16.6 crores. I see a small improvement margin from 17% to 18% quarter-on-quarter and PBT is up as well. PAT is slightly down, and that's partly only because of tax incurred on other income on some of our interest income we incurred some tax, and that's why the PAT is slightly lower than the previous quarter.

But generally, operations are stable. We feel it's a reasonably strong financial performance. Revenue growth is something we feel we'll achieve a stronger revenue growth something we'll achieve in the coming quarters, but generally a strong, stable performance from OLX as well. This is a good summary of the consolidated and subsidiary accounts in finance and operating metrics. I'd be happy to take questions now from each one of you. Thank you.

Operator

[Operator Instructions]

We have the first question from the line of Siddhartha Bera from Nomura.

S
Siddhartha Bera
analyst

Congrats on a good set of results. Sir, first question I have on the OLX business. So if you see the ramp up, now it's been like close to 1 year, we have this business, we are operating and running this. How do you think has been the performance? Is many of the improvement still yet to play out? Or do you think it is taking longer? If you can guide us about how to look at the revenue scale up in the OLX business and some more color about which are these segments? Any mix or any more data, if you can share in terms of OLX? How the business is telling or what are we doing here to sort of scale up the revenues to be helpful.

V
Vinay Sanghi
executive

I think happy Diwali to you that's first. The second thing is we've over the last been about 11 months to the end of September, for the -- from the acquisition of OLX, I mean, sorry, 13 months or so and obviously, the 10 in those first 13 months was around stability of technology platforms, teams, recruiting all the product technology teams, moving all of this technology and product to our own environment, stabilization and growth traffic, consumer traffic, processes and sales, et cetera, et cetera.

And the segments are pretty much the same. It's 45% of it is auto, used cars and used 2-wheelers and the rest is non-auto, which is like the real estate jobs, electronics, mobile, et cetera, et cetera. We've obviously -- there has been revenue growth in the last 13 months of operation during this period. And we feel a lot of the things we've done and a lot of the foundation we've laid the significant part of that growth will come in the future.

When you take over a business, I think you'll have a foundation where over the next 5 to 10 years, you can see that growth. So some of it started to play out. Obviously, the auto side is something we were more comfortable with and obviously, a lot of the initiatives we launched in the automotive side first.

But now we are also working heavily on the nonautomotive side, which is other segments of real estate mobiles and jobs, et cetera, et cetera. And we do feel in the coming quarters, we'll start seeing a more -- a stronger growth in revenue, I would say, across various sectors, which we're working on there.

So we feel very confident about that. We also feel very confident about the quality of traffic and users and the brand of OLX, right? I mean almost 30 million people a month, some every month. And as you know, we spend no advertising in OLX, which just shows the affinity of the brand, right? It's one of the leading -- or probably the leading use product platform in the country where people can come in and sell their products or buy use products, right?

So we feel of the initiatives we're taking will -- a lot of the growth, which is -- will show in the next few quarters by the initiatives we've taken in the last 13 months. But when we took the business, it's important to bring full stability and transfer of technology and product to our environment first. So that's what we did. And what we feel now we are actually working on the business very hard on various aspects of sales processes and other things to make sure or to -- and a strong foundation for growth in the future quarters coming ahead.

S
Siddhartha Bera
analyst

Got it, sir. Sir, second question is on the consumer business, where we did see a very good growth sort of playing out. Here, again, if you can throw some light about how is the mix between OE and new and used car and where is basically the stronger traction if you are seeing any particular segment worth highlighting?

V
Vinay Sanghi
executive

Here, the consumer group is mostly 85% new vehicles, right, as you know. And there itself, the car industry has been at a very modest 2%, 3% growth in the first 6 months of the year. In fact, in the last 2, 3 months, it's been degegrowing. And the 2-wheeler industrial had a robust growth of 18%, 19% for 6 months, as the industry has been.

We've actually seen growth across segments across all new and used segments. I feel one of the -- even though the industry of car growth -- the growth in the car industry only 2%, 3%, it is still at a high base of last year, and that's helped us as well.

So we feel good about the car industry, whether the 2-wheel industry and the used car industry the way they stand. Some of the results have come in the first 6 months, and we just hope and we think that some of this will play out still in the 2, 3 quarters coming. So it's been a reasonably strong performance from the consumer Group, both on the car side, bike side, even us both, I think.

S
Siddhartha Bera
analyst

Got it. Sir, lastly, on this auction business, now volume seems to have gone up quite a bit compared to last quarter or year in the current quarter. So are we looking at any signs of turnaround in this business also as we enter the second half of the year? Or do you think this business also may take still longer for some of the recovery to play out?

