CarTrade Tech Limited (CARTRADE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to CarTrade Tech Limited Q2 FY '25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performances and involves risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vinay Sanghi, Chairman and Managing Director of CarTrade Tech Limited. Thank you and over to you, sir.

Thank you. Good afternoon, everybody and welcome to CarTrade's Q2 earnings call. I want to -- of course, we've uploaded our presentation and the financials for all of you to see in advance. I just want to start off with saying that it's been a good quarter for the company. In this quarter, we've achieved the highest ever revenue and profit before tax in any quarter. We're the #1 automotive platform in India across used classifieds, horizontal classifieds and of course, vehicle auctions. We received almost 77 million monthly active users on -- across all our platforms, CarWale, BikeWale, OLX, et cetera. We -- I think what is more remarkable that drives the performance of the company, 95% of these users come through organic sources, which means we don't pay for these users to come on to the platform. We are now covering almost 150-plus physical locations. We auctioned at a rate of 1.4 million vehicles a year. Revenue for the quarter is at INR 172 crores, which is the highest, as I said, adjusted EBITDA is at INR 57 crores, INR 56.8 crores which is also our highest ever. Profit after tax is almost INR 31 crores. And as you know, we have a strong cash balance, debt free with about INR 832 crores of surplus cash. If you go to our consolidated results, which is on Page 6. As I said, our revenue is INR 172 crores. Revenue has grown by 27% in Q2 over last year. Half yearly revenues at INR 328 crores, which has grown by 35% year-on-year. So the 6-month results showing a 35% growth in revenue. You can see our margins, our EBITDA margin, EBITDA is up at INR 32.7 crores for the quarter and EBITDA margin jumped from 15% last quarter to 21%, which shows the leverage in the business. With increase in revenue, what we were to demonstrate is an improvement in our operating and EBITDA margins. As you can see, even the EBITDA is up from 21.58% last quarter, which is almost a 50% jump in EBITDA quarter-on-quarter, 54% jump from last year. And half yearly, the EBITDA jumped 104%, INR 54.28 crores consolidated, from INR 26.65 crores last year. And then therefore, you see the margin gone up 11% to 17% half yearly. PBT is up by 44% to INR 37.14 crores for the quarter and INR 61.29 crores for 6 months, which is up 48% half yearly from last year. And then that's what showed the leverage in the business, a 35% increase in revenues resulted in a 48% growth in the profit before tax. PAT for the year -- for the quarter first time at INR 30.72 crores, which is up 500% from last year and INR 53.62 crores half yearly which is up 189% from last year's INR 18.55 crores. So generally, you've seen a very strong set of revenue and profit growth with increase in margins across all periods. If you look at adjusted EBITDA, which is just removing ESOP cost and adding the interest income, it's at all time high of INR 56.81 crores, up from INR 42.8 crores last quarter and 37% year-on-year growth and almost INR 100 crores for the 6 months ended, which is up 38% from last year. So this is on the consolidated results. We got the stand-alone results, which is for the Consumer Group, contains CarWale, BikeWale, some of these brands. Revenue was up -- operating revenue is up 23%, which is INR 55.62 crores. Other income is down because of the acquisition of OLX last year, our cash balances have gone down. And therefore, see a slight dip in our interest income but operating revenue is up 23% for the quarter, 20% 6 months at INR 106 crores. It's been a strong quarter performance of the consumer group. I think it's the highest ever revenue in any quarter. You see the employee costs and other costs well in control now, which shows the operating leverage even though the revenue is up quarter-on-quarter and year-on-year. You see the actual costs, overall expenses are flat or close to flat, which is really resulting in the massive 464% growth Q-on-Q on EBITDA and last year INR 73 lakhs becoming INR 18.4 crores of EBITDA in the first 6 months here. So massive growth in both EBITDA over the small increase in revenue [indiscernible] increases in revenues. PBT, again, is showing a 71% up to INR 19 crores and half yearly up at 30% to INR 32 crores. When you look at profit after tax, INR 15.75 crores versus INR 12 crores last quarter and INR 10 crores last year, was up by 55% and INR 28 crores for the 6 months on the stand-alone side, it's up by 27%. So you see a strong operating performance here, slightly lower other income that's because of the reduction in cash balances due to the acquisition of OLX. But overall, again, very, very strong operating metrics being reported in the stand-alone results. When you look at the remarketing results, which is on Page 8, we had a modest growth of about 3% and INR 57.24 crores and 3% for the year at INR 105.84 crores. But we've kept our expenses under control and there's been slight cost reduction, which has resulted in a 34% growth in profit before tax at INR 10.26 crores and INR 14 crores for the half yearly, which is up by 29% to last year. PAT is also up 32% at INR 7.59 crores and INR 10 crores for the 6 months ended at 26% up from the last year. So generally a strong financial performance. We would have liked the revenue growth to be stronger but the financial performance has been quite strong even in Shriram AutoMall and the Remarketing Group. When you look at the OLX results, which is on Page 9. OLX, obviously, there's a growth over the previous quarter from INR 49.48 crores from INR 48.23 crores. It is difficult to compare over last year just because only 2 months of operation during the first half of last year. But at 6 months now, we've achieved INR 97.72 crores revenue for the 6 months ended September '24. EBITDA is up at Q-on-Q from INR 8.05 crores to INR 8.55 crores and half year is now at INR 16.6 crores. I see a small improvement margin from 17% on to 18% quarter-on-quarter and PBT is up as well. PAT is slightly down and that's partly only because of tax incurred on other income, on some of our interest income we incurred some tax and that's why the PAT is slightly lower than the previous quarter. But generally, operations are stable. We feel it's a reasonably strong financial performance. Revenue growth is something we feel we'll achieve -- a stronger revenue growth something we'll achieve in the coming quarters but generally a strong, stable performance from OLX as well. This is a good summary of the consolidated and subsidiary accounts and finance and operating metrics. I'd be happy to take questions now from each one of you. Thank you.

