Updater Services Ltd
NSE:UDS
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
265.15
432.75
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to Updater Services Limited Q1 FY '25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the 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. Raghunandana Tangirala, MD and Chairman. Thank you, and over to you, sir.
Thank you. Good afternoon all of you, and a warm welcome to everyone present on this call. Along with me, I have Radha, who is the Chief Financial Officer; and Amitabh Jayasurya, who is a Non-Executive Director; and SGA, our Investor Relations advisers. Hope you all have received the investor deck. For those of you who have not got it or don't have it, can view them on our company's website -- on the company website.
On the business front, I will keep it brief, and I will quickly give you a nutshell what has happened in the last quarter. We've had some challenging times. Despite that, the company has grown reasonably as per whatever we have guided across both the segments, the IFM segment and the BSS segment. Our commitment to exceptional service has always allowed us to diversify and enhance our offering, meeting the evolving needs of our clients across various sectors. We are dedicated to surpassing our customers' goals, driving excellence in every endeavor and solidify our role as a trusted partner in
We operate B2B services -- we operate in the B2B services space, which can be classified in 2 major segments, which you all know is the IFM segment and the BSS segment, which is the support services. During Q1 FY '25, our IFM segment contributed 64% of the overall revenue and the balance 36% from the BSS segment. We offer in the IFM segment like engineering services, technical services, housekeeping and cleaning services, pest control, collection support and other support services. And in the industrial space, we do production support services, warehouse management and other support services.
Our key focus in IFM segment is further to improve operational efficiency. Like we guided the last quarter, over the last 3 quarters, we have exited almost all the not very viable business. And going forward, I think we have kind of a clean slate. I think with this quarter, all that is over. So the growth would look definitely better going forward from this quarter. Due to this, we have started to witness improvement in our operating margins. Last quarter is 5.7%, which stood at 4.6% during first quarter of last year.
The outsourced market for the IFM segment is currently about INR 40,000 crores and is expected to reach INR 80,000 crores by FY '28. This is a CAGR of approximately 17%. As of '24, 39% of our IFM segment is outsourced and 60% is in-house, which is expected to shift to 45% over the next 2 years. India's manufacturing PMI is the highest in the world and has potential to reach 1 trillion by 2025. The industry is shifting towards fully integrated facility management with a higher demand for solution based of trades.
We have distinguished ourselves by providing a comprehensive range of services with specialized technical capabilities and our commitment to quality and quick turnaround solutions the growth. We aim to gain more market share, focusing on hard services due to margin accretive and specialized nature. Companies are increasingly outsourcing facilities that to leverage expertise, cost efficiencies and reduce attrition, allowing them to focus on their core functions and benefit from advanced technologies. This strategic shift offers a flexible and scalable solution for large corporations. We are confident that our growth will stabilize at 3x the national nominal GDP.
Our flagship BSS segment witnessed a robust revenue growth of 34%. We are witnessing a strong shift of client preference towards outsourcing and solution-based offerings. We are also witnessing strong traction in sales enablement and audit and segments with 2 of our group companies are delivering these services.
The Market Power Solutions segment witnessed substantial growth in Q1. We continue to witness growth in BSS segment despite the muted performance of EBV business. We are slowly -- EBV is employee background verification, which is one of the business lines. We are slowly reducing our reliance on IT and IT companies in employee background verification business and slowly diversifying our revenue pool and revenue coming from other sectors such as BFSI and retail. With strong government push for boosting employment and large setup of global capacity centers -- capability centers. We are confident in sustaining a strong growth trajectory going forward.
From our group company, A1, we have forayed into our logistics, niche logistics and transport services along with Logistics. A1 is currently on a revenue run rate of INR [ 100 ] crores very shortly. has always been highly focused on technology-driven innovations and integration of technology in our businesses. We have started to implement AI in our business, and we have also begun technology in the audit and assurance and the employee background verification business.