V
Vinay Sanghi
executive

Do you think that this -- it definitely seems to have bottomed out the reposition cycle, right? It doesn't seem to be getting -- it seems to have bottomed out. We do feel confident that this business now seems to be getting better. And of course, the other segments when we position have gone down, we've built other segments, which are also helping at this point of time.

So it's a mixture level of cost control a little bit of revenue growth, but we do feel that in the next couple of quarters, some or should deliver a reasonable performance. And it's hard for us to right now say with the repossession in banks and NBFCs are getting stronger or not. I mean if it is early to say that, but we do feel it's bottomed up, that's for sure.

Operator

The next question is from the line of Ankit K. from Smart Sync.

A
Ankit Kanodia
analyst

Congratulations on the good set of number. So my first question is related to all the 3 segments, actually. So if I look at the segmental revenues, coincidently, all 3 businesses are having roughly the quarterly revenue run rate of INR 50 crores today. And -- but when you look at the life cycle of all the 3 businesses, probably all 3 are are completely different in their life cycle revenue. So I just wanted to know from our side, I'm not looking for any guidance, but just directionally, how do you see these business -- these 3 businesses to distinctly different kind of businesses growing or going from here over the next, say, 3 to 5 years?

Qualitatively speaking, I'm not talking at any numbers, but how do you see the?

V
Vinay Sanghi
executive

Thanks for the question. I think the first part is because the consumer group, which is CarWale, BikeWale. It's 85% new vehicles, right, which is cars and 2-wheelers. And obviously, we feel with the car industry, India is the largest in market in the world, right? It is also top 5 car markets of the world. And naturally, for countries to grow, when you look at the penetration of cars in India, if you're going to be at 30 or 40 or 1,000, the penetration is extremely low.

So you do feel over a long period of time, 3 to 5 years what you've asked, the car industry will grow and the 2-wheeler industrially will continue to grow with personal mobility on the rise. And therefore, we feel very strongly on the health of the consumer group by itself, which is 85% dependent on new vehicles, right?

We also feel for us if you have seen 2, 3 years ago, it is harder because when there was a semiconductor issue and other supply chain issues in the automotive industry, and demand will more than supply, it affected us because you stoped manufacturer and dealer on our platform because they didn't need to. They were sold out because of just the availability of vehicles is low. Then availability is high, which is what the situation is today, where supply is more than demand, it's a little more favorable for the company, and we do see a strong demand cycle for the next 3 to 5 years in the automotive industry, but you also see supply being available.

And therefore, we feel very confident about the consumer group by itself over a 3 to 5 period. And obviously, what our attempt is not only is to go, as we said earlier, in CarWale or in BikeWale too not to move from a situation or go deeper into our transactions with our manufacturers for our customers who will not even be able to find their car, select their cars, connect to a dealer online, but also borrowed by cars online.

So we're moving and building technology and going deeper and reporting that process for all our customer and dealers and manufacturers. So that should we feel confident about that. On the Shriram AutoMall, in the last 1.5 years, we repositioned of vehicles coming down and supply to us coming down from that source. We had built a whole retail segment, which is almost 40% of our business today.

So obviously, we believe optimistic about growing the retail side of the business. But we also believe in times to come, it financing went up demand for vehicles going up, new vehicles, the repossession will also grow. And obviously, in the next 3 to 5 years, we feel got both the retail and the repossession market will grow and Shriram AutoMall is a strong player will be a big beneficiary. So we feel confident about that.

And then the third is OLX where the TAM of the business we operate in is limitless, right? It is basically handles all used products in India. It's the #1 or leading place where any consumer can sell a used product or buy or used product. So we obviously feel that time in India is just, as I said, limit has come a number even. We have a large set of Indian consumers, who -- I mean, as some of the data we've shared before, more than 30 million users a month come on OLX to sell a product or to buy a product, use product. And we have obviously a significant leadership here.

So there's limited growth opportunities here, whether it's used cars, whether it's used bikes, whether it's used mobile phones or good household goods, like furniture, et cetera, et cetera, or even homes. And we feel very confident about OLX's future here as well over the next 3 to 5 years. So on the whole across all 3 businesses, we see tremendous amount of levers to grow. I think one thing I would add here, as you might know, that -- and we've demonstrated successfully over the last 5, 6 quarters, is that every increase in revenue in this company, the results in a very strong profit growth.

We have a lot of levers in our business as normally when our revenues go up, only a small amount of manpower cost goes up with it. But a large part of the revenue growth leads to profitability, which you've seen.

