Indiamart Intermesh Ltd Q4 2023 Earnings Call Transcript

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

Question: Vivekanand Subbaraman - Ambit Capital - Analyst : Hi, thank you so much for the opportunity. My two questions, so the first one is on the collection. What we have seen is for the standalone business, the collection growth has been decelerating in the last three quarters, and it's now 26% year on year. So just wanted to understand how to think about collections here. And I understand that fourth quarter has a lot of renewals. So could you please help us understand the way the renewals have moved from your top 1%, top 10% versus the overall customer base? So that's question number one. Second question is on the margin side, we saw that the margins are still getting hit because of investments. So I just wanted to understand how to think about margins as we head into FY '24? Thanks, sir.

Question: Vivekanand Subbaraman - Ambit Capital - Analyst : Got it, thank you. Just one follow up on the first answer. So, Dinesh, on the renewals you said they are 90% of pre-COVID levels, is it 90% in platinum and gold or overall? I'm just trying to understand how to look at the renewals.

Question: Vivekanand Subbaraman - Ambit Capital - Analyst : Okay. Last one on the renewals, top 1% disclosure that you've been doing for the last four quarters, so here we have seen that your top 1% ARPU has gone up from 790,000 to almost 880,000. So is this a result of price hikes or higher usage, how to think about this?

Question: Vivekanand Subbaraman - Ambit Capital - Analyst : Great. Thank you. I'll re-join [the queue].

Question: Anmol Garg - DAM Capital - Analyst : Yeah, hi, thanks for the opportunity. So I had a couple of questions. Firstly, wanted to understand, if you can highlight some -- so among our investing companies, it's been almost a year since we acquired them. So if you can help me understand that, how have IndiaMART helped them scale up by providing -- by cross selling them through our sales team or by providing them access to our supplier base, if you can help me understand that how that has happened. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2023 / 10:30AM, INMR.NS - Q4 2023 Indiamart Intermesh Ltd Earnings Call

Question: Anmol Garg - DAM Capital - Analyst : All right. Thanks, Dinesh. Just a follow up on the same, so do we provide access of our supplier database to these companies?

Question: Anmol Garg - DAM Capital - Analyst : And secondly, from my side is that just wanted to understand if there has been any change in the duration of collections to revenue conversions, as earlier that we've highlighted that we have been moving more towards monthly customers. So from that perspective, has there been any change from collections, how the collections are getting converted to revenue?

Question: Anmol Garg - DAM Capital - Analyst : Okay, sure. I'll join back in the queue.

Question: Swapnil Potdukhe - JM Financial - Analyst : Hi, thanks for the opportunity. So I had two or three questions. First on the traffic side, so for the last three, four quarters, we are seeing that the numbers have been kind of flattish. I understand that initially there was impact of COVID, but now even in 4Q the things have not improved significantly. So do you think like if the traffic trends do not improve, say in the next two, three quarters, there could be a challenge on the supplier side additions also?

Question: Swapnil Potdukhe - JM Financial - Analyst : Right. Thanks for answering that in detail. The second question is on the supplier addition side. Now you have been guiding that we will add around 8,000 suppliers to 9,000 supplies every quarter, my question is like 4Q is typically the best quarter for you guys, and this quarter also you have added [only 8,300 suppliers]. Would you continue to stick to the guidance for the next year as well? Or I mean, given that you did allude to the fact that the suppliers are the lower packages, the churn at that range is significantly higher even now. So just wanted to get your sense, like, is that 8,000 to 9,000 additions per quarter maintainable even in a scenario like this?

Question: Swapnil Potdukhe - JM Financial - Analyst : Right. And just one last question on Busy integration. Now you did allude to the fact that the growth in the business has doubled, my question is more on the margin side, because last year your margins were skewed, because 1Q being at around 42%, if I'm not wrong, but rest of the year, the margins were pretty lower than your company average. So how are we trying to A, bring in incremental growth and maybe cross sales and all? And secondly, what are our targets for margin improvement in Busy? It's been more than 12 months, so I think we should be fairly able to have some visibility on that side.

Question: Swapnil Potdukhe - JM Financial - Analyst : Thanks, Brijesh. Just one --

Question: Swapnil Potdukhe - JM Financial - Analyst : Right, Brijesh. Thanks a lot for that. Just one clarification, in the beginning of the call, we mentioned that you expect margins to move towards 28% very quickly and then by the end of the year, 30%. For a full year basis, would it be fair to assume that you would be somewhere between 28% to 29%, the EBITDA margins in FY '24?

Question: Swapnil Potdukhe - JM Financial - Analyst : Sure. So thanks a lot guys for taking my questions. Thank you.