Implementing of technology is helping us become more efficient, which in turn is increasing our EBITDA margin, which stood at 9.9% as compared to 9% versus last quarter. I'm also pleased to share that our Q1 '24 airport ground handling business has turned around EBITDA positive and PAT positive, which is in line with our previous commentary. We are at present in major emerging airports such as Pune, Tirupati, Ayodhya, et cetera, which is expected to receive large amounts of traffic and now operate in a total of 22 airports. Apart from ground handling aviation, we have also global has also started aviation training academy to pick up and is expected to start positive contributions by next year.
During Q1 '25, BSS segment contributed 36% of revenue and contributed 49% EBITDA for BSS segment grew by 49% on a year-on-year basis. EBITDA margin for BSS segment stood at 9.9%. As of June 30, '24, we have 900-odd clients under dSS segment. Key clients under BSS services include customers like Microsoft, TCS, P&G, Hershey's, Aditya Birla, SpiceJet and Tata Communications.
While revenue from top 10 customers keep growing, we are also expanding with them in different geographies. 77% of our revenues came from top 50 customers. We continue to be the go-to partner for several clients. We continue to be the go-to partner for several clients, sales-enabled audit assurance and -- We are planning a strategic acquisition in the BSS space that will enhance the capabilities of UBS as a whole and be margin accretive in nature. Additionally, we are also boosting cross sales between IFM and the BSS segment, opening up significant growth opportunities and unlocking further synergies. We expect to achieve a 20% organic growth in the BSS segment, which will further improve our margins. Our ability to successfully acquire and seamlessly integrate high margin accretive business is a key differentiator for us.
On a profitable basis, which will stem from acquisition, we have effectively integrated. The largest opportunity within the market will be the sales enablement, origin assurance and employee background verification, all of which will -- which are asset-light and with capital efficiency in nature.
To summarize, UDS is well positioned to grow given the robust industry dynamics and our proven ability to manage large contracts. The government's strong push towards employment generation offering incentives for both white collar and blue collar creates an attractive opportunity for us. We aim to leverage these favorable conditions to drive our growth. Our strategic focus remains on achieving a growth rate of 3x the nominal GDP of the country, while maintaining a high emphasis on capital efficiency and profitability. Our expertise in handling complex and large-scale contracts sets us apart, and we are committed to expanding our market share by delivering exceptional value and services to our customers. Looking forward, we are excited about the potential to capitalize on these industry trends and government incentives, ensuring sustainable and profitable growth for UDS going forward.
I would like to hand over to our CFO, Radha Ramanujan, for Q1 financials. Over to you, Radha.
Thank you Good afternoon, everyone. I'll share the Q1 FY '25 financial highlights. Revenue grew [indiscernible] year-on-year to INR 6,587 million, IFM segment revenue grew by 5% year-on-year to INR [ 4,246 ] million and BSS segment revenue grew by 24% year-on-year to INR 2,340 million. The revenue split between IFM and BSS [indiscernible] last year. Quarter-on-quarter we are growing the share of BSS segment. EBITDA for Q1 FY '25 grew by 33%, INR 424 million. EBITDA margins stood at 12.2%, solid improvement over Q1 FY '24, which was declined by [indiscernible] close to 2% -- [ 107% ] and stood at [indiscernible]
Our cash profit also grew by 22% year-on-year to INR 322 million. Our [indiscernible]
Our total headcount IFM segment stood at [ 51,078 ] employees and BSS segment stood at 14,350 employees. And during Q1 '25, we had 29 new logos in the IFM segment and [indiscernible] new logos in the BSS segment.
With this, I open the floor for questions.
[Operator Instructions] We have first question from the line of Sanjay Shah from Securities.