A
Ankit Kanodia
analyst

Got it. Got it. Is it fair to assume that, say 3 to 5 years down the line probably our consumer business will form a large chunk of our revenue coming toward because that is the first is growing also?

V
Vinay Sanghi
executive

No, we don't think so. I think we did all the 3 businesses have opportunities. I mean they're all similar size today, but we don't -- it's hard for us to say that one way with other. They all have the reasonable opportunity to grow. So I wouldn't want to predict that the consumer group will be the largest or OLX would be the largest or Shriram AutoMall will be the largest. I don't want to predict that right now. But all the levers to grow.

A
Ankit Kanodia
analyst

Got it. Got it yes. So second question is related to the competition. So ever since we got listed and we started doing concall and presentation. One client which has been always there is what you share regarding the Google trends where CarWale volume went up compared to all the other competitors, which you share. When I look at the on-ground feedback from maybe customers or dealers, we get some really good feedback about the competitors also in terms of the business, which is happening. So can you share one reason why on Google Trends we are so high on the chart and consistently?

V
Vinay Sanghi
executive

It's a brand, right? So Google Trends is basically how many people search your name when it's OLX or CarWale or BikeWale into this search your name, right, and come to a platform, which means that it is -- the number of people who remember CarWale versus other people. That's what it is. It's a digital brand index.

And that's what it is. It's got nothing to do with dealers. It's got to do with consumers. It's the reason the 77 million MAUs come to these platforms. Just to give you context, 77 million people are on to CarWale, BikeWale and OLX. That's a huge number. And 95% come in an organic manner, which we don't pay for it, completely free of advise. That's why you have the margins we have in the company. With 95% of our users come out in the advertising costs, which is partly a reflection of Google trends, as you see, right? And which is why the consumer group or CarTrade Tech as the company is extremely profitable is because of the brand affinity of CarWale, BikeWale or OLX. These are strong brands now in the businesses were run. And that's a flex of Google Trends. It's got nothing to do with talking to dealers actually. It's not connected with that. It's a consumer.

Operator

[Operator Instructions]

The next question is from the line of Sachin Dixit from JM Financial.

S
Sachin Dixit
analyst

Congrats on a great set of results. With me coming to questions, I wanted to understand that we discussed at obviously, we had a bunch of low-end that we can educate to, first of all, I wanted to just check on that.

V
Vinay Sanghi
executive

The voice problem starts getting. Can you say it again, please?

S
Sachin Dixit
analyst

Sorry, I was saying that on OLX side, you -- we have discussed that there are a bunch of low-hanging fruit to in order to deliver the growth that we wanted. I wanted to just get an update on that. Where do we stand on that? Have you seen any ramp-up in terms of advertising income coming from OLX or any price hikes any such things? Can you please give an update on that?

V
Vinay Sanghi
executive

So wallets I think what the things we've been working on are for the automotive side, which is the used car classified side of OLX, right? And then in nonautomotive side, there's also an advertising side, which is driven by advertisers coming and putting this advertising on OLX side, the 3 different revenue sources in a way.

That is -- I would say a lot of work has gone in. I wouldn't say that a lot of the revenue, what we -- what we feel would kick in very quickly has all come in. I think we will probably see some of this growth coming in the next 2 to 3 quarters. And obviously, a lot of the foundation platform work is done, right, which is the products side, technology side, people side, processor side, so many small, small things after the M&A.

But as I said, some of it has come in, in terms of revenue growth, which you can see and some of it is a lot of it yet to come. And we just feel like OLX is a kind of a platform where we'll always be saying this over the next 3 to 5 years because this is so much the TAM is limitless, as we say, right?

Once we get one side, we got the other side and keep going deeper and deeper to monetize more and more aspects of the platform, right, and get more of more consumers on board. So it's a nonstop effort. I think we all are spending lots and lots of hours on it. And we do feel in the coming quarters, you'll see some of that. And even the coming years, not just the quarters because, as I said, there's this no limit to can be achieved in OLX over the next 5 to 10 years.

S
Sachin Dixit
analyst

Understood. So quickly on revenue side on OLX again, right? So we delivered roughly 2% Q-o-Q growth. Now if you recall like when this acquisition have been last year, we did talk about almost 20-plus percent class or growth. In order to deliver that, it looks like we'll need to deliver anywhere between 30-odd percent, 30%, 32-odd percent Y-o-Y growth over H2.

Do you think we are on track for that? Or that's going to be less on that piece.