[Operator Instructions] We have the first question from the line of Siddhartha Bera from Nomura.

Congrats on a good set of results. Sir, first question I have on the OLX business. So if you see the ramp up, now it's been like close to 1 year, we have this business, we are operating and running this. How do you think has been the performance? Is many of the improvement still yet to play out? Or do you think it is taking longer? If you can guide us about how to look at the revenue scale up in the OLX business and some more color about which are these segments? Any mix or any more data, if you can share in terms of OLX, how the business is changing or what are we doing here to sort of scale up the revenues here? It'll be helpful.

Sure. I think -- Happy Diwali to you, first. The second thing is, we've over the last -- been about 11 months to the end of September for the -- from the acquisition of OLX, I mean, sorry, 13 months or so. And obviously, the attempt in those first 13 months was around stability of technology platforms, teams, recruiting all the product technology teams, moving all of this technology and product to our own environment, stabilization and growth of traffic, consumer traffic, processes and sales, et cetera, et cetera. And the segments are pretty much the same. It's -- 45% of it is auto, used cars and used 2-wheelers and the rest is non-auto, which is led by real estate, jobs, electronics, mobile, et cetera, et cetera. We've obviously -- there has been revenue growth in the last 13 months of operation during this period. And we feel a lot of the things we've done and a lot of the foundation we've laid, the significant part of that growth will come in the future. When you take over a business, I think you lay a foundation where over the next 5 to 10 years, you can see that growth. So some of it started to play out. Obviously, the auto side is something we were more comfortable with and obviously, a lot of the initiatives were launched in the automotive side first. But now we are also working heavily on the nonautomotive side, which is other segments of real estate, mobiles and jobs, et cetera, et cetera. And we do feel in the coming quarters, we'll start seeing a more -- a stronger growth in revenue, I would say, across various sectors, which we're working on there. So we feel very confident about that. We also feel very confident about the quality of traffic and users of -- and the brand of OLX, right? I mean almost 30 million people a month, come every month. And as you know, we spend no advertising on OLX, which just shows the affinity of the brand, right? It's one of the leading -- or probably the leading used product platform in the country, right, where people can come in and sell their products or buy used products, right? So we feel part of the initiatives we're taking will -- and a lot of the growth, which is -- will show in the next few quarters by the initiatives we've taken in the last 13 months. But when we took over the business, it's important to bring full stability and transfer of technology and product to our environment first. So that's what we did. And -- but we feel now we are actually working on the business very hard, on various aspects of sales processes and other things to make sure or to -- and put up a strong foundation for growth in the future quarters coming ahead.

Got it, sir. Sir, second question is on the consumer business, where we did see a very good growth sort of playing out. Here, again, if you can throw some light about how is the mix between OE and new and used car? And where is basically the stronger traction if you are seeing, any particular segment worth highlighting?

As you know, the consumer group is mostly 85% new vehicles, right, as you know. And there itself, the car industry has been at a very modest 2%, 3% growth in the first 6 months of the year. In fact, in the last 2, 3 months, it's been degrowing. And the 2-wheeler industry, of course, had robust growths of 18%, 19% for 6 months, as the industry has been. We've actually seen growth across segments across, all new, used segments. I feel one of the -- even though the industry of car growth -- the growth in the car industry only 2%, 3%, it is still at a high base of last year and that's helped us as well. So we feel good about the car industry as well as the 2-wheeler industry and the used car industry, the way they stand. Some of the results have come in the first 6 months and we just hope and we think that some of this will play out still in the next 2, 3 quarters coming. So it's been a reasonably strong performance from the consumer group, both on the car side, bike side, new and used both, I think.

Got it. Sir, lastly, on this auction business, now volume seems to have gone up quite a bit compared to last quarter or year in the current quarter. So are we looking at any signs of turnaround in this business also as we enter the second half of the year? Or do you think this business also may take still longer for some of the recovery to play out?

