CE Info Systems Ltd Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Shobit Singhal - Anand Rathi Share and Stock Brokers Limited - Analyst : Thank you. Sir, I have two questions. Sir, first on the C&E segment. So C&E revenue growth trajectory is sustainable, I mean, as it appears that it was a onetime project revenue, which got booked in this quarter, which explains the steep rise in outsourcing expenses. So can you elaborate more about what we did in this project? And is the order related to this project exhausted or more to come in Q4? Thank you.

Question: Shobit Singhal - Anand Rathi Share and Stock Brokers Limited - Analyst : No, no, I'm saying that, so this growth which we got, so there was a, I think there was one government project as well, which we booked in this quarter, and also there was a steep rise in our outsourcing expense, which you have mentioned in your presentation as well.

Question: Shobit Singhal - Anand Rathi Share and Stock Brokers Limited - Analyst : Okay. And sir, second question is on the Gtropy. So last quarter, you said that Gtropy funding issue was resolved. But if you see, hardware sales did not pick up this quarter as well. So any specific reason? Or have we rationalized our authorized dealer network here?

Question: Shobit Singhal - Anand Rathi Share and Stock Brokers Limited - Analyst : Right. And sir, last question is, so at the start of this financial year, so you have given a guidance that for the full year, we will be able to achieve around 25% kind of growth. But given that in nine months, we did only 17% type of growth. So I as for fourth quarter, it's around close to 45%, sorry, first. Are we still sticking to our guidance?

Question: Shobit Singhal - Anand Rathi Share and Stock Brokers Limited - Analyst : Okay, great, sir. Yeah, thank you.

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : Hi, good morning and thank you for taking my questions. My first question is just if you're able to provide a little bit of color on some of the deals that you've announced this quarter. And what that does to your order backlog? I think the last update we had on the order backlog was towards the end of previous fiscal year. Roughly INR1,370 crores of open orders. Just want to understand what what the quantum of recent deal wins has been, what the nature of those deals has been and where our existing order backlog looks like in terms of visibility going forward?

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : Got it. That's helpful color. Second question is just around seasonality. Historically, we've seen second half and last quarter, seasonality pick up in terms of mapmy vendors business. And then we had a little bit of unfavorable lumpiness in the first half of the year in terms of contracts closing and so on. So if you look towards the end of the fiscal, could you just share some of the drivers that are giving you the confidence that you can meet your 25% sort of employed growth target? And then I think as the previous part has been meaningful pickup and growth expected in the fourth quarter.

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : Got it. That's helpful. And my last question is just around your earlier remarks around the temporary increase in technical outsourcing costs. Is that costs that you're incurring ahead of the curve for potential pickup in revenue expecting certain types of business (inaudible)

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : Got it. So it's unlikely that this elevated level of technical outsourcing costs occurs in the near term is, is that the way you think about it?

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : Got it. That's helpful. Thank you very much and all the best.

Question: Anmol Garg - DAM Capital - Analyst : Hi, thanks for the opportunity. I had a couple of questions. Firstly, wanted to understand that how are we looking towards the government business. So are we bidding on government led GIS projects? And also wanted to understand how are the margins in these kind of projects?

Question: Anmol Garg - DAM Capital - Analyst : Overall.

Question: Anmol Garg - DAM Capital - Analyst : Right, sir. Understood. So just to follow up on that, so given that we are taking now more government projects, should we assume that there are more sustainable margin range would be around 35%, 36% going?

Question: Anmol Garg - DAM Capital - Analyst : EBITDA margin.

Question: Anmol Garg - DAM Capital - Analyst : I'm talking about the full company's margin. (multiple speakers)

Question: Anmol Garg - DAM Capital - Analyst : Understood. Secondly, sir wanted to understand our confidence on next year's growth trajectory. Now, do we have enough order book and enough confidence that we will go back to the growth trajectory like we have in the last two years. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 5:30AM, CEIF.NS - Q3 2025 CE Info Systems Ltd Earnings Call

Question: Anmol Garg - DAM Capital - Analyst : Right? So should we assume a trajectory of around 25% growth rate going ahead..

Question: Anmol Garg - DAM Capital - Analyst : Understood. And just one last one from my end. If I look at our B2C spend this quarter that you have indicated that you spend around INR5 crores in this quarter, for B2C. Now, going ahead, how should we see these pains? Would it be range bound? Or would it increase as we focus on the Maples application?

Question: Anmol Garg - DAM Capital - Analyst : Understoo., Sir, are we giving any size of the deal that we have signed with the social media in this quarter? .

Question: Anmol Garg - DAM Capital - Analyst : Sure, sir. Sure. Thank you so much for answering my question.