V
Vinay Sanghi
executive

I don't know, I don't want to give any guidance on revenue. As I said, we don't want to give any guidance. So we're working on, obviously, all the growth levers. And some of them will happen next 6 months, some will happen in the 6 months after that. But all I can say we see a very long-term growth opportunity. I don't want to talk about the next 3 months or 6 months, very specifically. I mean the one thing is happening in OLX that every quarter we get better than the last month, right? And not just in OLX accessing that applies in the consumer group and as well, where we actually make progress every single quarter. You see the numbers, almost every single quarter, but year-on-year better, right? So we'll keep doing that. And some of it will play out now or some will play out after 3 months, 6 months, but the effort to continue to do that. And as I said, again, when we grow our revenue, the margin expansion is quite high, right? The moment to grow revenue.

S
Sachin Dixit
analyst

Right Yes. That's fair. Coming to new auto very quickly on that piece like we delivered close to 23% growth in the quarter while auto industry continues to struggle to say the least. Do you see this trend sustaining? Obviously, you have highlighted that this is probably the best time on advertisement per speak.

V
Vinay Sanghi
executive

Yes, we see some of this continuing. I think I do feel like October, December normally is a better quarter than even the major then even in July and September, normally year year. I don't think that's changed at all. I do think October, December, it is going to be better. And probably this trend might continue, is possible that I do see that volumes are generally at the highest ever for 2-wheelers and cars, even though the growth is lower for cars, the grow, but the volumes are pretty high and supply is higher than demand. So it's reasonably a favorable market condition, I would say.

S
Sachin Dixit
analyst

Sir, the reason why I asked that question was last year in H2, our Y-o-Y growth dipped quite sharply compared to H1. So that's why I am asking this question.

V
Vinay Sanghi
executive

The growth rate may be lower.

S
Sachin Dixit
analyst

So which is where I'm coming from, like do you see that growth rate like this 23% growth rate sustaining in H2? Or we can expect.

V
Vinay Sanghi
executive

don't give a guidance on growth rate, but all I can say is normally the market conditions are slightly better. And I do feel like these quarters will be better than the previous quarter. That's what I do feel. Is that but I don't want to give a growth rate guidance.

Operator

We have the next question from the line of Akshay Satija from Alpha Invesco.

A
Akshay Satija
analyst

Congratulations on a good set of numbers. Sir, my first question will be for our demarketing business, our EBITDA per cars seems to have improved from what it was in Q1. So I just wanted to understand, is it because of contribution from maybe retail sales, higher number of retail sales? Or it's just that, as you said, the operating leverage that we sold more cars?

V
Vinay Sanghi
executive

it's also some costs you talked on the remarketing. We have some cost reduction, but it is also -- the product mix has not changed much, but there is some cost reduction as well.

A
Akshay Satija
analyst

Okay. If you could specify the numbers for retail and B2B that you do for remarketing?

V
Vinay Sanghi
executive

you want to give it, but I think it's 40% is retail, which is quite similar to what it was earlier, 39% earlier, 40% I think. So a slight similar, not much.

A
Akshay Satija
analyst

Okay. Sir, could you also share the new versus used car ratio for the consumer business? And if you could just go a little into detail for the abSure business that we have. So what would be sort of revenues? My belief is that we report abSure under the consumer business. So what will be the revenue the volumes for the abSure business? And how many stores that we hold of abSure as of now?

V
Vinay Sanghi
executive

Sure. So I think the first part, about 86% is new in the consumer group. That's one, which is pretty similar to what it was at 85% and 86%. That's the first question. The second question is abSure. So Aneesha, you want to come out as here, but I'm sure abSure outlets are actually growing. What is that?

A
Aneesha Menon
executive

165.

V
Vinay Sanghi
executive

165 the number of outlets. We don't disclose volume in the revenue as yet. But there's 165 outlets, obviously, we are growing. And not only are we growing it here, OLX is a very similar number of OLX branded stores as well for used cars, right? Am I a similar number? Sorry??

A
Aneesha Menon
executive

About 170.

V
Vinay Sanghi
executive

170. So they're probably actually 335 sub-store now. So the intent of the stores, I'll be honest, was and I still is the ability for a consumer to come online and you select a good certified car and then buy it with a -- and eventually buy it in a one-click experience so they can actually have a completely online experience. And we're working towards that, but the coverage actually improved with the OLX is actually about or at least stores.

A
Akshay Satija
analyst

okay. Sir my final question. Could you just elaborate a little on the AutoMall stores on that front to say, we list roughly 1.2 million cars a year, but we are selling only 20% of those cars. Just wanted to understand what happens to rest of your cars or are they kept as an inventory, not with us, but someone who's it with us. Just wanted to understand, is that inventory carried forward to the next quarter or -- just wanted to understand the business front?

