Release Date: May 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Retail segment showed healthy growth despite severe headwinds.
- Net increase in the number of centers, indicating growing confidence in the partner community.
- Strong cash position with INR199 crores at the end of FY24.
- Successful launch of the Virtual Production Academy, aligning with future technological trends.
- Significant reduction in debtor days, improving cash flow.
Negative Points
- Setbacks in the enterprise business group, leading to negative growth in EBITDA.
- Impact of Hollywood strike on the media and entertainment segment, affecting job growth and sentiment.
- Currency depreciation in Nigeria significantly affected revenue and outstanding debtors.
- Aggressive competitive pressure in the Beauty segment, impacting market share and realization.
- Challenges in the enterprise business due to some customers moving to paper and pencil for exams.
Q & A Highlights
Q: Could you talk about the current placement season and how it is growing now? Given the strike impact was there before, but now that the strike has ended, what are the current trends?
A: The strike did impact our placements, but it has ended, and work has started trickling back to Indian studios. However, it will take at least a quarter or more before gaining full momentum. The sentiment did get impacted last year, but the good news is that it's coming back. Additionally, our students are finding opportunities in domestic studios and the gig economy.
Q: The bookings number has been much lower in the last two quarters. Is this due to the strike, and how are you addressing this?
A: The industry growth was projected at 24% but ended up at 7%. Despite this, our billing growth was 14%, which is better than the industry. We are adapting our courses to stay relevant and are focusing on new segments and technologies to maintain growth.
Q: What is the impact of currency depreciation on the global retail segment's PBT, and what is the core underlying revenue growth on a like-to-like basis?
A: If we had used the royalty model in FY24 and FY23, the revenue growth in retail would have been 8%. Adjusting for the FX impact, the growth would have been 10%. The reported PBT growth is 11%, and after adjusting for the model change and FX impact, it would have been 16%.
Q: How should we look at growth in the global retail segment going forward, considering the FX impact and the Hollywood strike?
A: The industry is projected to grow at 17.5% over the next three years. We are also expanding into new geographies and leveraging our proven track record in media and entertainment and IT segments. Overall, we expect healthy growth aligned with industry trends.
Q: The institutional business has seen a sharp drop in revenue. How should we look at growth coming back in this segment, and what is the breakeven level of revenue?
A: The government's focus is on boosting CBT (Computer-Based Testing) infrastructure, which presents significant opportunities. We have already signed three new customers and are working on more. While we can't disclose exact breakeven numbers, we are working to minimize the breakeven point and ensure profitability.
Q: What is the current order book for the institutional side?
A: We do not intend to disclose any order book numbers as they are projections based on contracts. The actual orders did not materialize last year, so we prefer not to give a specific number.
Q: Is there any plan to demerge the institutional business and list it as a separate entity?
A: No, the Board has decided to continue with the current structure. While the institutional business has faced challenges, the Board believes in its potential and has taken steps to stabilize and grow it.
Q: What is the scale of Lakme's contribution to retail revenues, and how do you see its growth over the next five years?
A: Lakme contributes approximately 25-26% of our domestic business. While the growth from network expansion may slow down, we expect continued growth from same-store sales and new product introductions.
Q: Why is it taking Aptech longer to enter newer segments?
A: We are cautious about entering new segments to ensure profitability and sustainability. We are working on a five-year strategy plan and will share more details once it is finalized.
Q: Is the integration of the new accounting policy completed?
A: We are working towards completing the integration, and it is expected to be finalized soon.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