Congrats on a great set of numbers. Sir, my question was regarding our BSS, where all our 3 verticals like Athena, [indiscernible] all have really done good and improving. So how do you see that vertical coming ahead from this level since our contribution from BSS is around 40% or slightly less than 40%. So what's the target for next 1 to 2 years we can reach in this BSS? And what are the opportunities you see on where we can -- can we add any new services to our offerings by way of some acquisitions? And how is the strategy work out?
So thanks for that question. And see, when we actually went to market and even subsequently in our quarterly calls, we have been talking about a clear strategic direction that BSS will continue to grow and BSS share of our total revenue will also grow, but not very fast because even IFM is growing. So right now, our projection could be that revenue mix, for example, is 64% and 36%. So this 36% revenue split could actually go up to about 40%, 42% in the next year, 1.5 years, 2 years. So year-on-year, maybe it will probably improve by about 2% or there about 2% to 3% is what we believe.
Margins, as you can see, are also looking good, and there is a strong margin growth as well also in terms of percentage margin growth. Your question about new service lines being added, we are always on the lookout to add new service lines. But we have a very clear idea that we will add synergistic lines, which we understand and which -- where we know either the customer or the product or the service delivery mechanism. And where the -- are clearly accretive. We may make some acquisitions within the BSS space on the technology side, but those will be more in terms of enabler to enable -- to make our functions, our products more efficient and to improve internal productivity. So service lines, customer-facing service lines, we are evaluating. Right now, we do not have any identified target.
Right, sir. Sir, in BSS, our sales enablement services contribute around 70%, 71% of our revenue in BSS. And all other are also very exciting like audit and insurance, employee, mail room, airport ground handling. So now how do you see that vertical growing panning ahead? Because we see a lot of unorganized players in this segment, correct me, if I'm wrong. And do we see any green shoots on that side where we can grow?
So on the sales enablement side, we are very bullish. And not only India, but we have global customers, as you know. We also have a global delivery center in Malaysia. And we have also been expanding into Korea and to some of the other markets. So that's a global play that we have, and we are very excited about it. We are also trying to experiment with newer technologies in these areas to improve our productivity and efficiency. As far as the unorganized sector is concerned, in sales enablement, that's not a very large threat. The threat comes from employee background verification where there are some unorganized players. But even there, there are the top 5, 6 players are quite large, and we are amongst the top 3 players in any case. So it's not really that much the unorganized sector. The business has been under stress for the past few quarters. That is basically because as we had already commented earlier, the business is very closely linked to hiring and IT hiring in particular. And we all know the IT hiring story in the last few quarters where it has always been -- where it has not done well.
There are some green shoots that we are seeing in IT hiring, but we don't see IT hiring coming back to the levels that we saw in '22 and -- in '21 and '22, mainly '23. So therefore, we are diversifying our customer base. We are also now getting into BFSI and some of the other places where employee background verification is also required and those areas. That said, overall metrics did expand at about 18% year-on-year, which is quite substantial.
Yes. One more thing just to add on Amitabh, what he said. You also mentioned on ground handling. Ground handling, we have an absolute kind of -- I mean, monopoly because we have a 10-year concession. Only along with us is another Air India, AIGSL,, which is an Air India company. Probably we don't see it as a big competition. Otherwise, these airport contracts are for 10 years, on the 32 airports, concession. See, we had commented earlier in the previous quarterly call that we expect Global to turn around this year. And we are actually quite pleased to report that it has -- And it is now onwards is going to contribute to profitability. So -- and this business had a gestation period in some of our airports 2.5, 3-year gestation period is roughly over. And now we see and now we will see this business contributing more meaningfully to our BSS numbers and therefore, also to our overall numbers.
And ground handling this gestation period is required for -- because we were a new entry or it is required in every new airport we enter?