V
Vinay Sanghi
executive

Sure. First, last part of that inventory has not come physically. It's not -- I don't have the exact number right, but a large percentage only comes online. It doesn't have constantly to us in the AutoMalls. So some percentage come physically. And even in that percentage, if the seller decides not to sell it, at the vehicle back and then give it back whenever they feel they would like to send it again. So 25% or 28% is a conversion ratio which is of every 100 vehicles coming to auction. That's when you get sold. I think that's what it is.

A
Akshay Satija
analyst

Okay. Okay. Do you see this number probably could go up or?

V
Vinay Sanghi
executive

No, it's been quite stable actually. It's not gone up. It's not gone. It's been quite stable. I think the conversion ratio will probably be stable. Our attempt here is, of course, to improve conversion ratio by getting more buyers in, but it's also through increasing volume on supply. I think there are 2 different efforts here. But we don't see much -- there's not been much change over the last couple of years in the percentage actually.

Operator

[Operator Instructions]

We have next question from the line of Vijit Jain from Citigroup.

V
Vijit Jain
analyst

Congratulations on great to 3 businesses. My first question is, so I note on the presentation that organic traffic growth was especially stronger than the overall growth this quarter. But you did increase your stand-alone marketing spend about 20% this year -- this quarter, right? So my question, I guess, is, is that with an eye towards the next half of the year? Are you seeing any trends which you want to increase your marketing spend here? And I think a related question to that is, in addition to what you show on Google trend, one can see on app traffic and other third-party data sources as well that you have taken market share in both cars and bikes from the competitors this year? Especially on the bike side. So if you could give a view on what is happening there really have -- is your business in the bike side, for example, particularly higher now this year versus last year?

V
Vinay Sanghi
executive

Yes. Okay. The first is the marketing spend in these businesses is very, I would say, tactical, but it's very -- it's not brand-driven expense or traffic-driven expense. It' s very targeted at manufacturers who may want to sell us some kind of product and we are spending money on advertising and then try and build a specific consumers for them and that traffic and that advertising has incurred with them. 20% is up, but it's a very small number. I mean the numbers are really small, right? Our total significant, right So the amounts are very significant year. That's one. I would not think you can correlate that with an increase in advertising or a significant increase in adverting spend in the next 6 months. I would not think that would happen.

It may be directly a little in correlation a little bit of revenue, but it's not likely to go up substantially in the next 6 months at all. This is also not driving the growth in traffic, as we said, actually, the organic percentages are going up. It's 95% now across platform. So it is going up. The brands are getting stronger. Our consumer traffic actually in absolute terms, if you see it in the deck as well in the last few slides, is substantially up.

So the quantum of traffic are not be done by advertising. This is just done on the brand and an organic basis. 2-wheelers have gone up a lot and so as cars gone up. So both traffic on both counts has gone up. We do feel that one is that, as I said earlier, the demand for cars is not down. It's just that the growth rate is down, right? If you look at the first 6 months, actually, it's grown back 2, 3%. So it's not negative. Number one. Number two, the 2-wheeler industry has been very, very strong. We have shown growth in every parameter, right? I mean the volumes have gone up, traffic is of course going up, everything is going up. So it is -- it's a massive opportunity for us as well, the 2-wheeler side, but both cars and have been quite healthy. So in fact, the traffic growth has been very, very healthy, I would say. Also new launches this, right? I mean we had a couple of big launches in the car market. There's been a lot of interest on traffic, right, in the traffic side.

V
Vijit Jain
analyst

So any broad sense on -- I don't know if you want to -- if you don't want to disclose split between, say, 2-wheelers and 4-wheelers, maybe some sense in terms of what growth rate you saw in the 2 categories this year?

V
Vinay Sanghi
executive

It's been strong on both sides, I would say. I mean, 2-wheelers on a smaller base side, so it's outpaced the growth, but generally, it's been strong both places. The revenue split is something, Aneesha, in the revenue split on 2-wheelers and 4-wheelers? Not yet. Not yet, because it's quite -- okay, it's actually a mix of business in OEMs and dealers, not so much on 2-wheelers and cars. That's what you can given the OEM and dealer split, but the -- I think we see robustness in both actually, cars and 2-wheelers both has grown.

V
Vijit Jain
analyst

Got it. Great. And my next question is the remarketing business, right? So I guess, the shift -- the mix shifted a little bit in the repo favor this quarter because, obviously, you can see the actions went up, but the realizations went down.

