Easy Trip Planners Ltd

NSE:EASEMYTRIP

Earnings Call Transcript 2023-Q2

[Operator]

Good evening, ladies and gentlemen. Welcome to the Q2 FY 2023 Earnings Conference Call of Easy Trip Planners Limited. Today in this call, we have Mr. Prashant Pitti, Co-Founder and Executive Director; Mr. Nishant Pitti, Co-Founder and CEO; Mr. Ashish Bansal, Chief Financial Officer; and Chief Compliance Officer and Mr. Rajat Gupta from our Investor Relations -- the results for Q2 FY 2023 for the company. The investor presentation and the press release have been uploaded on the stock exchange and on the company's website. Before we start the call, a disclaimer. 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 performance and involve 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. Prashant Pitti, Co-Founder and Executive Director of Easy Trip Planners Limited. Thank you, and over to you, sir.

[Prashant Pitti, executive]

Good evening, everyone. This quarter has been remarkable event on to the company as we recorded our sales over gross booking numbers of approximately [2,000 pipes], the highest GVR in a single quarter. We have almost reached our same last year GVR in just 2 quarters of this current financial year are testimony to our growth capabilities. We have also crossed INR 100 crore milestone in terms of revenue from operations during quarter 2 of FY '23, a sharp increase in 92% year-on-year, back on strong broad-based growth across all segments. Other core segment, which is there, reported growth of 84% year-on-year.

In terms of transaction, our ARM segment registered a growth of 62% and 59%, respectively, in support against the same quarter of last year, again effectively to our marketing strategy and sales commercial efforts undertaken through the [indiscernible] . As one of the prominent industry players, we continue to lead the innovation and customer data approach by providing the most appreciated pricing to customers and giving a great booking experience and running a room call center. The EaseMyTrip travel targets, for instance, from June till August 2022, we see the encouraging respond for the GMV regarded. Between 12th August and 10th of August, we collected more than INR 300 crores for the first time in the companies history.

Happened by this, we launched traveler festival between October 16, 20 till end of october, which recorded highest gross sales of more than INR 555 crores for the company.

These accomplishments keep volume above the robust industry recovery and kind of the [indiscernible] general, [indiscernible] higher brand value in particular. This is also a significant information for our customer care strategy.

Keeping in mind that as our brand building investments during the quarter, the company became first powered sponsors of Asia Cup Cricket 2022. This has an estimated [indiscernible] of more than INR 49 crores, given that Cricket in India is not just a game but emotion. This partnership deals with companies are required for in visibility to be the part of the most watched and love Cricket tournament. A Brand building in visibility on multiple TV sports,[ inflation], various TV channels across the globe, providing solid push towards a long vision of going global.

And another important campaign initiative. EaseMyTrip became the presenting partner for Road Safety World Series tournament of 2022. This recognition reflects our responsibility and focus marketing alliances towards supporting an existing significant [ societal ] concerns by [indiscernible].

These 2 initiatives somehow, we expect onetime cost of INR 13 crores, which we believe would have yield much higher growth and growth going travel.

The company continues to balance its investments towards strategic marketing opportunities while maintaining cost discipline. We have taken further steps to strengthen our presence abroad by partnering with Flybig airline through [indiscernible] other services is a [indiscernible]

We have also got this well recognized brands such as magicpin and South Indian International Movie Awards SIIMA This comes with the back and the company is already setting up subsidiary in other countries like U.S.A., U.K., New Zealand, Philippines, Singapore, U.A.E. and our corporate office in Dubai and London. An appreciation all noteworthy applause, we have been discussed with the Asia's best B2C travel provider 2022.

And the best B2C travel provider in India for 2022 at the awards on 29th Annual World Travel Awards This is a validation of our industry leading and customers approach.