We think that this -- it definitely seems to have bottomed out the repossession cycle, right? It doesn't seem to be getting -- it seems to have bottomed out. We do feel confident that this business now seems to be getting better. And of course, the other segments, when repossession has gone down, we've built other segments, which are also helping at this point of time. So it's a mixture of a little bit of cost control, a little bit of revenue growth but we do feel that in the next couple of quarters, SAMIL should deliver a reasonable performance. And it's hard for us to right now say that the repossession in banks and NBFCs is getting stronger or not. I mean it's a little early to say that but we do feel it's bottomed out, if that's of sorts.

The next question is from the line of Ankit K. from Smart Sync.

Congratulations on a good set of numbers. So my first question is related to all the 3 segments, actually. So if I look at the segmental revenues, coincidently, all 3 businesses are having roughly a quarterly revenue run rate of INR 50 crores today. And -- but when you look at the life cycle of all the 3 businesses, probably all 3 are completely different in their life cycle revenue. So I just wanted to know from your side, I'm not looking for any guidance but just directionally, how do you see these business -- these 3 businesses to be distinctly different kind of businesses growing or doing from here over the next, say, 3 to 5 years? Qualitatively speaking, I'm not looking at any numbers but how do you see the [indiscernible]

Thanks for the question. I think the first part is because the consumer group, which is CarWale, BikeWale. It's 85% new vehicles, right, which is cars and 2-wheelers. And obviously, we feel with that the car industry -- India is the largest 2-wheeler market in the world, right? It is also in the top 5 car markets of the world. And naturally, for country to grow, when you look at the penetration of cars in India, if you're going to be at 30 or 40 for 1,000, the penetration is extremely low. So you do feel over a long period of time, 3 to 5 years what you've asked, the car industry will grow and the 2-wheeler industry will continue to grow with personal mobility on the rise. And therefore, we feel very strongly of the health of the consumer group by itself, which is 85% dependent on new vehicles, right? We also feel for us, if you have seen 2, 3 years ago, it is harder because when there was a semiconductor issue and other supply chain issues in the automotive industry and demand was more than supply, it affected us because they stopped, manufacturers and dealers advertising on our platform because they didn't need to. They were sold out because of just the availability of vehicles was low. When availability is high, which is what the situation is today, where supply is more than demand, it's a little more favorable for the company. And we do see a strong demand cycle for the next 3 to 5 years in the automotive industry but we also see supply being available. And therefore, we feel very confident about the consumer group by itself over a [ 3 to 5 ] period. And obviously, what, our attempt is not only, is to go, as we said earlier, in CarWale or in BikeWale to, not to move from a situation or go deeper into our transactions with our manufacturers and dealers and for our customers to not only be able to find their car, select their cars, connect to a dealer online but also tomorrow buy cars online. So we're moving and building technology and going deeper and deeper in that process for all our customer and dealers and manufacturers. So naturally we feel confident about that. On the Shriram AutoMall side, in the last 1.5 years, the repossession of vehicles coming down and supply to us coming down from that source, we had built a whole retail segment, which is almost 40% of our business today. So obviously, we believe optimistic about growing the retail side of the business. But we also believe in times to come, with financing up, demand for vehicles going up of new vehicles, the repossession will also grow. And obviously, in the next 3 to 5 years, we feel good, both the retail and the repossession market will grow and Shriram AutoMall will be a strong player, will be a big beneficiary of that. So we feel confident about that. And then the third is OLX, where the TAM of the business we operate in is limitless, right? It is -- basically handles all used products in India. It's the #1 or leading place where any consumer can sell a used product or buy a used product. So we obviously feel that TAM in India is just, as I said, limitless. I can't put a number to it even. We have a large set of Indian consumers, who -- I mean and some of the data we've shared before, more than 30 million users a month come on OLX to sell a product or buy a product -- used product. And we have obviously a significant leadership here. So there's limited growth opportunities here, whether it's used cars, whether it is used bikes, whether it's used mobile phones or goods -- household goods, like furniture, et cetera, et cetera, or even homes. And we see very confident about OLX's future here as well over the next 3 to 5 years. So on the whole across all 3 businesses, we see tremendous amount of levers to grow. I think one thing I would add here, as you might know, that -- and we've demonstrated successfully over the last 5, 6 quarters, is that every increase in revenue in this company results in a very strong profit growth. We have a lot of levers in our business. And normally when our revenues go up, only a small amount of manpower cost goes up with it. But a large part of the revenue growth leads to profitability, which you've seen.

Got it. Got it. And it's only for the [indiscernible]. So is it fair to assume that, say 3 to 5 years down the line probably our consumer business will form a large chunk of our revenue compared to what it is today because that is probably the fastest growing also?