Question: Abhishek Kumar - JM Financial Limited - Analyst : Yeah, hi, good morning. Thanks for taking my question. First question is on Hyundai, Kia, both the India deal as well as the Indonesia JV. Last quarter, we understand because of lower production, it is not reflecting, but how has that deal progressed? Have we now increased the number of models where our software is going in and how should we look at it in terms of achieving its peak quarterly run rate going forward and also any color on how -- what is the progress on the JV? When can we expect revenues or, some profit coming from the JV?

Question: Abhishek Kumar - JM Financial Limited - Analyst : Yes, that's very detailed and clear. One quick follow up there just in terms of size of the market. Our understanding is that the volumes in Southeast Asia similar to Indian market where the realizations are 2x, 3x of what we get in India. Is that true? And does that mean that the time that we are looking at a potential time is 3x of India's automotive market.

Question: Abhishek Kumar - JM Financial Limited - Analyst : Yeah. Okay. Yeah, my question was more around time, not our revenue but point taken. Next question is on, some of the wins that we have had in quick commerce, et cetera. That's the space that I assume even Google maps target very aggressively and they have -- they cut their prices also a couple of quarters back. So, good to hear that we have been winning in e-commerce and new age digital. What is in your view leading us despite, competition being aggressive in pricing to win these and does that in your mind validates the product market fit that we have and kind of addresses, I mean, anything you can give in terms of why we won over competition, in some of those deals.

Question: Abhishek Kumar - JM Financial Limited - Analyst : Sure. One quick follow up on this just in terms of, order to revenue conversion here because these are APIs and volume driven. Does it mean that the order to revenue consumption is much faster compared to any other typical B2B or B2G space? And therefore, I mean the revenue growth here could -- ramp up could be faster.

Question: Abhishek Kumar - JM Financial Limited - Analyst : Understood. Great. Thank you so much and all the best.

Question: Prachi Patel - Aventus Capital - Analyst : Hello sir. Good morning. I had a couple of questions. So the first one is what is the expected revenue contribution from our drone services towards achieving INR1,000 crore for revenue target for FY28?

Question: Prachi Patel - Aventus Capital - Analyst : Okay, sure, sir. So my next question would be what factors have contributed to the decline in our device sales within our IoT led segment this quarter? And was this decline an intentional strategic decision?

Question: Prachi Patel - Aventus Capital - Analyst : Yeah. So I meant to ask what factors have contributed to a decline in the device here within our IoT led segment this quarter? And was this decline an intentional strategic decision?

Question: Prachi Patel - Aventus Capital - Analyst : Okay. So any idea on when that could be happening if it's postponed for the future?

Question: Prachi Patel - Aventus Capital - Analyst : Okay sir. Sure. My last question being with our partnership with Qualcomm Tech, what revenue impact and growth opportunities do we anticipate in our automotive and mobility tech segment in the upcoming quarters?

Question: Prachi Patel - Aventus Capital - Analyst : Understood, sir. Thank you so much for taking my question.

Question: Nishant Chandra - Temasek - Analyst : Hi, thanks for taking my question. I had a question the IoT hardware line that has been the IOT hardware revenue profile. So just to understand the number of units sold, this would be something the zip code of 170,000 units that we've done on a nine month basis. Is that right?

Question: Nishant Chandra - Temasek - Analyst : So for the nine month year period, we've got the revenue number on from IoT hardware is disclosed in the investor presentation right. Now when I compare this with last year, in terms of number of units for full year, I think we did something like 300,000 units of hardware sale. I'm trying to understand what is INR38.2 crore of revenue pertains to. This should be something like 160,000, 170,000 units of sale. Am I thinking about it the right way?

Question: Nishant Chandra - Temasek - Analyst : Okay, I understand. And the full year number would again track something close to 300,000 or is there something that we need to change. The expectation was this last year on the baseline of hardware revenue?

Question: Nishant Chandra - Temasek - Analyst : No, 300,000 is there in the annual report? I think you -- I think the IoT double plate had the number of devices, the revenue from hardware and revenues from software split in the annual report. So I was just trying to see what is the unit value and that I use the same unit value here to see what is implied number of units.

Question: Nishant Chandra - Temasek - Analyst : I mean, I think the hardware revenue declining YoY per se is not a -- so the way we look at it is that there are two parts, right? So here the, it's not like you're making profits from hardware sale, which is materially large, the profits are anyway driven by services sale. But, and hardware effectively enables you to make the services sale. So that's why I was just trying to see what is the universe of sales that we're doing on the hardware side. And if that is, so let's say if it is not tracking, let's say last year's number, how should we -- why is that the case? Because your points of presence on the retail side should be similar to last year. So what is -- how should we interpret that momentum on sale of hardware?