No. So there are 2 things. You are right. Every new airport that we enter, we have to invest in equipment. So like a ground power unit, there is an air handling unit. There are what are called packs, there are ladders, there are also luggage handling units, et cetera. So these are all equipment -- buses, for example, to move the passengers. So all the equipment has to be deployed. So that is one aspect of gestation. Second is that traffic takes time to build up. So the investment happens first, traffic takes time to build up. The third area of gestation is that once you get the concession and your clock starts, then the minimum guarantee that you have to pay to the airport, that also starts. But what -- revenue may take a little time to build up. So these are the 3 reasons why there is gestation.
We have our next question from the line of Balaji from IIFL.
I have a 2-part quarter. the first one is on the while we disclose the segmented PBT margins -- disclose the segment EBITDA margins for 1Q FY '25 -- FY '24 and 1Q FY '24? The reason I'm asking is it gives us a better picture of the underlying momentum of the business. So in case you have it, it would be great if you could share it.
So you are asking for EBITDA margin of IFM and BSS for the previous 3 quarters.
Okay. Balaji, the IFM EBITDA [indiscernible] Q4 '24 was 5.3%. For Q1 '24, it was 4.9% and now it is 9.7%. BSS EBITDA, the last quarter was 3.8% and last year same quarter was 9%, and now it is 9.9%.
In IFM, there is a clear trend which we are seeing. in BSS also margins are steady and they are also improving, 9.9%.
Both of them have grown [indiscernible] over last year same
Oh, that has -- quite good. And I think it will be great if you could share the quarter itself going forward so that it becomes absolutely clear and this you have call, so that is quite helpful. Secondly, on the IFM segment, you mentioned most of the low-margin contracts have already been exited and growth should improve from here on. But in general, when I look at your other listed peers also, one can see that the revenue growth has substantially [indiscernible] at least based on the report, it is supposed to grow at growing teens. But at least whatever we can see from the listed companies reporting is that it has been in single digits. So going forward, how do you think -- how long do you think will it take for you to get back to the mid-double kind of number?
Balaji, this year in spite of that because most of the -- contract last year this year or may be a little bit this year -- first quarter. So this year, I think -- not I think, we will guide you -- 13% growth, between 13% and 14% growth for this year at the IFM.
The second question was industry and also
So in fact, I read report, they have also their existing unviable contracts and they have said that's why the top line did not grow much.
It was single digit.
I think it was [ 6% ] of traffic. But we will do much better and Q1 will do between 13% to 14% if I look at first quarter numbers you would have seen. And normally, what this IFM business start picking up in the second and third quarter for some reason.
Two other things I will just add, Balaji. So when Raghu used the word, I will guide, I mean, please don't take this in the term formal guidance. This is not formal guidance, but this is an informal
Now that said, the other piece is that the construction is happening all around us. So overall, A-grade office space is getting added. We do expect that the market will grow and that there will be margin improvement as well, go slow. Margin improvement will be slower, but volumes should come back much faster is the belief at this point. And we are seeing some of that momentum up now.
Got it. And just to understand these low-margin contracts were the ones you got into during the pandemic? Is that a fair understanding? Now those contracts are expiring and going forward, the pricing pressure which we saw should be a lot less. Is that a fair understanding?
Some will be like that, but not all because some of these are shorter-term contracts. So they may not be 3-, 4-year contracts because in the pandemic period was 2021. But some of these could also be even earlier, for example, or some may have been shorter-term contracts that we may have got into slightly later. But -- so see the company strategy is very clear. Strategy is to not spread ourselves too thin, focus on larger customers, focus on value-added services and therefore improve margins and get steady business improvements. That is the strategy. Therefore, as you know that we have almost 1,500 customers. So there is a tail, there's a long tail and some of these customers become difficult to serve profitably. So also the reason is that if they are not strategic, then we will exit them over time.
The next question is from the line of
Sir, my first question was on the airport side. So in Q4, I think we were handling around 16 airports. And more you were going to add. So as of now, how much is that number?
We are operating at 22 airports as of now which we fully starting in the last quarter.
Okay. And in coming time, let's say, for FY '25, how many more are we planning to add on?
