Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aurum Proptech Ltd (BOM:539289, Financial) has become the largest rental management platform in India, aiming to double its capacity to 15,000 rental units.
- The company has successfully acquired and professionalized a single asset worth INR70 crores in Pune, positioning itself to become one of the largest electronic REITs in India.
- Aurum Proptech Ltd (BOM:539289) has onboarded top developers across India, including prestigious clients like Birla Estate, Adani Realties, and Sriram Properties.
- The company has significantly increased its revenue and improved its EBITDA margin considerably, demonstrating a focus on profitable growth and unit economics.
- The rental cluster registered an 87% year-on-year growth, and the company successfully turned around India's largest rental marketplace, Nestaway, making it a leaner and more efficient organization.
Negative Points
- Revenue from operations for Q4 FY24 was INR59.81 crores, down from INR67.31 crores in the previous quarter, indicating a decline in quarterly revenue.
- Total loss for the year was INR65 crores, up from INR40 crores in the previous year, showing an increase in annual losses.
- Liabilities increased significantly to INR456.47 crores as of March 31, 2024, compared to INR157 crores at the end of March 2023.
- The company faces challenges in scaling its mandate model for real estate sales, requiring a shift to a more tech-enabled AOP model.
- Despite improvements, the company still has a long way to go to achieve consistent profitability, with a focus on improving EBITDA margins by 700 to 1,000 basis points annually.
Q & A Highlights
Q: How far are we from taking mandates for entire real estate projects where we are the sole sellers or have a guarantee to sell most new properties?
A: We commenced with a mandate model but are evolving to a more tech-enabled AOP model, allowing us to scale across multiple geographies. This model involves annual contracts with developers to sell inventory through our broker aggregation platform. We are seen as technology partners, providing analytics for project launches and consumer profiling.
Q: Can you give some color on our student living and co-living projects? Are we booking properties beforehand and then renting them out?
A: Yes, our acquisition strategy involves securing entire buildings, often built to suit. We have signed up close to 5,000 beds for student and shared living, set for delivery over the next few quarters. Our focus cities include Bangalore, Kota, Hyderabad, and Pune.
Q: What changes are we making at Nestaway to achieve profitability? Do we hold 100% stake in Nestaway?
A: We have turned around Nestaway, making it a leaner and more efficient organization. We hold nearly 100% stake and are open to discussions for further opportunities. Our focus is on expansion in the top six cities, aiming for over 50% year-on-year growth.
Q: What is the guidance for FY24-25 revenue figures for Aurum Proptech?
A: We aim for a 45% to 50% revenue growth this year and subsequent years. We have established a 68% revenue growth year-on-year and will continue to demonstrate robust growth.
Q: If we execute well on the 50% CAGR, what will be our EBITDA level?
A: We have improved our EBITDA margin by 1,150 basis points this year. We aim for a 700 to 1,000 basis points improvement in margin annually over the next two years.
Q: What will be our final equity after the balance of the rights issue is put in?
A: We have received 90% of the call money from the rights issue. Total equity remains at 51%. We are working on receiving the remaining amount.
Q: Have we let go of growth targets to achieve profitability in Q4? Is this a normalized rate of EBITDA going forward?
A: Post-acquisition of Nestaway, we focused on unit economics while maintaining growth. We demonstrated a robust 30% Q-on-Q growth in the distribution business. We aim to continue improving EBITDA margins by 750 to 800 basis points annually.
Q: What is the opportunity for institutionalization of rental real estate in India?
A: The demand for rental units in India is around 2 crore, with only 2 lakh units currently formalized. We aim to capture even 10% of this demand, which presents a multifold growth opportunity.
Q: Do you see further adoption in analytics and CRM business in Indian real estate?
A: Yes, with AI and ML, the capabilities of data are growing exponentially. Our analytics platform provides actionable insights, and our real estate-specific CRM, Sell.Do, is the market leader with over 500 developers as clients.
Q: What are the risks that could hamper our growth?
A: Macro risks and policy changes in the rental and distribution space are potential risks. We mitigate these by quickly adapting to policy changes and institutionalizing business processes. We are also shifting from a mandate model to a tech-driven AOP model to reduce dependency on relationships.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