V
Vinay Sanghi
executive

I think there's some suppressed pricing of used products is used cycles as well, which is affected a little bit. But generally, that I said, reposition seems to have bottomed out. It's always hard to predict because it's not something in our control, but it seems to have bottomed out, what I said earlier in the call, it seems to be a little better.

V
Vijit Jain
analyst

And you have -- I mean I think you mentioned it around the end of 4Q results, but you have added about 100 locations across Shriram AutoMall, abSure and OLX this calendar year, right? I think last 4Q, you were around 350, now you're at 450, thereabouts. So could you give us a sense of where these additions are coming? Are these mostly in abSure here or.

V
Vinay Sanghi
executive

Mostly in abSure Signature and OLX, they're not Shriram AutoMall at. It's almost all there.

V
Vijit Jain
analyst

And so basically, about 50 to 100 store ads on the abSure site.

V
Vinay Sanghi
executive

Probably to 100, I don't know the exact number. But almost all the additions will be there. I mean, I think the Shriram AutoMall, am I right? I couldn't be more I mean 5, we don't really add very many AutoMalls. So it's mostly come in OLX and abSure.

V
Vijit Jain
analyst

Got it. So with abSure, do you think you -- this is a pace that you could probably continue to?

V
Vinay Sanghi
executive

Probably the base. Yes. There's a lot of work to be done on the pace, which is like probably will continue, both on the OLX side and the abSure/Signature outlets. What we're looking at doing is obviously adding a lot more tech and product to it and over time as consumers want. The whole idea is getting also is to give a differentiated experience for a user on CarWale or on OLX, right?

And I think that is still something you're working on. Distribution seems to be catching on, but now we've got to also -- when you come to the consumer, provide this one-click like ability to buy a used car, if you want to do so, right? I think that maturity will also come in consumers over time, right?

So it's a combination of all of that.

V
Vijit Jain
analyst

Got it. And my last question, one. Just the OLX business, given the nature of the business, the October, November, December quarter should have a fair bit of seasonality related uptick. I mean not just -- I mean I know you said that for the auto business, but nonauto parts?

V
Vinay Sanghi
executive

Should be better. It should be better because normally, October is definitely normally better. November the holidays and substitution always no. Because Diwali by the people come by the time them, businesses really start all over again, right? But generally, this O&D is normally is normally a little better than September.

V
Vijit Jain
analyst

So the question I was trying to -- the answer I was trying to get to also in part whenever we have a lot of the festive season sales that the e-commerce platforms run and I would imagine some of that will drive traffic to yours for used transactions. Is that a fair understanding of how this would work?

V
Vinay Sanghi
executive

No, I don't think they're really connected with -- even though you got it, the e-commerce platforms have sales not convinced that directly correlated with the traffic on OLX or different CarWale. But I would think that this season is normally better for , right? I think normally, October is always this year, Diwali and Dusshera both happened to be the same month as. So normally, it is a strong month always.

Operator

We have the next question from the line of Rahul Nadi from Goldman Sachs Management.

U
Unknown Analyst

So just a couple of questions. So one is what answered partially in terms of seasonality for OLX. So you're saying there could be some bit of a seasonality element in Q3, so that is answered. But just on the other side, OEM to dealer, we used to share the split earlier on, did we share that now?

V
Vinay Sanghi
executive

Yes, we can give a -- can you give the OEM 67.

A
Aneesha Menon
executive

67 and 30.

V
Vinay Sanghi
executive

67,33. It's not changed much. I think it's a model that's been.

U
Unknown Analyst

Okay. Okay. So is it the right understanding when we say new to use is 85, 15 during the 67-33, the 67 is out of the 85 and then the 33 is a split between new venues.

V
Vinay Sanghi
executive

That is right.

U
Unknown Analyst

Okay. Got it. Got it. And lastly, I just wanted to check in terms of progress on these allied services that we kind of talk when we say buying vehicles and the pickup of butter. So let's say, financing or insurance have they started contributing to our revenue in any way in terms of?

V
Vinay Sanghi
executive

They are very small revenues. Insurance is not financing at a very small revenue contributor. But the important thing is the tech and all of that has started to play in, right? So it could be on almost all our platforms now that right? I think those are the kind of things and a lot of the products were launched, whether it's abSure or these loans to enable a lot of the future transactions which might come online as consumers want to do more and more.