Question: Nishant Chandra - Temasek - Analyst : And the last one is if I were to look at the stock of devices, which is giving you this subscription revenue on IoT sale, where would that be currently in terms of closing number because I think that number was close to 0.5 million devices in end of '24. That should be something like 650,000, 6 70,000 devices for nine months. '25 is again, is the number probably the right zip code.

Question: Nishant Chandra - Temasek - Analyst : No, the number of. So if I look at the sale of subscription devices in IoT how many devices would be subscribed to your IoT services? It should be somewhere around 600,000 to 700,000 units is what I thought I just wanted to verify that number with you.

Question: Nishant Chandra - Temasek - Analyst : Okay. Got it.

Question: Gautam Rathi - CWC - Analyst : Hi, Mr. Verma. Thanks for taking my question. I had a couple of them first on the entire contract just needed some clarification. So this is a INR400 crore contract for five years. But how should we think about the peak ramp revenue in this contract, right? Is it fair to say because even if I take average it's an INR80 crore. But is it fair to think that a peak this could be like INR100 crore,INR120 crore kind of a revenue and just to take a guess today, we would be not even say INR10 crore to INR15 crore in that contract. Is it fair to think it that way?

Question: Gautam Rathi - CWC - Analyst : Okay. Understood.

Question: Gautam Rathi - CWC - Analyst : And the other thing on the Hyundai JV, last time around you were saying that even in the JV, the map of making the car, right, the development of maps would be outsourced to Map My India, right? So are we already seeing the cost coming for this in our, business for which, in future we would get the revenues or is it still too early.

Question: Gautam Rathi - CWC - Analyst : Understood, that was really helpful. Just the last question, right. How should we think about the growth in the government part of the business?

Question: Gautam Rathi - CWC - Analyst : Government business.

Question: Gautam Rathi - CWC - Analyst : Less than 15%. So which is more or less set of --

Question: Gautam Rathi - CWC - Analyst : And, Mr. Verma again, if I understand it right with your government business going up, is it fair to assume that your margins or a blended margins could be lower. Because you just -- in one of the earlier questions, you mentioned that, your margin should be around 38% to 40% or 38% right? So is it fair to assume that as the share of government business goes up? We wat are --

Question: Gautam Rathi - CWC - Analyst : Understood. That's very fair. Thanks a lot for answering the questions.

Question: Ridhima Goyal - Acquaint Bee Ventures - Analyst : Hi Mr (inaudible). Thank you so much for giving me the opportunity. I have two questions. First, I just wanted to know like earlier if we see that we have a average growth rate of around 30%, 35%. And now in FY20, we have, we are targeting around 25% and going forward also, we are seeing that 25% CAGR is expected. So I want to know like what is exactly happening in the industry? Are we facing any competition or like what is happening? Why are we not able to have the earlier run rate of [35%]plus growth rate? And also what is the reason of the margins? I know that B2C cost is what we have incurred and that has resulted in the dent in margin. But since we are going to calibrate this cost going forward, then again, we are targeting for 30%. So what is the reason for the dent in margin process and its target?

Question: Ridhima Goyal - Acquaint Bee Ventures - Analyst : Sorry, hello. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 5:30AM, CEIF.NS - Q3 2025 CE Info Systems Ltd Earnings Call

Question: Ridhima Goyal - Acquaint Bee Ventures - Analyst : Yeah. So actually just the reason we wanted to know is the right like the growth rate is to them. I understand that you have a target of INR1,000 crores by FY28. But, we were growing at 30%, 35% and just, reaching to 25% growth is a concern or maybe just we wanted to know the reason anyway.

Question: Ridhima Goyal - Acquaint Bee Ventures - Analyst : Got it. And the second question is, so I wanted to understand all this, your contract. So since you said that we have five years contract, I wanted to know like how does it work? Like every year, if you, if, for example, Kia makes 100 vehicles, your maps are being installed on all of those 100 vehicles, then in second year, if they again manufacture 80 vehicles, then that is your AP you know, maps are being installed. And how does it work? Like what happened post five years do up vehicles installed for the unit of will there will be the renewal of your, the mapping thing or like post that you will have a different contract of new vehicles being manufactured. And the ESP of 800 includes the installation part or is it includes the renewal also?

Question: Ridhima Goyal - Acquaint Bee Ventures - Analyst : Okay. Got it. And just a request, will it be possible for you guys to give more granuality on your segment wise? Like what is the variable and fixed contract and in variable like what is like for (inaudible) and what would be the number of vehicles which are being, we are installing our maps on a quarterly basis. It will give us more clear picture to, track the KPIS of your business otherwise would be very difficult for us to predict what is going to happen in the next quarters.

Question: Ridhima Goyal - Acquaint Bee Ventures - Analyst : Okay. Got it. Thank you so much, sir. That's it from my side.