At this point of time, there is only one more airport because these were of contract -- conversion which we won earlier. And with that, we will be done with that. New airports, new airlines will keep coming. Even now the same airport a new airlines, one of the largest airline is talking to us through run it. It's an initial stage of negotiation. We can get new avenues of business, a new carrier can come into.
Okay. And ma'am, if I just missed it earlier, can you give me revenue split in the BSS segment from metrics other subsidiaries...
You want the breakup of BSS segment...
Yes, ma'am, from BSS segment.
Okay. From BSS segment, we have A1, which is our logistic transport company, which had INR 241 million in Q1, which was almost 100% growth over the last quarter. INR [ 315 ] million, which again is 18% over the last year same quarter. Global did INR 119 million, 129% over last year same quarter. Is INR [ 590 ] million, which is 36% over the last year same quarter. INR 377 million, which is 4% over the last year same quarter.
We have our next question from the line of Shah from Investec.
I had a couple of questions. Just to begin with, within the IFM business, if you check the stand-alone itself over -- the revenue has come up, EBITDA margin excluding the other income is at 3.7%. So just wanted to understand what is the outlook going forward on this number? And as you mentioned IFM EBITDA margin at 5.7%, which I think Radha mentioned -- which quarter -- And same numbers without other income will be very helpful.
Yes. We will populate going ahead without other income. And we've also given the balance sheet published. You can even -- There will other income.
So the thing is that historically -- segment other operating income. Now it is with other income, it is actually getting very difficult for us to understand the trend. And the bookkeeping itself is causing us to not get the final details right. So if you could please do that, that would be really helpful. And if you could just explain the outlook on the EBITDA margins would look for the stand-alone business.
Okay. The other income, we had around INR 58 million in this Q1 FY '25. And if you are clearly wanting to understand the finance income, which is about INR 45 million, INR 25 million on our top line -- it's about 0.1%.
How much is it without EBITDA margin?
INR 45 million with -- EBITDA margin is INR [ 474 ] million which became INR 420 million. So I said 0.9%...
On the EBITDA margin.
Going forward, we will clearly separate it out. Your idea is right including the segmental -- another asked the numbers. We will include both of them in our quarterly deck so that we won't have to -- as you rightly pointed out, and then otherwise it would become slightly difficult -- So this year, I mean, for this quarter, Radha has explained that it's about INR 4.5 crores, INR 45 million.
Understood. And yes, just if you could share some light on how exactly is the IFM stand-alone business standing out. The margin improvement from 1.7% to 3.7% on a quarter-over-quarter basis looks great. So just on the out of that, I believe, is a function of how your low-margin contracts are now exited. So just going forward, what would it look like?
So going forward, we believe that this margin of around 4%, 4.5% should easily should be there. And in fact, we believe that overall it can be better. This is on a stand-alone without other income, without financial income sort of anything, operating income. So we do believe that our 4.5% -- even 5% is what we would be looking at. But in the near term, you can easily 4.5%.
Understood. And now coming to the BSS segment. So even in the BSS segment, while the sharp growth is segment excluding all the adjustments that you mentioned, the EBITDA margin was flat Q-o-Q. So if you could just explain the growth drivers going forward? And if global flight continuously improve, [indiscernible] 7% as reported increasing?
Yes. Global will definitely keep on increasing because the costs are already taken into account. And of course, gestation period every airport -- So global will keep on improving. And that is the trend that we are seeing in almost every business that we have right now. And in any case, Q2 and Q3 are the better quarters. So there is festive demand and also festive jobs that happen. So there are a lot of shorter-term projects that come in and also some other payments that come in at that time. So Q2 and Q3 will anyway be stronger.