So when you buy a loan today and you come to CarWale or BikeWale and you apply online and you have sanctioned instantly by multiple, multiple banks and vendors. You've got a sanction, but from sanction to disbursement is not necessarily that all the banks and other partners are ready to at this point or able to do it even at this point, it requires also documentation, KYC customers, et cetera, et cetera, as for their processes. So it's not fully, I would say, the product is all the business sanctions, it doesn't still probably give you a loan in account in the next 1 minute or something, right?

I mean the disbursements -- the sanction disbursement cycle is not fully online yet.

U
Unknown Analyst

Got it. Got it. So the meaningful attrition in terms of monetization, I mean, will only happen when that piece also falls in place.

V
Vinay Sanghi
executive

I think the important monetization might improvement, but that's not the intent here. The intent was always that we give this journey to a car buyer or a 2-wheeler buyer or a used product buyer they're listen when you buy a product, you think they are loan instantly, so you can buy the car online. Like a last part of 2-wheeler than part Finance. So if you under the loan instantly, when buying a car on one-click on 1 is almost impossible, right? Because if you want to learn the journey they never going to get broken right? And I think that's what we work with banks and other stakeholders to see this is journey can be completed online. But it's more from a customer experience angle? Monetization is 1 thing, but it's also experienced.

U
Unknown Analyst

Yes. Yes. Yes. Understood. And just lastly, this is not many car trade or CarWale value specific. I just wanted to understand from a financing penetration standpoint, if you were to look, let's say, 4, 5 years back to now, for used vehicles, both used cars and used 2-wheelers, do you see a significantly greater proportion of people going for financing for their used vehicles or is it more or less the same how.

V
Vinay Sanghi
executive

New cars, as you know, for the last 4, 5 years, maybe last 10 years, it's been -- it's very, very high as a percentage. In used cars, we've actually seen it being not move much. I feel like industry on one. And second bigger thing is that you still don't have a large number of organized financials, financing used cars, right? A lot of people buying used cars are taking loans from unorganized sources, right? It could be a personal loan. It could be like a per unsecured loan? Or could we even be from an employer or someone else, right? So you feel like the long, long way to go use financing in India. It's actually a massive opportunity. I think for any bank or any NBFC, it's just a big, big opportunity.

Operator

The next question is from the line of Mohit from Envision Capital.

U
Unknown Analyst

Great set of numbers, so congratulations on that. Just a few bookkeeping questions. Number one, I can see on the balance sheet that in the noncurrent assets, other financial assets have gone up, while in the current financial -- other financial assets have gone down kind of a similar amount. Just wanted to understand what that movement has been firstly?

V
Vinay Sanghi
executive

What is that Aneesha? Do you want to explain that?

A
Aneesha Menon
executive

What's your question is that your other financial assets have come down and the investments have gone up. Is that a question?

U
Unknown Analyst

No. So my question is that in the current assets part of it, it has gone down by about INR 50 crores from March 31, September year. Whereas in the noncurrent part, it has gone up by INR 58 crores. So just wanted to understand what this is related to?

A
Aneesha Menon
executive

Second because most of it was because fixed deposits, we would have moved into investment in mutual funds.

V
Vinay Sanghi
executive

it must be that Sobek Auto was that by Sobek Auto?

A
Aneesha Menon
executive

And both to the end farther but no cash balances improved by INR 50 crores.

U
Unknown Analyst

Okay. Okay. Next question was basically that there's been a bad debt written off or that it is a very small amount, sort of INR 75 lakhs. I just wanted to understand where this has come from?

V
Vinay Sanghi
executive

Aneesha, I don't have much client report, but is it the consumer group?

A
Aneesha Menon
executive

Yes. So we have done a cleanup or debtors which are more than 3 years, you have provisions in the only what was beyond 3 years portion of this year.

V
Vinay Sanghi
executive

Yes. So what we do is the provisioning of course, as per accounting policies and then we move from provisions to writing off. I think that's what's probably more from provision bucket to the write-off bucket.

A
Aneesha Menon
executive

Yes, you provide.

V
Vinay Sanghi
executive

But fully provided for earlier is what what you say.

U
Unknown Analyst

Okay. Got it. And the ESOP cost, we are still at the run rate of INR 6 crores per quarter, right? So is expected to continue going ahead?

V
Vinay Sanghi
executive

Yes, I think for this year, it is going to be similar. It should -- as per the vesting schedule will come down from next year further. At this point, it will continue, yes, through this year. And I think it comes down next year as to the vesting schedules.

U
Unknown Analyst

So for FY '25, we would still be around a full year INR 24 crore kind of on an ESOP cost.

V
Vinay Sanghi
executive

That's right.

