Q4 and FY23 Earning Summary
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Operating revenue for qtr: 232.5 cr. up 5% QoQ and 39.5% YoY
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Operating revenue for Year : 845 cr. up 30.6% YoY
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Adjusted EBITDA for qtr: (excluding non cash ESOP expenses), 35.6 cr. (EBITDA margin 15.3%)
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Adjusted EBITDA for Year: (excluding non cash ESOP expenses), 95.5 cr. (EBITDA margin 11.3%)
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Employee expense increased 29.2% YoY led by 37% increase in headcount. rise of 3% only on Sequential basis.
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Other income for qtr: stood at normalized 74.2 cr. (mainly from 4000 odd cr. cash in BS).
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Other income for year: 141.9 cr. (there was MTM loss in Q2 due to rise in interest rate)
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PAT for qtr. : 83.8 up 278% YoY and 11.3% QoQ
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PAT for year: 162.9 cr.
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Collection at 945 cr. vs revenue of 845 cr. the difference of 100 cr. seats current liability/deferred revenue in BS.
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Deferred revenue : 438 cr.
Q4’Call Summary
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Deferred revenue stood at 438.2 cr. growing 29.6% YoY and 8.9% QoQ
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Tier 1 cities contribute about 61% to revenues and 41% to paid campaigns.
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B2B side of the business (JDMart competing with indiamart) contributes 26% of the revenue. vs 20% 3 years back. In order to monetize this segment better , there is a dedicated 700-750 member team working on it. Mgm expects this to be the key growth driver from next 2-3 yrs perspective. Target customer is SME segment. Realization in this segment is 10-15% higher than normal Just Dial customer. Assessment is to take this 26% to 33-35% over next 2-3 years.
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Margins : pre-Covid they were at 25% plus sustainable margins. exited FY23 at 15% margins (full year was 11.3%), Next year same time (Q4) mgmt expects to be at pre-Covid margin levels.
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Tax rate: operating income attracts 25.2% tax rate. other income so far used to attract 12% to 13% tax rate, with the change in taxation norms, assuming they hold them for 3 years, they will be taxed at 20% with indexation, so effectively 12-13%
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Next Year major expense heads estimates: Employee expenses could be 10-12% higher than current year. Ad expenses could be 35-40 cr. ( new initiatives may need more cash, will decide when time comes).
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Landscape of target market : 65 million S&M businesses, and 10-15 million freelancers. so a total universe of 75-80 million. so even 1% of that population spends on digital advertising it comes to 8,00,000. The number we have as active campaigns at 5,38,000 is still miniscule and lot of headroom.
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Growth : Realizable value for next year is 1000 cr. (20% revenue growth from current year based on current signups.). Plus the new recruitment which has happened over last few qtrs is expected to deliver better sales growth. Half the growth should materialize from addition of paid campaigns and half by realization.
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Use of Cash: Mgmt is very evasive and non-committal on this. Might use for inorganic opportunity, might use for promotion of new initiative (but again rebuts this, saying we are not into mindless spending etc etc…). Says the sector is disruptive, we need to conserve resources for any eventualities.
My take: Post Reliance take over and covid, this has been first year of company doing well operationally. It seems, for FY24, we can bake in a 1000-1100 cr. revenue at 20% EBITDA margins kind of scenario. So 200-220 cr. of EBITDA, ~30 cr. of Depreciation, 25% tax and 120-140 cr. kind of PAT figures from operation.
4000 cr. cash yields at 7.2% and 12% tax gives. 250 cr. of bump to PAT. No idea on how to value this. Best IMHO, is value it as cash, simple.
Mcap : 5681 cr.
Mcap ex of cash : 5681 cr. – Cash 4066 = 1615 cr.
company capable of earning 120-140 cr. PAT with solid BS, decent growth rate of 20+%, EBITDA margins of 25% and hardly any requirement for capex should trade at 30-40x trailing (??) i.e, 3600 to 5600 cr mcap ? Plus the 250 odd cr. added to PAT from cash. I hope so!!
Disc: invested after results.
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