Now a brief snapshot of financial highlights for quarter 3 and first half year of FY '23. Despite being seasonally dull quarter, the company continued to deliver robust growth in our GBR, which is gross booking revenue, standing at INR 1,997 crores in the quarter 2 against INR 895 in quarter 2 of FY '22, an increase of 124% year-on-year.

We have also reported adjusted revenue INR 169 crores for this quarter. This is again an increment of 68% compared to the last year. Other B2C volume for the quarter stood at 84.4%. We are pleased to report that International Dubai office has been performing well and in just few months, it has seen good response with GMV for quarter 2 crossing INR 24 crores, which was INR 7 cores in the previous quarter.

Coming to the operational numbers. Company [ VR ] segment, net of cancelation grew by 52% year-on-year. We sold [ 28.3 lakh ] at [indiscernible] quarter 2 compared to [ 18 lakh ] for quarter 2 of FY '22. Our number of [ total line ] has seen a jump of 70% in quarter 2 of FY'23. Manpower [indiscernible] in the quarter while on [indiscernible] structure [indiscernible] GBR, which was similar to the quarter of previous [ visited ].

Marketing and submission expenses were a percentage of GBR was 1.5% of quarter 2 at 0.9% of last year's quarter 2, mainly due to one-time promotion and marketing expenses of INR 13 crores that we added to this quarter towards Sponsoring Asia and Road Safety World Series.

EBITDA for quarter 2 stood at INR 40 crores as compared to INR 46 crores of last year. Competing for INR 38.8 crores however, a [indiscernible] for loss reported due to overseas subsidiaries of INR 1.7 crores and onetime marketing expenses of INR 13 crores, the adjusted [ EBT ] for quarter 2 would have been INR 53.5 crores compared to INR 64 crores of this corresponding year, which would have given a growth of 47%.

We maintained our history of being profitable in projection and a profit after tax was [indiscernible] so that INR 28 crores, which was compared to INR 27 crores of last year.

On a half yearly basis, the GBR for the first half year stood at INR 3,640 crores as compared to INR 1,259 crores of corresponding 2 quarters of last year and a [indiscernible] of [ 190% ]. Our adjusted revenue launched INR 300 crores for the first half year, which is again up by 100%.

EBITDA for first half year stood at INR 85.7 crores as compared to INR 68 crores for the first half year of FY '22. And profit after tax stood at INR 61 crores as compared to INR 42 crores of the last year.

We are in control position to consistently deliver strong growth given our diversified and low cost business volume. Backed on healthy balance sheet, strong return ratio and [indiscernible] cash generation from operations. We expect this momentum to continue as we focus on various promotional activities and brand building initiatives. We are looking for new territories along with an organic growth opportunities to create value for our well esteemed shareholders.

Now I will request moderator to open up the questions for the question and answer.

[Operator]

[Operator Instructions] The first question is from the line of Madhuchanda Dey from MC Pro.

[Madhuchanda Dey, analyst]

Good evening. I have a couple of questions. The first question is we understand that there was this so-called ad hoc INR 13 crore expenses, which impacted the cost as well as the margin. But going forward, I mean, given where you are, where do you see the marketing expenses settling eventually? That is my first question.

I have a second question, which is -- when I look at your numbers for Hotel Nice, there seems to be a sequential jump of 8.5%. But when I set your segmental results, there is a significant reduction in the revenue reported under hotel package from INR 7.3 crores to INR 1.7 crores. If you could explain this to us, I mean, what is it -- we have the numbers when the actual number of Hotel Nice going up for the revenue declining sharply? Thank you.

[Prashant Pitti, executive]

So hi Madhu this is Prashant. To answer your first question, the efforts which we have taken were basically branding efforts in the future. We do look our marketing to settle anywhere between 0.6% to 0.9% which was basically 1.5% because of the one-off activity.

So in the future, you can consider its value in between 0.6% to 0.9% is what we are considering.

Related to your question number 2, the number of [ roommates ] have increased the marketing, the revenue [indiscernible] primarily because we are giving a majority of the money back to the consumer as a format of discount on digital sale.