No, we don't think so. I think -- we think all the 3 businesses have opportunities. I mean they're all similar size today but we don't -- it's hard for us to say that one will be bigger than the other. They all have their reasonably opportunity to grow. So I wouldn't want to predict that the consumer group will be the largest, or OLX will be the largest, or Shriram AutoMall will be the largest. I don't want to predict that right now. But all have the levers to grow.

Got it. Got it. Yes. The second question is related to the competition. So ever since we got listed and we started doing con calls and presentation, one slide which has been always there is the -- is what you share regarding the Google Trends where CarWale is always on top compared to all the other competitors, which you share. When I look at the on-ground feedback from maybe customers or dealers, we get some really good feedback about the competitors also in terms of the business, which is happening. So can you share one reason why on Google Trends we are so high on the chart and consistently?

It's a brand, right? So Google Trends is basically how many people search your name, whether it's OLX or CarWale or BikeWale into the search for names, right and come to the platform, which means that it is the number of people who remember CarWale versus other people. That's what it is. It's a digital brand index. And that's what it is. It's got nothing to do with dealers. It's got to do with consumers. It's the reason the 77 million MAUs come to these platforms. Just to give you context, 77 million people a month come to CarWale, BikeWale and OLX. That's a huge number. And 95% come in an organic manner, which means we don't pay for it, completely free of advertising. That's why you have the margins we have in the company because 95% of our users come without any advertising cost, which is partly a reflection of Google Trends, as you see, right? And which is why the consumer group or CarTrade Tech as the company is extremely profitable is because of the brand affinity of CarWale, BikeWale or OLX. These are strong brands now in the businesses they run. And that's a reflection of Google Trends. It's got nothing to do with talking to dealers actually. It's not connected with that. It's a consumer [indiscernible]

[Operator Instructions] The next question is from the line of Sachin Dixit from JM Financial.

Congrats on a great set of results. With me coming to questions, I wanted to understand that we discussed that on OLX side, obviously, we have a bunch of low-hanging fruits that we can probably cater, first of all. I wanted to just check on that.

Your voice [indiscernible] Can you say it again, please?

Sorry, I was saying that on OLX side, you -- we have discussed that there are a bunch of low-hanging fruits we can cater to in order to deliver the growth that we wanted. I wanted to just get an update on that. Where do we stand on that? Have we seen any ramp-up in terms of advertising income coming from OLX or any price hikes or any such things? Can you please give an update on that?

Sure. OLX, I think all the things we've been working on are for the automotive side, which is the used car classified side of OLX, right? And then in nonautomotive side. There's also an advertising side, which is driven by advertisers coming and putting digital advertising on OLX site, the 3 different revenue sources in a way. That is -- I would say a lot of work has gone in. I wouldn't say that a lot of the revenue, what we feel would kick in very quickly, has all come in. I think we will probably see some of this growth coming in the next 2 to 3 quarters. And obviously, a lot of the foundation platform work is done, right, which is the product side, technology side, people side, processes side, so many small, small things after the M&A. But as I said, some of it has come in, in terms of revenue growth, as you can see and some of it is -- a lot of it yet to come. And we just feel that OLX is a kind of a platform where we'll always be saying this over the next 3 to 5 years because this is so much, the TAM is limitless, as we say, right? Once we get one side, we go to the other side and keep going deeper and deeper to monetize more and more aspects of the platform, right and get more and more consumers on board. So it's a nonstop effort. I think we all are spending lots and lots of hours on it. And we do feel in the coming quarters, you'll see some of that. And even in the coming years, not just the quarters because, as I said, there's just no limit to what can be achieved in OLX over the next 5 to 10 years.

Understood. So quickly on revenue side on OLX again, right? So we delivered roughly 2% Q-o-Q growth. Now if you recall like when this acquisition happened last year, we did talk about almost 20-plus percent plus odd growth. In order to deliver that, it looks like we'll need to deliver anywhere between 30-odd percent, 30%, 32-odd percent Y-o-Y growth over H2. Do you think we are on track for that? Or that's going to be a miss on that piece.

Yes. Yes. I don't know, I don't want to give any guidance on revenue. As I said, Sachin, we don't normally give any guidance. So we're working on, obviously, all the growth levers. And some of them will happen next 6 months, some will happen in the 6 months after that. But all I can say is, we do see a very long-term growth opportunity here. I don't want to talk about the next 3 months or 6 months, very specifically. I mean the one thing that's happening in OLX is that every quarter we get better than the last month, right? And not just in OLX, I think that applies to the consumer group and -- as well, where we actually make progress every single quarter. If you see the numbers, almost every single quarter, we got year-on-year better, right? So we'll keep doing that. And some of it will play out now, some will play out after 3 months, 6 months but the effort is to continuously to do that. And as I said, again, when we grow our revenue, the margin expansion is quite high, right, the moment we grow revenue.

Right. Yes. That's fair. Coming to the auto side quickly. On that piece, like we delivered close to 23% growth in the quarter while auto industry continues to struggle to say the least. Do you see this trend sustaining? Obviously, you have highlighted that this is probably the best time when advertisements peak.

