Max India Limited (MAXIND) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Max India Limited Q4 FY '24 Earnings Conference Call. This conference call may contain forward-looking statements about the companies, which are based on beliefs, opinion and expectation of the company as on the date of this call. These statements are not the guarantees of future performance and involve 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. Rajit Mehta, MD and CEO of Max India Limited. Thank you, and over to you, sir.

Thank you. Good evening to all of you on behalf of Max India Limited. A hearty welcome to all of you for this Q4 FY '24 earnings call. I'm not saying a warm welcome deliberately given the heatwave we are faced with, so a hearty welcome to all of you. For the benefit of some of you who are joining the call for the first time, I have with me my colleague, Ajay Agrawal, who's the Deputy CEO and CFO for Antara Senior Living and also spearheads Investor Relations for the company; Ishaan Khanna, who's the CEO for Antara Assisted Care; Sandeep Pathak, who's the CFO for Max India; and Ankit Kalra, CFO for Antara Assisted Care Services; and Nishant from our IR team; and SGA, our IR advisors. We have already uploaded the results on the investor deck, on the exchanges. I hope everybody had the opportunity to go through the same. To start with, it gives me actually great delight to share that we have had a very impactful and interesting year, significant progress made across all business verticals in FY '24. And several growth initiatives are now being planned to accelerate the scale-up in FY '25 for new businesses. As you know, 100% inventory sold out in Dehradun. It's now vibrant and buzzing community with 189 apartments out of 197 handed over for possession, over 180 residents enjoying the facility in a calm and serene space. Cumulatively, the Dehradun project has collected about INR 680 crores, which is 7% more than last year. The operations revenue for the Dehradun community increased to INR 22 crores in FY '24, a growth of 32% over last year. And due to robust sales, the community continues to be PBT and cash positive with a cash surplus of INR 125 crores as of March '24. In Noida Phase 1, all inventories have been sold out since March '23. I'm pleased to inform you our collections are better than planned. We have 99% collection efficiency, which is a testimony of the quality of customers we have at Noida. We have a cumulative ITD collection of INR 342 crores, which is 36% growth over last year. Our construction is on track. We already completed block work for all the 3 towers, and the finishing and interiors are underway, and we are confident that we'll complete the construction as planned and shall be ready for delivery as promised. For Phase 2, our approval for sales is still awaited from RERA. We have filed our application and are waiting to hear from them. On the new communities, our prelaunch activities now are -- going on for Gurugram community. We have already initiated the work on the RERA approval application, the experiential studio and marketing strategy. This will be North India's first intergenerational project in which we will develop about 0.72 million square feet of senior living with 292 apartments. The project is being developed by Max Estates Gurgaon, and the launch is expected in Q2 FY '25. For Bengaluru, we have already closed all terms of definitive agreement and are waiting for financial closure from the bankers. However, in the interest of time, since we don't expect any hurdles to this, we have already started work related to approval activities, like submission of our development plans with the authorities and initiated work on the experiential studio. This is a 1.08 million square feet development with 544 units, and the project is expected to be launched in Q4 FY '25. We are also in advanced stages of discussion for Hyderabad, Chandigarh and other geographies. And as the transaction or deals materialize, we'll be happy to share that with you as well. But we're quite on track to achieve our target of 1.5 million square feet development every year for the next 3 to 4 years. Our Antara Assisted Care, it has been a great year. Our overall net revenue increased by 55% to INR 25.1 crores in FY '24, up from INR 16 crores last year. The care home's net revenue was INR 5.5 crores in FY '24, which grew by 39% compared to last year, adjusting, of course, for the revenue of inoperative care home, which I discussed last time as well, which we have decided to discontinue because we're now going to operate only full service care homes. On Care at Home, that vertical has done very, very well. We achieved the highest ever revenue of INR 9.3 crores in FY '24, which is a growth of 53% over FY '23, led by high-margin service offering and expansion into new geographies as well. As you know, we have already launched our services in Bengaluru and Chennai. On MedCare, we have achieved the highest-ever net revenue of INR 7.8 crores in FY '24. It's a growth of 1.3x year-on-year. This is a new vertical, which only got launched in end of August last year. The revenue scaled up to INR 1.43 crores in Q4 FY '24 from INR 0.95 crores in Q3 FY '24 with a growth of 53%, and we are already at an ARR of INR 6 crores within 6 months of launch. On Care Homes, significant expansion is planned for FY '25, 600 beds to be operational by FY '25 year-end. I'm conscious that I had looked -- I had announced that we will do about 360 beds by the end of FY '24. There has been a quarter delay. 