[Madhuchanda Dey, analyst]

Okay. And is it an increase strategy, which is delivered at this point in time?e.

[Prashant Pitti, executive]

That is right. And since the time the business [indiscernible] time of [indiscernible] [ 97% ] of our business is flight business and only 3% of [indiscernible], which was hotel, traveling, bus, cab. Now that number has changed significantly from 3%, that number is jump to 10%, around 10% business from everything else besides the flight.

The idea is for us to get that number was good stability, which would be 70-30 and then we probably will start making money right now, the company is selling the process of growing this business, not at the cost. We want to do this business either at breakeven, but not at the cost. So we will continue with the 70% off.

[Operator]

The next question is from the line of Manik Taneja from JM Financial Capital.

[Manik Taneja, analyst]

Prashant, just wanted to understand from you as to how are you seeing the competition play out across the different categories of business?

And the second one was on [indiscernible] question, if you could help us understand that GBR breakup airlines and the other non air segments.

And the third question was just a clarification question around the declining cash that could be on the balance sheet because you understand what's changing some of the work.

[Prashant Pitti, executive]

Understood. So question number one is in terms of market share and growth and we manage as you would note it. The -- for the entire industry and the competition, you will see that the numbers which we would have [indiscernible] pretty much muted our segment that they would have reported the last quarter are usually the [indiscernible] because of summer vacation and middle education. Quarter 2 is usually the muted quarter.

In the [indiscernible], we have grown on quarter-on-quarter, we have grown by 20%, where you could see other competitors did not grow, a slight of degrowth. From the business that we will be able to understand that we have gained the market share considerably in this particular quarter, across the segment.

The second question is related to GBR. Ashish, have you provided the breakup for the GBR for this particular quarter result in our presentation?

[Ashish Bansal, executive]

No. We have not provided presentation.

[Prashant Pitti, executive]

So this quarter, we have not guided the [indiscernible], I can give you a number which probably existed for the last quarter. And I do not think that there would be a monumental change in that. I believe that the [indiscernible] was around 19.5% and the remaining was basically around [indiscernible] basically train, bus and other Cabs and other services. This is a breakup so to answer to your second question.

And the third is related to the working capital. Working capital pretty much remains [indiscernible] despite being profitable. And the reason finally is that there have been [indiscernible] number every 6 months. There has been increase in other current assets, which is the airline deposit by INR 61 crores.

The sale has also increased by [35ops] because of the working capital, I think we have [indiscernible]. But overall, after paying taxes [indiscernible] net cash decreased by somewhere around INR 1 crores.

[Manik Taneja, analyst]

And just, [indiscernible] around second quarter being flat or declining for one of your larger competition. Just in the [indiscernible] fact that they report some more dollar terms and thereby the dollars [indiscernible]

[Prashant Pitti, executive]

If you look at in terms of their volumes as well, I think there was a slide uptick movement on the volume side, but our volumes grew by more than 28%. In terms of gross booking revenue, we grew at 20% in terms of absolute number of [indiscernible], we grew by about 28%. And I think the [indiscernible] grew by [indiscernible]

So even then the [indiscernible]

[Operator]

The next question is from the line of Aditiya Krishna from -- the next question is from the line of Santosh Sinha from Axis Capital.

[Santosh Sinha, analyst]

My question is regarding the balance sheet items. Now [indiscernible] are up to in this quarter from INR 528 million to INR 987 million and also on GAAP liability, that is INR 700 million that we can see in the balance sheet. So what are these attributed to? That's my only question.

[Prashant Pitti, executive]

I understand. The trade receivables to get money, which basically is the amount which we are there to receive on the cost price and from being travel agent, then business is growing up. As you could see that our B2C company, [indiscernible] was around 90%, which has come to 85%, which is basically our increased effort in growing our profit and average business because of this trade receivable has gone up by around INR 35 crores.