Yes, we see some of this continuing. I think, I do feel like October, December normally is a better quarter than even the immediate -- than even June, July and September, normally every year. I don't think that's changed at all. I do think October, December, it is going to be better. And probably this trend might continue. It's possible that I do see that volumes are generally at the highest ever for 2-wheelers and cars, even though the growth is lower for cars, although [ absolute no ] growth but the volumes are pretty high and supply is higher than demand. So it's a good -- it's reasonably a favorable market condition, I would say.

So the reason why I asked that question was last year in H2, our Y-o-Y growth dipped quite sharply compared to H1. So that's why I am asking this question.

It's the growth rate. Not the absolute number. The growth rate may be lower.

Yes, growth rate dipped -- So which is where I'm coming from. Like, do you see that growth rate like this 23% at Y-o-Y growth rate sustaining in H2? Or we can expect [indiscernible]

No. I don't give a guidance on growth rate but all I can say is, normally the market conditions are slightly better. And I do feel like these quarters will be better than the previous quarter. That's what I do feel, if that's that the -- but I can't -- I don't want to give a growth rate guidance here.

We have the next question from the line of Akshay Satija from Alpha Invesco.

Congratulations on a good set of numbers. Sir, my first question will be for our remarketing business, our EBITDA per car seems to have improved from what it was in Q1. So I just wanted to understand, is it because of contribution from maybe retail sales, higher number of retail sales, or it's just that, as you said, the operating leverage that we sold more cars?

[indiscernible] It's also some costs because of the remarketing. There was also some cost reduction but it is also -- the product mix has not changed much but there is some cost reduction as well, which has helped.

Okay. If you could specify the numbers for retail and B2B that you do for remarketing?

Aneesha, you want to give it? But I think it's 40% is retail, which is quite similar to what it was earlier, 39% earlier, it is 40% now I think. So it's quite similar again, not much [indiscernible].

Okay. Sir, could you also share the new versus used car ratio for the consumer business? And if you could just go a little into detail for the abSure business that we have. So what would be sort of revenues? My belief is that we report abSure under the consumer business. So what will be the revenues or volumes for the abSure business? And how many stores that we hold of abSure as of now?

Sure. So I think the first part, about 86% is new in the consumer group. That's one, which is pretty similar to what it was at 85% and now it's 86%. That's the first question. The second question is abSure. So Aneesha, you want to tell how many outlets we have but that abSure plus which outlets are actually growing. What is that?

165.

165 are the number of outlets. We normally don't disclose the volume in the revenues yet. But the 165 outlets, something obviously, we are growing. And not only are we growing it here, I think OLX has a very similar number of OLX branded stores as well for used cars, right? Am I a Aneesha, similar number? Sorry, go ahead.

About 170.

170. So they're totally actually 335 such stores now. So the intent of the stores, I'll be honest was and still is, the ability for a consumer to come online and select a good, certified car and then buy it with a -- and eventually buy it in a one-click experience so they can actually have a completely online experience. And we're working towards that but the coverage has actually improved with the OLX acquisition. So the 165 actually becomes what, about 330 now, roughly 340 stores.

Okay. Sir, my final question is, could you just elaborate a little on the AutoMall stores and on that front? So say, we list roughly 1.2 million cars a year but we are selling only 20% of those cars. Just wanted to understand what happens to rest of the cars, are they kept as an inventory, not with us but someone who's listing it with us. Just wanted to understand, is that inventory carried forward for the next quarters, or just wanted to understand the business front.

Sure. First, last part of that inventory does not come physically. It's not -- I don't have the exact number yet, but a large percentage only comes online. It doesn't ever come physically to us in the Automalls. So some percentage come physically. And even in that percentage, if the seller decides not to sell it, they can take the vehicle back and then give it back whenever they feel they would like to sell it again. So the 25% or 28% is a conversion ratio which is of every 100 vehicles coming to auction, that's when you get sold. I think that's what it is.

Okay. Do you see this number probably could go up or...

No, it's been quite stable actually. It's not gone up. It's not gone down. It's been quite stable. I think the conversion ratio will probably be stable. Our attempt here is, of course, to improve conversion ratio by getting more buyers in, but it's also through increase in volume on supply. I think there are 2 different efforts here. But we don't see much -- there's not been much change over the last couple of years in the percentage actually.

[Operator Instructions] We have next question from the line of Vijit Jain from Citigroup.

Congratulations on great 2Q across the 3 businesses. My first question is, so I note on the presentation that organic traffic growth was especially stronger than the overall growth this quarter. But you did increase your stand-alone marketing spend about 20% this year -- this quarter, right? So my question, I guess, is, is that with an eye towards the next half of the year? Are you seeing any trends which make you -- want to increase your marketing spend here? And I think a related question to that is, in addition to what you show on Google trend, one can see on app traffic and other third-party data sources as well that you have taken market share in both cars and bikes from the competitors this year, especially on the bike side. So if you could give a view on what is happening there really? Have -- is your business in the bike side, for example, particularly higher now this year versus last year?