Okay. And just another last question. In the IFM business, a lot of your peers have been stating the fact that the larger customers are seeing lower margins. And would that mean that, that your incremental customers are coming at growth margins
That is our that we always want to take customers at margins that are accretive, which is higher than our current overall margin. For some strategic reason, for one particular product line, we may offer margins that are lower or pricing that is lower to establish a relationship with some of these customers. But otherwise, the general expectation that you're talking about is correct, which is that new customers should come in at a margin which is at where we are or
We have our next question from the line of Naman Shah from Monarch Capital.
Congratulations on good set of numbers. I just had one question. In the IFM segment, how much of your revenue is from government and how much is from non-profit?
Government is almost 0 now.
[indiscernible] that's what, almost 0, 1%, 2%, and we are almost
So I just wanted to understand, having the government contract doesn't it 3, 4 years stable revenue
Sorry?
So if you have a government contract, that means you bid through -- you are in the bidding process and if you bid and win, you have 3, 4 years of stable income, correct?
That is correct. But government business comes with its own set of complications, in terms of penalties, in terms of the payment cycles, sometimes the DSOs can be above 6 months and there are other issues. So therefore, our attempt has been -- it's not that we are saying you will never do government business, but extremely selective and right now, very, very low exposure to those kinds of contracts. And it's unlikely that we will very large orders.
The next question is from the line of Ventures.
Sir, I'm new to this company and I want to understand a bit about the IFM business. So you have a lot of segments in the IFM business. So can you share what is the major segment like from where does most of the revenue comes from the IFM segment?
So IFM basically comprises of services, which is cleaning services by and large. It comprises engineering services, which is a fairly large part of our business. The third major one where we are very strong is production support services, PSS, which is where we support industries on their industrial plants, on their manufacturing lines, et cetera, doing O&M and other services, that's the third large one. And then you have institutional catering, which is also growing very well, and we are very strong in the South. So that's a big one. And then what we have is warehouse management, which is not very large for us, but we see growth over And also there is a very specialized company that we have called washroom hygiene, where we provide services for safe and environmentally friendly disposal of used sanitary napkins. So that's a high-margin business for us. So those are the 6 segments that we have in this space.
Got it, sir. Sir, can you quantify what percentage of revenue comes from these segments?
So we don't break it up like that. But I can give you some very, very broad numbers. So you will have staffing at about 10% or less. You will have institutional catering at about 10% or maybe slightly less than that. Engineering services and SOC services would be about 30%. ESOP would be about 40%, Engineering would be about 25%, so that will be about 65%. And production support services will also be about 15% or 20%. So washroom hygiene is a very small business. Washroom hygiene is a very small revenue business, but strong EBITDA, 40% EBITDA.
Got it. Got it. Sir, my second question will be you stated that we are #2 or #3 in the market share in most of our segments. So what is something that we do different from your peers to have that kind of market share?
So I think we have over the years, one of the strongest thesis really is our customer relationship and our customer management because we deliver services which are reliable and we deliver services which are as per the customers' expectations. That's why the relationship exists. Most of our new business also comes from existing customers. So that is the measure of right from what you have -- So if somebody if you're already doing business with them, in plant A or in factory 1, then they will take us to factory 2, 3, 4 and 5. So that is the kind of thing that we are seeing. So one is quality of services delivered, quality of relationship that we have with them. We're also bringing in technology in various parts of what we do. So that is helping very clearly. So that I would say would be the third. And the last to an extent is really the bouquet of services that we have. So we have a full range of services, which is helpful in the -- Because most customers are not consolidating the vendors that they have. And they want to deal with larger vendors who are more compliant and UDS being listed has very strong credentials for that. So that helps. So the reputation that UDS has because of the fact now also that it is listed and we've been in the market for 30 years, that has been very, very helpful as well. So those would be the 3 or 4 core trends. The fact that we've been there, reputation, the fact that we understand the business and have delivered services to them, the fact that we have a full bouquet of services and the fact that we have people who have been with the company for a long time, churn is low at our site management level. And therefore, we have strong relationships.
Got it. And sir, my last question is any guidance for FY '25 on a consolidated level?