On the second question, which you mentioned is the contract liabilities, which has gone up INR 70-odd crores, that's because of the advance, which we get from the IT too, which is the [deal] so that content was released this year and because of which you are seeing the additional amount of INR 17 crores, which is basically [indiscernible] money [indiscernible].

In our book, as in the view of the commissions, which we will get from them, we give a period of time.

[Santosh Sinha, analyst]

Sorry, I couldn't get the second part, actually. INR 17 crore for contract revenue.

[Prashant Pitti, executive]

We will get commission not just on the airlines, but we also did commissions for the GBR. [indiscernible], we gave us almost INR 100 crores of advance. Other submissions, which we will in incur which we will [indiscernible] we kept in long term and around [indiscernible] in short [indiscernible] anticipate INR 30 crores to be utilized within the [indiscernible] INR 70 crores is just in the long term because that will capitalize after [indiscernible].

[Operator]

The next question is from the line of [indiscernible]

[Unknown Analyst]

I'm coming from the United States. My first question, actually impressive quarter given the kind of cycles [indiscernible] First question is, I can see some different kind of other expense this quarter. Apart from the 1-shot INR 13 crores earnout expense, which you mentioned, there is significant difference in other expenditure [indiscernible] categorized just for this [indiscernible]

[Prashant Pitti, executive]

[indiscernible] which is just [indiscernible] for this quarter, even though the last quarter, the other expenses were slightly higher. The reason is the commissions which we did while working with travel agent whether working with travel or whether working with B2C companies. And hence, since our business are shorter on B2B side, the commissions which we have to get or decide with the other expenses, and that is why that number has gone up.

[Unknown Analyst]

Sir, just to follow up on that. I have one other question. This is closely related to that. So now when our revenues start shooting up even more, when we start to really go into the explosion phase, are we -- is our payment charges also going to keep on increasing like because I can see quarter-on-quarter payment charges are increasing. I mean.

[Prashant Pitti, executive]

[indiscernible] rate charges. Even [indiscernible] are basically directly [indiscernible] to the GBR, which is gross booking revenue. And if you see other percentage of GBR, they are pretty much [indiscernible]. In fact, [indiscernible] it might reduce as more and more [API] payment adoption[indiscernible].

[Unknown Analyst]

Okay. Well, that's pretty clear. Okay. Yes. So that's pretty clear. Second one is importantly, what is the profit tax percentage or EBITDA percentage, more importantly, profit after tax percentage from Dubai office and the Dubai business because it's expected to be at least significantly higher than the India business or the target might be. So I wouldn't want to know a little bit about the Dubai office and even the other global businesses is started or has been moving into what kind of phase?

[Prashant Pitti, executive]

So basically, Aditiya, these businesses are under incubation phase as of now. There we are trying to make our mark. We are repeating on the value, we are getting respect from the respectable [AI] which are these orders over there. They might not have dealt with these market as [indiscernible].

Here we are working with them here. And as we continue to do, we will be able to command better margins, better commissions from [ them ]. As of now, the business looks to -- the business is growing. We are growing on the strong demand, which is coming to this matter timingly because the kind of convenience fees or service fees, which the global player charges are extraordinarily higher than what service fees or convenience fee Indian player charges.

The income tax in Middle East, Europe, U.S., these developed nation, which are anywhere between INR 600 to INR 2,000 per passenger as a convenience fee. Now the market strength is not that we don't have convenience fee. The market strength is that because of our very low-cost business model and operational efficiencies because [affords of the notoriety] in these geographies, international geographies which you [indiscernible], these are the geographies which will give tremendous value service matters.

As we continue to go forward because we are proceeding with the same for purpose of not charging convenience fee for huge geography. And because of that, the demand is coming very strong and right now, we are -- the business is running [indiscernible] slightly elevated for the region, but that is not what is [indiscernible] us. We understand but as the business grows, we will be able to make a lot more money from there by commanding better [ PLDs ], better condition from the respective [indiscernible]

[Unknown Analyst]

That's primarily because we'll be charging a foreign currency and because of that, we'll be able to make higher.