Yes. Okay. The first is the marketing spend in these businesses is very, I would say, tactical, but it's very -- it's not brand-driven expense or traffic-driven expense. It's very targeted at manufacturers who may want to sell us some kind of product and we are spending money on advertising and then try and build a specific consumers for them and that traffic and that advertising has incurred with them. 20% is up, but it's a very small number. I mean the numbers are really small here, right? [indiscernible] significant. So the amounts are very significant here. That's one. I would not think you can correlate that with an increase in advertising or a significant increase in adverting spend in the next 6 months. I would not think that would happen. It may be directly a little in correlation with a little bit of revenue, but it's not likely to go up substantially in the next 6 months at all. This is also not driving the growth in traffic, as we said, actually, the organic percentages are going up, it's 95% now across platform. So it is going up. The brands are getting stronger. Our consumer traffic actually in absolute terms, if you see it in the deck as well in the last few slides, is substantially up. So the quantum of traffic are not be done by advertising. This is just done on the brand and an organic basis. 2-wheelers have gone up a lot and so as cars gone up. So both traffic on both counts has gone up. We do feel that one is that, as I said earlier, the demand for cars is not down. It's just that the growth rate is down, right? If you look at the first 6 months, actually, it's grown back 2%, 3%. So it's not negative -- number one. Number two, the 2-wheeler industry has been very, very strong, which has shown growth in every parameter, right? I mean the volumes have gone up, traffic is of course going up, everything is going up. So it's a massive opportunity for us as well, the 2-wheeler side. But both cars and 2-wheeler have been quite healthy. So in fact, the traffic growth has been very, very healthy, I would say. Also some of the new launches has fueled this, right? I mean we had a couple of big launches in the car market. There's been a lot of interest on traffic, right -- I mean, the traffic side.

So Vinay, any broad sense on -- I don't know if you want to -- if you don't want to disclose split between, say, 2-wheelers and 4-wheelers, maybe some sense in terms of what growth rate you saw in the 2 categories this year?

It's been strong on both sides, I would say. I mean, 2-wheelers on a smaller base side, so it's outpaced the growth, but generally, it's been strong both places. The revenue split is something, Aneesha, have you given the revenue split on 2-wheelers and 4-wheelers? Not yet. Not yet, because it's quite -- okay, it's actually a mix of business in OEMs and dealers, not so much on 2-wheelers and cars. I mean, that's the reason we've given the OEM and dealer split, but the -- I think we see robustness in both actually, cars and 2-wheelers both has grown.

Got it. Great. And my next question is the remarketing business, right? So I guess, the mix shifted a little bit in the repo favor this quarter because, obviously, I can see the auctions went up, but the realizations went down.

Slightly better. I think there's some suppressed pricing of used products is used cycles as well, which has affected a little bit. But generally, that said, reposition seems to have bottomed out. It's always hard to predict because it's not something in our control, but it seems to have bottomed out, what I said earlier in the call, it seems to be a little better.

And you have -- I mean I think you mentioned it around the end of 4Q results, but you have added about 100 locations across Shriram AutoMall, abSure and OLX this calendar year, right? I think last 4Q you were around 350, now you're at 450, thereabouts. So could you give us a sense of where these additions are coming? Are these mostly in abSure here or...

Mostly in abSure Signature and OLX, they're not in Shriram AutoMall [indiscernible]. It's almost all there.

And so basically, about 50 to 100 store ads on the...

Probably closer to 100, I don't know the exact number. But almost all the additions will be there. I mean, I don't think [indiscernible] Shriram AutoMall, am I right? It couldn't be more, I mean big size. We don't really add very many Automalls. So it's mostly come in OLX and abSure.

Got it. So with abSure, do you think you -- this is a pace that you could probably continue...

Yes. There's a lot of work to be done on the pace, which is like probably will continue, both on the OLX side and the abSure/Signature outlets. What we're looking at doing is obviously adding a lot more tech and product to it and over time as consumers want. The whole idea is getting also is to give a differentiated experience for a user on CarWale or on OLX, right? And I think that is still something we're working on. Distribution seems to be catching on, but now we've got to also -- when you come to the consumer, provide this one-click like ability to buy a used car, if you want to do so, right? I think that maturity will also come in consumers over time, right? So it's a combination of all of that.

Got it. And my last question, Vinay. Just the OLX business, given the nature of the business, the October, November, December quarter should have a fair bit of seasonality related uptick. I mean not just -- I mean I know you said that for the auto business, but also nonauto parts...

I think OLX too should be better. It should be better because normally, October is definitely normally better. November the holidays and substitution always long. Because Diwali -- by the people come -- by the time them, businesses really start all over again, right? But generally, this O&D is normally a little better than July to September.