No. We don't yet give formal guidance. So for that, we are not giving out or putting out a formal guidance.
And sir, just one last bookkeeping question. Sir, what will be the tax rate going -- for FY '27?
So our tax rate roughly is about 15%, and we expect [indiscernible] So we're looking about 15%, 16%.
Yes, about 15%, 16%. And the thing to note there is that we are not dependent on days. So that is something for you to keep in mind. So our -- yes, so we are not really dependent on that.
The next question is from the line of Pranav from
Sir, I have two questions. [indiscernible] What exactly -- And going forward, how do you see the growing
[indiscernible]
[indiscernible]
Yes. So GenAI will basically sales enablement as GenAI is also sales enabled. Sales enablement -- customers and more. So we have a digital business where we help them sell more digitally. We also help them generate leads and close sales also or pass on the leads to them and we get paid for that. So this is done through a lot of digital work. It is also done through other campaigns that are run. And we also do a lot of market activation activity, which is on the ground. So there are the 3 or 4 areas where we work. So there is market activation. There is sales, which is the lead part of it, and there is digital, primarily these three.
And are these [indiscernible] Are they profitable for us? [indiscernible]
We don't break it up like that. So I will not be able to give you a revenue and EBITDA at that level. But at the legal entity level for GenAI and for the others, we have actually already given that in the previous [indiscernible]
GenAI is about 12.5% and [indiscernible] We have given 9.9%...
Yes. 9.9% BSS, overall. [indiscernible]
[indiscernible] last slide?
For BSS, margin number is 9.9%. But below that line, we don't give generalized breakups. But the overall segment of BSS is delivering 9.9% EBITDA.
[indiscernible] around this level for a while?
No. So we do expect margins to improve as revenue grows, there is cost arbitrage as that kicks in. So margins will definitely improve. But we have already guided in the past that we have mentioned in the past that margin improvement in this business is on cost arbitrage basis, not on price. So we will grow at about 0.2%, 0.3% year-on-year as far as margin is concerned, yes.
We have our next question from the line of from Lucky Investments.
Sir, could you give any indication on the EBITDA growth that you're looking at for the next couple of years? And second, in terms of your new business pipeline, any comments that you want to share?
The new business pipeline because since we are in different kinds of businesses, the pipelines look different for the different businesses. But as far as revenue is concerned, rather...
Overall, I think what we have earlier also commented was we are looking at a 15%, 16% consol from businesses to put together that's the growth we are looking at.
So here you were [indiscernible] with respect to that.
So we may be closer to that as well, but we don't believe in overpromising and over delivering. But the thing because there have been headwinds, and we had mentioned that in the last quarterly call also, there are headwinds in the business, for example, where clearly we are seeing uncertainty around IT hiring and therefore a slowdown in that business. And we had talked about the fact that the counter that to some extent global will improve, which it has. And our AA business -- our business is growing strongly. But since we do see weakness in and we do see some weakness in some of our other business, therefore, we are mentioning 15%, 16%.
We have our next question from the line of Shah from Dolat Capital.
In the previous call, about the IFM business, you had mentioned that more and more projects that you're receiving already. And once you stabilize, you will see higher throughput. So is this happening now? What is the situation?
It does happening in the sense, I mean that is what we are working on that. I think if you look at this quarter numbers also, you would see a slight improvement over last quarter. So that is what is happening. We will...
Yes. And what was your ESOP cost for the quarter? And what will it be for the year?
ESOP was -- what was last year INR 8 crores.
The ESOP cost for this particular period is...
How much?
Last year, it was about INR [ 8 ]...
INR 11 million for this quarter. The full year, we are expecting it to be around INR 5 crores.
Yes, INR 5 crores full year and this quarter is about INR 1.1 crores.
INR 1.1 crores.
INR 1.1 crores for quarter 1 and INR 5 crores full year.