Question: Ruchi Mukhija - Elara Capital - Analyst : Hi. So my question is kind of building on earlier participant's question regarding the traffic and the unique enquiries. So here, if you look at the ratio, total enquiries delivered to unique enquiries have changed the direction. It's been increasing for last three quarters. If you look coupled with about 20%-plus growth in your paying supplier base implies diminishing value of the platform for each paying supplier. Is that a right way to look at? And I have a I would say a related question here, pre-pandemic this ratio of your total enquiries delivered to unique has reached a top of [about 6.4]. Is that optimal or is that I would say a peak ratio where one need to get worried about the traffic metrics? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2023 / 10:30AM, INMR.NS - Q4 2023 Indiamart Intermesh Ltd Earnings Call

Question: Ruchi Mukhija - Elara Capital - Analyst : Thank you for that detailed answer. I get what you are trying to say that in a very short period of time, it's very difficult to match the growth frequency of buyer and supplier. But over long period, they should run hand in hand. Here what I'm trying to just assess is that at what level it turns worrisome for IndiaMART, how you look for that signal or that trigger in your business where it's turning I would say concerning for you?

Question: Ruchi Mukhija - Elara Capital - Analyst : Understood. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2023 / 10:30AM, INMR.NS - Q4 2023 Indiamart Intermesh Ltd Earnings Call

Question: Nikhil Chaudhary - Nuvama - Analyst : Hello. Yeah, hi. I have a couple of questions, first is on higher churn in silver category. So it's been like quite some time and churn continues to remain high. Earlier there used to be case where we have less number of employee per supplier and support category. So maybe the experience got impacted during those times. But we have filled those gaps and despite of that, we are seeing higher churn. Can you give some color on that or is it due to higher pricing, maybe?

Question: Nikhil Chaudhary - Nuvama - Analyst : Sure sir, a very detailed answer. I think I have one follow up related to what you mentioned about geographic expansion. We also read on the news that you expanded into Tamil Nadu, some cities in Tamil Nadu, Pondicherry, and also some of the Tier 2 and 3 cities. So how is the initial response? And can we say that a good part of or most of your paying subscriber addition is coming from this geographic expansion, while more or less your existing geography paying addition is broadly flat? Any color on that.

Question: Nikhil Chaudhary - Nuvama - Analyst : IndiaMART as well.

Question: Nikhil Chaudhary - Nuvama - Analyst : Yes.

Question: Nikhil Chaudhary - Nuvama - Analyst : Sure sir. Thank you so much.

Question: Amit Chandra - HDFC Securities - Analyst : Hello?

Question: Amit Chandra - HDFC Securities - Analyst : Yeah. Yes, sir, thanks for the opportunity. So my simple question is, obviously, we have seen very strong collections, it has increased quite well. So what factors you attribute to that, so maybe you can expand more upon the channel partners because is it coming from higher sales from channel partners or you attribute it to a lot to the sales efficiency, or the aggressive sales investments that you have done? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2023 / 10:30AM, INMR.NS - Q4 2023 Indiamart Intermesh Ltd Earnings Call Or is it the existing suppliers are doing more -- are actually going up the pyramid or subscribing to more longer term contracts or more monthly suppliers are getting converted to the platinum category? So if you can throw some light which part is actually leading to that?

Question: Amit Chandra - HDFC Securities - Analyst : Okay. And on the price hike, what is our strategy here? So is it an annual price hike or we do it when we suppose --

Question: Amit Chandra - HDFC Securities - Analyst : Okay. And sir, my last question is on the Busy. So if you can throw some more light on what is the cross sell opportunity? I know there's a huge cross sell opportunity that you've talked about. So what is the success that you have got in terms of cross sell and how many of our existing suppliers are using Busy?

Question: Amit Chandra - HDFC Securities - Analyst : Okay. Thank you, sir.

Question: Sarang Sanil - RW Investment Advisors - Analyst : Hi, good evening. Am I audible?

Question: Sarang Sanil - RW Investment Advisors - Analyst : Yes, thank you. I have two questions. So the first one is during our last concall, you had mentioned that we'll be targeting an ARPU growth of 4% to 6% for next year. While early last month on the media, you had pushed this number a little higher. So would this be coming from price hike or the adoption of more cities category by the paid suppliers, like you've noticed with the platinum customers?

Question: Sarang Sanil - RW Investment Advisors - Analyst : Okay. So you are confident [5% to 6 -- 7%], yeah. So my other question is on the registered buyer slide. Here my understanding is just a customer sign up puts me on the registered buyer figure. But only once I submit an RFQ, I get into the active buyer figure, right? I completely understand how you're optimizing the business enquiry side through algorithmic changes and all. Here there's a different situation where paid suppliers are coming in from one side, but the ones interested in submitting an RFQ on the buyer side is just stagnant for the past three years, right? So are we planning to improve this engagement metric in some way or are we just fine? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 28, 2023 / 10:30AM, INMR.NS - Q4 2023 Indiamart Intermesh Ltd Earnings Call

Question: Sarang Sanil - RW Investment Advisors - Analyst : Right. But my understanding is last three years the paid suppliers have gone up significantly, but the active buyers --

Question: Sarang Sanil - RW Investment Advisors - Analyst : So you're not worried about the active buyers number not increasing.

Question: Sarang Sanil - RW Investment Advisors - Analyst : Sure. Okay, sir. Thank you.