So the question I was trying to -- the answer I was trying to get to also in part, Vinay was, we have a lot of these festive season sales that the e-commerce platforms run, and I would imagine some of that will drive traffic to yours for used transactions. Is that a fair understanding of how this would work?

No, I don't think they're really connected with -- even though you got it, the e-commerce platforms have sales not convinced as directly correlated with the traffic on OLX or definitely on CarWale. But I would think that this season is normally the better for anybody, right? I think normally, October is always -- this year, Diwali and Dusshera both happened to be in the same month as well. So it normally -- it is a strong month always.

We have the next question from the line of Rahul Ranade from Goldman Sachs Asset Management.

So just a couple of questions. So one is what answered partially in terms of seasonality for OLX. So you're saying there could be some bit of a seasonality element in Q3. So that is answered. But just on the other side, OEM to dealer, we used to share the split earlier on, did we share that now?

Yes, we can give it. Aneesha, can you give the OEM, was it 67%?

67% and 33%.

67% and 33%. It's not changed much. I think it's a model that's been...

Okay. So is it the right understanding when we say new to use this 85%-15% depending this 67%-33%, this 67% is out of the 85% and then the 33% is a split between the new venues.

That is right.

Got it. And lastly, I just wanted to check in terms of progress on these allied services that we kind of talk when we say buying vehicles at the click of a button. So let's say, financing or insurance, have they started contributing to our revenue in any way in terms of...

They are very small revenues. Insurance is not financing at a very small revenue contributor. But the important thing is the tech and all of that has started to play in, right? So you can see on almost all our platforms now that one click is [ let alone ], right? I think those are the kind of things and a lot of the products were launched, whether it's abSure or these loans to enable a lot of the future transactions might come online as consumers want to do more and more. So when you buy a loan today and you come to CarWale or BikeWale or OLX, and you apply online and you get a sanction instantly by multiple, multiple banks and vendors. You've got a sanction, but from sanction to disbursement is not necessarily that all the banks and other partners are ready to at this point or able to do it even at this point, it requires all the documentation, KYC of customers, et cetera, et cetera, as for their processes. So it's not fully, I would say, the product is all the business sanctions instantly, it doesn't still probably give you a loan in account in the next 1 minute or something, right? I mean, the disbursements -- the sanction-to-disbursement cycle is not fully online yet.

Got it. So the meaningful attrition in terms of monetization, I mean, will only happen when that piece also falls in place.

I think the important monetization might improvement, but that's not the intent here. The intent was always that we give this journey to a car buyer or a 2-wheeler buyer or a used product buyer, they listen when you buy a product, you think they are loan instantly, so you can buy the car online. Like a last part of 2-wheeler than part the finance. So if you goes under loan instantly, when buying a car on one-click on 1 is almost impossible, right? Because if you want a loan, definitely the journey they never going to get broken, right? And I think that's what we work with banks and other stakeholders to see this journey can be completed online. But the intent was more from a customer experience angle. Monetization is 1 thing, but it's also experienced.

Yes. Understood. And just lastly, this is not very hard paid or CarWale specific. I just wanted to understand from a financing penetration standpoint, if you were to look, let's say, 4, 5 years back to now, for used vehicles, both used cars and used 2-wheelers, do you see a significantly greater proportion of people going for financing for their used vehicles or is it more or less the same how...

New cars, as you know, for the last 4, 5 years, maybe last 10 years, it's been -- it's very, very high as a percentage. In used cars, we've actually seen it being not move much. I feel like industries don't want. And second bigger thing is that you still don't have a large number of organized financials, financing used cars, right? A lot of people buying used cars are taking loans from unorganized sources, right? It could be a personal loan. It could be -- like a personal unsecured loan? Or could we even be from an employer or someone else, right? So you feel like the long, long way to go used financing in India. It's actually a massive opportunity. I think for any bank or any NBFC, it's just a big, big opportunity.

The next question is from the line of Mohit Madhiwalla from Envision Capital.

Great set of numbers, so congratulations on that. Just a few bookkeeping questions. Number one, I can see on the balance sheet that in the noncurrent assets, other financial assets have gone up, while in the current financial -- other financial assets have gone down kind of in a similar amount. Just wanted to understand what that movement has been firstly?

What is that, Aneesha? Do you want to explain that?

I'm sorry. Mohit, your question is that your other financial assets have come down and the investments have gone up, is that the question?

No. So my question is that in the current assets part of it, it has gone down by about INR 50 crores from March 31 to September this year. Whereas in the noncurrent part, it has gone up by INR 58 crores. So just wanted to understand what this is related to?

Second, because most of it was because fixed deposits, we would have moved into investment in mutual funds. It can be that.

It must be that. Whether it's in Sobek Auto? Was that Sobek Auto?

No. Both to the [indiscernible] but no other change. While cash balances have improved by INR 50 crores.