U
Unknown Analyst

Slightly lower in FY '26.

V
Vinay Sanghi
executive

They'll come down ' 25. '26 will come down. That's correct.

U
Unknown Analyst

Okay. Got it. And just 1 last question. What would be a reasonable kind of overall tax rate to as for the full year FY '25 because we are currently at around 21% on an effective tax case. I just wanted to understand where we can end for the full year, given all the OLX kind of net sale losses what have been absorbed.

V
Vinay Sanghi
executive

I think there is no -- Aneesha, correct me I'm wrong, but there is more tax in OLX, right? And they'll go back in the stand-alone entity, the only tax in Shriram AutoMall. The tax has seen on the standard entity is deferred tax, which has come from the change in the budget on how our treasury income is created, right?

I think it's a full change from long-term capital gain tax on debt funds, right which is the is not actually pertaining to the quarter, it's pertaining to a previous period. Yes. So the deferred tax will probably continue for more quarters this year, and then we'll go away. It will not be there anymore. So -- but generally, the tax and the stand-alone.

U
Unknown Analyst

Right. Okay. So I think I misspoke previously, the effective tax rate for this quarter was 17%. So that's why.

V
Vinay Sanghi
executive

Mostly Deferred tax, which is in the budget, right, when they move this indexation on mutual fund.

U
Unknown Analyst

Got it. Got it. So then for the full year, it would be at like what below 25%?

V
Vinay Sanghi
executive

It's exactly the same. It did.

U
Unknown Analyst

Great. Great.

V
Vinay Sanghi
executive

And has to be lower because the profit goes up, the tax rate should come down. This amount of deferred taxes identical for next 2 quarters. This exactly the same amount. So the profit went up, the effective tax would see would go down actually. Because on our normal business income, there's no tax.

Operator

We have the next question from the line of Sachin Dikshit from JM Financial.

S
Sachin Dixit
analyst

I have a couple of book keeping questions. So the first 1 being that when I'm mentioning the depreciation expense across the 3 segments or it's not matching up with the consol number by a decent margin. Why is that the key?

V
Vinay Sanghi
executive

What is not matching,, sorry?

S
Sachin Dixit
analyst

Depreciation expense. And this is consistent across a few years in, like this is what we keep on.

V
Vinay Sanghi
executive

You're saying we add up depreciation doesn't total? Is that what you said?

A
Aneesha Menon
executive

Because there's an entry ad consolidation Sachin. There is a contract asset that we've created on the SAMIL acquisition. That entry gets passed only a consolidation. So the one plus one 1 will not equal to to the consolidated number of depreciation.

S
Sachin Dixit
analyst

Is it fair to assume that you use that plug to be a part of Shriram AutoMall business or the remarketing business? Any think of segments?

A
Aneesha Menon
executive

No, it's a very specific entry for the Shriram acquisition, which was done in 2018, where our contract asset was created is a depreciation on the particular asset, which is created in the consolidated set of accounts. It's not to do with OLX or Consumer Group. It's only for the Shriram acquisition.

S
Sachin Dixit
analyst

Yes, understood. Second question is on lease liabilities. So we are seeing that the lease liability went up by roughly March 31 and September 30. Question that the business is largely nonasset heavy. Where are these lease liabilities arising from?

V
Vinay Sanghi
executive

It's also from OLX, I think a come from.

A
Aneesha Menon
executive

Yes.

V
Vinay Sanghi
executive

Yes. But is rental for OLX, right? Because it's only been 2 months of the year -- last year, only 2 months, 1.5 months in this year's whole year.

S
Sachin Dixit
analyst

But this is a balance sheet entry, right? You were giving a snapshot as of March 31 or September 30. Number of months accounted that should not change.

A
Aneesha Menon
executive

Sachin, which number are you comparing? The balance sheet early?

S
Sachin Dixit
analyst

Yes, in balance sheet, lease liabilities as of March 31, INR 1,212 cr. They went to 122 this September 30. What are the in coming from?

A
Aneesha Menon
executive

So the increase is coming from sales. There was 7 millions users added in SAMIL year, I mean from the compared to what you.

Operator

We will take this as our last question for the day. I would now like to hand the conference over to management for closing comments.

V
Vinay Sanghi
executive

Thank you, everybody, for joining this earnings call. And we are quite buoyant by the quarter we just had. I look forward to talking to you again in the next quarter. Happy Diwali to you and all your families. Thank you, everybody. Thank you.

Operator

On behalf of CarTrade Tech Limited, we conclude this conference. Thank you for joining us. You may now disconnect your lines.

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