Yes, that's it. But last year, it was INR 8 crores. So that keeps reducing, which has -- the next year, it -- next year, it gets over, I think, right?
One more year.
One more year, very small, it will be. It will be [ 5 ] That's your answer for that question.
Right, right. Okay. And just to reconfirm, I believe you said for the BSS segment, you expect margins to grow 0.2% every year?
Yes, roughly. Overall margins. Consol margins.
Consol margins, not just BSS?
No, no. Consol margins will grow between 0.2% to 0.3%.
The next question is from the line of Vora from Guardian Partners.
I just had one question. I just want clarification with respect to the investment that we've made in technology. Sir, we've done a rights issue of INR 7.9 crores. I just wanted to understand, given this is a loss-making business, why has this happened and given further loan? And secondly, could you just give some information around why we've done this scheme of merger also with
Okay. See, the scheme of amalgamation between IT [indiscernible] at this point of time having a network which is negative, and we want to go under Section [ 23 ] that merger. UDS have given the load already to which was [indiscernible] and UDS group. So we now have given them a little more money to increase the net worth to be positive. And of course, that money has come back. The loan has got repaid to us. So cash terms, there's no impact for UDS. The money went as a rights issue and the money came back as a loan repayment. And this merger is necessary for us because UDS is also invested in a technology company and is a technology company. Strategically, if we merge these 2 companies, we'll have a lot of synergies.
Especially on the go-to-market because ITFS has a go-to-market already in place. there's no point investing new money to get them to create another go-to-market. ITFS already has that.
We have our next question from the line of Manoj from K Shares and Securities.
Good set of numbers which you have given for Q1 FY '25. My question is there on the BSS side. This is regarding the field marketing services, which we are doing for one prestigious mobile manufacturer in India. So may we have some -- any sort of numbers how much revenue we could have it in a couple of quarters or for the FY '25?
Yes. The last quarter, we reported close to INR 40 crores of revenue in which has come out of this new initiative, which we are running the retail stores. It's not just running it, enabling the sales, converting it. It's a comprehensive solution which we are providing to the largest mobile manufacturer.
Can we have the name of that particular manufacturer and how big is the contract?
See, we cannot share that unless we get the approval from the manufacturer at this point of time.
Also that's competitive information. So we will not be able to share the exact name, but there aren't that many who are that large.
You can understand.
You can draw your own conclusions also.
And my another question is that company is harping more on the technological and digital use of providing all the services. Are we moving away from the mass scale of people labor deployment to smart solutions for the technology enablement for providing services in the BSS or the IFM segment? And how it could be EBITDA and margin accretive to the businesses large
So there are two parts to that question. One is that are we moving away from people intensive and more into technology. We are certainly examining all types of technology. But these are mostly in looking in the sense that they will help transform internal productivity and efficiency. So -- and it will improve customer interactions. In some businesses like -- and Matrix -- in particular, it could also result in some new services getting created. But will we reduce our dependence on people? See, at this point in time, hard to comment. But we certainly expect that it will add to product. So that might mean a few jobs getting relocated or people being redeployed to other areas.
Sir, my another one question for you because -- with your kind permission, would be the opportunity with the BSS has in the Korean market. And how much revenue we would be doing right now in that segment?
Not much. It's not a reportable number. It's not that much. And -- but the idea is that it complements our Asia office because there are global customers who want services in various countries. So it will not be a material number in the near future. But Korea is a large market. And in the future, 2 to 3 years down the line, it could be a significant revenue and EBITDA generator.
Ladies and gentlemen, that was the last question for today. And I would now like to hand the conference over to the management for closing comments.
Thank you. And I didn't know you are waiting for my -- Thank you, everyone, for joining us. I hope we have been able to answer all your queries. We look forward to such interactions in the future. In case you require any further details, you may contact us or Mr. Of SGA, Investor Relations Advisers. Thank you once again.
Thank you.
Thank you. On behalf of Updater Services Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.