Okay. Next question was basically that there's been a bad debt written off and that it is a very small amount, sort of INR 75 lakhs. I just wanted to understand where this has come from?

Aneesha, I don't remember which client was, but is it the consumer group?

Yes, Vinay. We have done a cleanup for debtors which are more than 3 years. We have kept provisions in the -- only what was beyond 3 years is what we've written of this year.

Yes. So what we do is the provisioning of course, as per accounting policies and let me move from provisions to writing off, I think that's what's probably more from provision bucket to the write-off bucket.

Yes, absolutely right.

We've [indiscernible] provided for earlier repays is what -- is what she is saying.

Got it. And the ESOP cost, we are still at the run rate of INR 6 crores per quarter, right? So does this expected to continue going ahead?

Yes, I think for this year, it is going to be similar. It should -- as per the vesting schedule, come down from next year further. But at this point, it will continue, yes, through this year. And I think it comes down next year as to the vesting schedules.

So for FY '25, we would still be at around a full year INR 24 crore kind of on an ESOP cost.

That's right.

Slightly lower in FY '26.

They'll come down '25 -- '26 it will come down. That's correct.

Okay. Got it. And just 1 last question. What would be a reasonable kind of overall tax rate to as for the full year FY '25 because we are currently at around 21% on an effective tax case. I just wanted to understand where we can end for the full year, given all the OLX kind of net sale losses what have been absorbed...

I think there is no -- Aneesha, correct me I'm wrong, but there is more tax in OLX, right? And they'll go back in -- the stand-alone entity, the only tax in Shriram AutoMall. The tax has seen on the stand-alone entity is deferred tax, which has come from the change in the budget on how our treasury income is treated, right? I think it's a whole change from long-term capital gain tax on debt funds, right, which is the entry, it's not actually pertaining to the quarter, it's pertaining to a previous period. So the deferred tax will probably continue couple of more quarters this year, and then we'll go away. It will not be there anymore. So -- but generally the tax and the stand-alone, AutoMall exists here.

So I think I misspoke previously, the effective tax rate for this quarter was 17%. So let's say...

17% is mostly deferred tax, which is -- change in the budget, right, when they move this indexation on mutual fund.

Got it. So then for the full year, it would be at -- like -- what, below 25%?

It's exactly the same. This entry means it's actually the same situation here. And the effective tax should be lower because the profit goes up, the tax rate should come down. This amount of deferred taxes identical for next 2 quarters. The amount is in rupees. Aneesha, this is exactly the same amount. So the profit went up, the effective tax would see would go down actually. Because on our normal business income, there's no tax.

We have the next question from the line of Sachin Dixit from JM Financial.

I have a couple of book keeping questions. So the first 1 being that when I'm mentioning the depreciation expense across the 3 segments, our -- it's not matching up with the consol number by a decent margin. Why is that the key?

What is not matching, sorry?

Depreciation expense. And this is consistent across a few years in what is like this is what we keep [ such things ].

You're saying when we add up depreciation doesn't total, is that what he said?

Because there's an entry in ad consolidation, Sachin. There is a contract asset that we've created on the SAMIL acquisition. That entry gets passed only at consolidation. So the one plus one will not equal to the consolidated number of depreciation. It's an NGO which can donate self accounts.

Is it fair to assume that you use that plug to be a part of Shriram AutoMall business or remarketing business? Any think of segments?

No, it's a very specific entry for the Shriram acquisition, which was done in 2018, where our contract asset was created. It's a depreciation on the particular asset, which is created in the consolidated set of accounts. It's not to do with OLX or Consumer Group. It's only for the Shriram acquisition.

Yes, understood. Second question is on lease liabilities. So we are seeing that the lease liability went up by roughly -- between March 31 and September 30. Question that the business is largely nonasset heavy, where are these lease liabilities arising from?

It's also from OLX, I think, Aneesha, where it come from, correct?

Yes.

Go ahead, Aneesha. Do you want to answer? But is rental for OLX, right? Because it's only been 2 months of the year -- last year it's only 2 months, 1.5 months in this year's whole year.

But this is a balance sheet entry, right? You are giving a snapshot as of March 31 or September 30. Number of months accounted, that should not change.

Sachin, which number are you comparing? The balance sheet earlier is...

Yes, in balance sheet, lease liabilities as of March 31 was INR 112 crore. They went to INR 122 crore this September 30. What are the incoming...

So the increase is coming from SAMIL. There was 7 million users added in SAMIL -- I mean from compared to that you see -- from March to September.

We will take this as our last question for the day. I would now like to hand the conference over to management for closing comments.

Thank you, everybody, for joining this earnings call. And we are quite buoyant by the quarter we just had. And I look forward to talking to you again in the next quarter. Happy Diwali to you and all your families. Thank you, everybody. Thank you.

On behalf of CarTrade Tech Limited, we conclude this conference. Thank you for joining us. You may now disconnect your lines.