Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CarTrade Tech Ltd (BOM:543333, Financial) reported its highest-ever quarterly revenue of INR172 crores, marking a 27% year-on-year growth.
- The company achieved a significant increase in profit before tax, up by 44% to INR37.14 crores for the quarter.
- EBITDA margins improved from 15% to 21%, demonstrating strong operational leverage.
- The company remains debt-free with a robust cash balance of INR832 crores.
- Organic traffic growth is strong, with 95% of users coming from organic sources, indicating strong brand affinity.
Negative Points
- The OLX business, despite showing growth, has not yet fully realized its potential, with some improvements still pending.
- Revenue growth in the remarketing segment was modest at 3%, indicating slower progress compared to other segments.
- There is a slight decline in other income due to the acquisition of OLX, impacting cash balances.
- The auction business is still facing challenges, with repossession cycles yet to show significant improvement.
- The company faces competitive pressures, particularly in the consumer business, where competitors are also receiving positive feedback.
Q & A Highlights
Q: How has the OLX business performed since its acquisition, and what are the future growth expectations?
A: Vinay Sanghi, Chairman and Managing Director, explained that the focus in the first 13 months post-acquisition was on stabilizing technology platforms and teams. The OLX business has seen revenue growth, and the foundation laid is expected to drive significant growth in the future. The business segments remain the same, with 45% in used cars and two-wheelers, and the rest in non-auto categories like real estate and electronics. The company is confident about future growth across various sectors.
Q: Can you provide insights into the consumer business growth, particularly in new and used cars?
A: Vinay Sanghi noted that the consumer group is primarily focused on new vehicles, which constitute 85% of the business. Despite modest growth in the car industry, CarTrade Tech has seen growth across all segments, including new and used vehicles. The company is optimistic about continued growth in the automotive industry over the next few quarters.
Q: What is the outlook for the auction business, and are there signs of recovery?
A: Vinay Sanghi mentioned that the repossession cycle seems to have bottomed out, and the company is confident about the auction business improving. They have controlled costs and built other segments to support revenue growth. The expectation is for a reasonable performance in the coming quarters.
Q: How do you see the three business segments evolving over the next 3 to 5 years?
A: Vinay Sanghi expressed confidence in all three segments—consumer group, remarketing, and OLX—having significant growth opportunities. The consumer group benefits from the growing automotive market in India, while the remarketing business is expected to grow with both retail and repossession markets. OLX has limitless potential as a leading platform for used products in India.
Q: What factors contribute to CarTrade Tech's strong brand presence on Google Trends compared to competitors?
A: Vinay Sanghi attributed the strong brand presence to consumer recognition and organic traffic, with 95% of users coming to the platform without advertising costs. This brand affinity is reflected in the company's profitability and is a key factor in its market position.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