[Prashant Pitti, executive]

[indiscernible] other operations and our technology will continue to exist from India. For our technology will continue to exist frim India. And because of this cost arbitrage, we believe we are in very valuable position to become the global shipping company of India.

[Unknown Analyst]

Absolutely. I mean we are going to -- I mean -- that's what we are hoping. Just to clarify on what you are telling me that the INR 238 million, which is INR 23.8 crores you have not made money from that this quarter? Or how is that performed by?

[Prashant Pitti, executive]

This is still a number which we had not disclosed right now but overall, as I mentioned, for all of the subsidiaries which we get in the quarter, we have reported a loss of INR 1.7 crores.

[Unknown Analyst]

Okay. I mean, that does not go much -- Anyway, okay. We'll keep it that way. And what [ are ] the 3 acquisitions we have made YoloBus and YoloBus Free and the other one.

[Prashant Pitti, executive]

We are made to acquisition with Yolo. Three hotels have been able to increase the number of people from ideally 12 because of the time when we acquired to around 27% right now. So the business is doing great, and the business is profitable.

I believe the business is able to generate anywhere between INR 12 lakh to 13 lakh on monthly resale of profit. When you know it's been very integration phase, the company which we acquired was really in distressful situation, the large valuation at which we pay-rate company was at about INR 100-odd crores when we acquired the company to service. So the business [indiscernible] the business -- I think the strength and the technology was started early about 3 months ago we started already [indiscernible] and we are looking forward for it as well, to and become a depart of these matters.

[Unknown Analyst]

Okay. Can you repeat that number of [indiscernible] generating profits per month of [ June -- ] adding that the number?

[Prashant Pitti, executive]

Between INR 20 lakh to 30 lakh okay, that's still a significant number when we took it up to debrand and then add it because the cash on books of [indiscernible] reduced because we are using the cash for other projects, which means this will cushion that as it grows.

[Operator]

[Operator Instructions] The next question is from the line of Manik Taneja from JM Financial Capital.

[Manik Taneja, analyst]

I just wanted to understand the fact that in the last 6 months, you've seen us increase in terms of share of our B2B business, which is also a function of the markets opening up and corporate travel, et cetera, opening up. But if I have to think about the next 3 to 5 years, what kind of a mix of business do you want to have between CTC and cash B2C because historically, we went from a significantly higher B2B business to a share of B2C business and now we're talking about once again just focus on this -- it creates access to what kind of a mix are we thinking about over a year in [indiscernible]?

[Prashant Pitti, executive]

So Manik, basically, what has changed between the last time and this time -- like previously, we were pretty much focused on travel agent. Whether or now majority of the business is coming from B2B and B2C businesses which is basically the life of HDFC smart bank, all basically being available on Bajaj being available on [indiscernible] or being up label on internet.

Basically, it's powering the list and set up online organization, and inmate has been well positioned to do it beautifully because of the very low cost operations. And due to this, this number has grown up slightly in the last couple of quarters. We believe that this number is looking steady state right now. We really have continued our focus on growing our B2C business and the number [indiscernible]. I believe the number which is right now, which is 85 versus 15 inside a stable number for the long completion.

[Operator]

[Operator Instructions]

[Prashant Pitti, executive]

We believe that a business engine is well positioned to take advantage of growth opportunities. We will try to deliver fair amount results and achieve greater milestones in the future This will be backed by our customer service strategy, low-cost business model, new age technology and our exceptional marketing center. This will help us realize our vision of becoming extremely viable provider for all-in-one travel solution. Thank you everyone for joining us. I hope we have to answer all your queries. If you have any other follow-up questions, please do reach to us. Thank you and good day.

[Operator]

Thank you. On behalf of Easy Trip Planners Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.