Impact Of Baldor Tech Acquisition On Indiamart's Revenue | NDTV Profit
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00:00Hello and welcome. You are watching the Small and Mid Cap show. I am Mahima Vachrajani.
00:12Well, we have a very interesting line up of managements lined up for you on the Small
00:17and Mid Cap show today. First up, we are joined by Mr. Dinesh Agrawal, founder and CEO of
00:22India Mart. India Mart came out with its Q1 FY25 results, good set of numbers, margins
00:27have significantly improved. But to discuss more about this, how the quarter has gone
00:32by and how FY25 is shaping up for the company, we will welcome Mr. Dinesh Agrawal. Welcome
00:37to the show, sir. Give us some context as to how the quarter has gone by, good set of
00:43numbers, there is growth in margins as well as net profit. Give us some color as to how
00:49the quarter has gone by and how do you see FY25 shaping up as a whole?
00:55So, revenue from operations on a standalone basis grew by about 18% to Rs.315 crores.
01:02And EBITDA margin has been expanded specifically in the quarter 1 because the hirings have
01:08happened a little later, but still it is much higher than the previous quarters. We plan
01:14to maintain this margin at about 33-34%. Other income has also shown handsome gains. So,
01:22that is why the profit after tax is very high right now. In terms of the collections
01:28from customer, also has grown at 15% to Rs.341 crores. Cash generated from operations has
01:36also grown to Rs.125 crores for the quarter. Currently, we have about a deferred revenue
01:42of about Rs.1421 crores and cash and cash balance at Rs.2150 crores. Our paying suppliers
01:50have grown moderately by only 1500 customers from Rs.214,000 to Rs.216,000.
01:57Right. So, Mr. Agarwal, since you mentioned your paying subscribers addition has been
02:05muted for this quarter, I want to understand that this is majorly on the back of churn
02:10that has been observed in the customers from silver monthly and silver annual packages
02:16because you have taken some kind of price hikes there. So, I want to understand that
02:21how do you plan to recover this loss that has happened in Q1 FY25? Do you see that prices
02:29going back to what they were before this or is there some other strategy that you will
02:34be using? We are trying to optimize where we acquire customers from, which industry
02:40and which cities that we acquire customers from. We should acquire customers more in
02:44the profitable segment and that is what we have been doing. On the churn side, yes, SME
02:51churns have been elevated on the silver annual and silver monthly level. However, we continue
02:56to see very healthy retention on the gold and platinum subscribers. As I told on the
03:02call also, about 50% of the customers are in the gold and platinum. They account for
03:07about 75% of the revenue. So, we continue to operate with a profitable growth mindset
03:15and we will address the churn issue by moderating our algorithms to reduce the competition as
03:24well as to increase the relevancy for the suppliers getting buyer inquiries. Right,
03:30so then Mr. Agarwal, how long do you think will it take for you to come back to the normal
03:37levels as it was before? Yeah, it is taking some time, so I am not able to comment on
03:42that. We continue to work on that, maybe another two quarters, but let us work closely on that
03:51and see how it shapes up. Understood. And you know, you have also started cutting back
03:58on marketing expenditure overall. So, I want to understand that, will this overall impact
04:03your growth going forward? No, marketing spend has been nil for many, many years now.
04:11We have not yet started any brand marketing. The last time we did any marketing spend was
04:16sometime around 2016 or something. So, we have not been doing any marketing spend. We
04:22have had organic and word-of-mouth growth. Our brand has been pretty strong in the market,
04:29so we have not needed any inorganic marketing or advertising so far. If we need to be, we
04:38have enough cash and enough profits to do that. Right. Mr. Agarwal, you know, in this
04:43particular quarter, you have also acquired 10% of Baldor Technologies. So, I want to
04:48understand that what are the kind of synergies that you are expecting from this particular
04:52acquisition and what is the kind of revenue inflow are you expecting from this acquisition?
04:59See, we have made a minority investment of 10% into ID5. They run a very good digital
05:08KYC and digital onboarding process. Apart from that, they have a very good bank statement
05:17analyzer and things like that. So, we are looking at help in the process of merchant
05:23onboarding as well as buyer, any kind of a user fraud detection going forward because
05:28as the digital adoption is growing, these kind of technologies would come and help at
05:34India Mart also. And we also believe that in the long run, there could be more synergies
05:38possible going forward. Right. And Mr. Agarwal, you know, for FY24, you had roughly done revenue
05:45of 1200 odd crores and your net profits were approximately 335 odd crores. So, give us
05:54some, you know, idea as to what is your target for FY25 in terms of top line and bottom line?
06:01Going by the revenue run rate, currently we are at a revenue run rate on the consolidated
06:06basis of about 331 crores. So, this looks like if you quadruple it because most of our
06:15revenues come from collection from customers and collection from customer has been growing
06:20at 16, 17, 18 percent. So, similar growth is expected in the upcoming quarters also.
06:27In terms of cash from operation or in terms of profit, I think we are doing a lot better
06:34than previous year. Previous year, we have done about 28 percent overall EBITDA margin.
06:41This year, we are expecting at about 33 percent overall EBITDA margin.
06:44Okay. And, you know, I want to understand that, you know, this quarter you've done EBITDA
06:50margins of 36 percent. So, overall, you're expecting a 33 percent EBITDA margin. Why
06:55is that dip one thing? And, you know, what will be the overall levers that will maintain
07:02the margins at 33 percent? Yeah. So, last year, we did about 28 percent
07:08and last quarter, January, the AFM quarter, we have done some gains because of the certain
07:16optimizations that we have done. There is a natural leverage that is coming as the revenue
07:21is increasing, the fixed costs are coming as a percentage lower of that. Also, in the
07:28April, May, June quarter, because the hiring typically happens towards the end of June
07:34and beginning of July, based upon the college outcomes. So, we are expecting this 37 percent
07:42margin to dip further to maybe 33, 34 percent. Right. And, Mr. Agarwal, you know, with respect
07:49to your internal targets for the entire FY25, for certain operational metrics like unique
07:56business inquiries, you know, suppliers, storefronts and traffic, what are the internal targets
08:02that you have set for yourself? So, we continue to maintain our internal target at 28 percent
08:09and depending upon, because it's a marketplace and a lot more moving parts are there, we
08:15are a horizontal marketplace. So, Delhi unique business inquiries have increased 14, 15 percent
08:22in the last two quarters and we would want to maintain this at the similar levels. In
08:27terms of the supplier, total supplier base, if you see, we have about 8 million total
08:31supplier base and that grows slowly and slowly because we are adding about 0.1 million supplier
08:40almost every quarter. So, about half a million supplier in the entire year. In terms of registered
08:46buyers also, if you see, we increased the registered buyers by about 3 to 4 million
08:51per every quarter. So, about 10 to 12 million every year. Right. Well, Mr. Agarwal, thank
08:58you so much for giving us those insights on India Mart and all the best for the entire
09:02FY25. But with that, it's time to slip into a short break. But up next, we'll be joined
09:09by the management of Jindal Stainless and Sapphire Foods. So, stay tuned.