83 beds in Bengaluru, Bannerghatta, are coming up and will be up and running in -- by June end. 53 beds in Noida by July or August. So in Q1 FY '25, you will find 136 beds. And 98 more in Gurgaon will get added by Q2. So total 225, all these are under fit-out. LOIs have been signed, so there's no ifs and buts about these numbers. Already signed the LOI for 85 beds more in Whitefield. The RFPs have gone out now for design and construction. This facility, we will cover by Q3 FY '25. So that makes it about 300-plus, plus 68 beds operational. And at this point of time, we are in active discussions with a few people in Chennai to add about 200 beds by Q4 FY '25. So while there is a quarter delay, we are making up by scaling up this year as well. On Care at Home, we'll expand our footprint in existing geographies; NCR, Bengaluru and Chennai in FY '25, keeping our focus as always on high-margin services like critical care, physio, nursing, diagnostics, et cetera. On AGEasy, we plan to launch 2 new conditions, respiratory health and diabetes in FY '25, and also, initiate listing of products in other marketplaces. While we're available today on Amazon, we also want to look at Flipkart and Tata 1mg. And the process has been initiated now to consolidate the back end because we had MedCare, and now, we have AGEasy. So the entire back end of products, the warehousing, logistics, supply chain, procurement has been centralized to ensure that we have more operational efficiency and margins because we do have about 800 SKUs now with 30 SKUs which are private labeled. Now coming to business and financial performance for FY '24. There's indeed been a very, very strong endorsement for our brand and offering by customers, employees and partners. If you look at our CSAT scores across all business verticals, they continue to be healthy; 93% for Care Homes and Care at Home, 95% customer satisfaction for MedCare and 53% NPS score for AGEasy, which is really a vindication of what the brand stands for and how the customers are perceiving us. If we look at Dehradun community, our RSAT scores continue to be high at 90%, and 40% of our sales did come through resident referrals. Again, one more evidence for how customers believe in the qualities that Antara and Max India produce. It also gives me great pleasure to share with you Antara Senior Care has been certified by Great Place to Work. We are a very young organization, and we are very happy to receive this certification. This is an exercise they do over 5,000 companies, who apply, and only 250 get certified. And then there will be a ranking, which will be done later. So it's a big milestone for us. We are a very early-stage organization, so we're very happy that some of the work that we have done to invest in our people, training, culture have the right set of employees to serve our customers well. They're now paying rich dividends. Just today, I also heard that AGEasy is a finalist in the 12th Asia Pacific Elder Care Innovation Award 2024, which will -- which are being held in Singapore. That news just came in today, so I thought I must share this with you as well. We've also signed an MoU with IIT Delhi so that we are able to design and customize our products for seniors, especially mobility-related solutions. We're working on that. And we also entered into a collaboration with Dementia India Alliance, which is an NGO working in the space of dementia and mental disorder space. And they are acting as a knowledge partner to offer us both training as well as protocols. They have a tie-up with NIMHANS on an all-India basis. So we'll get a lot of know-how on memory care from them. If you look at our consolidated performance, FY '24, as I said, overall performance on metrics -- financial metrics is better than what we expected. The strong focus now is on growth. I had shared with you last time as well that for a few quarters you will see a dip in the consol revenue because as we expand and invest in to scale up, and we have no inventory to sell our residences, this will happen. But this is a temporary phenomenon. As we launch the residence work in the Gurgaon in Q2 -- or Q1 of FY -- Q2 FY '25, this temporary phenomenon will get bridged. Our consol EBITDA loss has been contained in line with expectations. It's about a loss of INR 34 crores versus a gain of INR 12 crores last year. The impact, obviously, is because of our scale up and expansion and strategic growth initiatives, the ramp-up in care homes, expansion to new geographies and scale up of AGEasy, that's the impact that you will see. But the losses have been contained through cost optimization and effective treasury management. Our treasury and other monetizable assets stood at a very healthy number of INR 435 crores as of March '24, so very strong balance sheet and a consolidated net worth of INR 492 crores as of March end. Coming now to the quarter update for business. On Antara Assisted Care, overall net revenue increased by 94% to INR 8.6 crores in Q4 '24 from INR 4.5 crores in Q4 FY '23. The Care Homes net revenue was INR 1.4 crores in Q4 FY '24, which grew by 4% year-on-year. Contribution margin improved to 2% in Q4 FY '24 from 0% in Q4 FY '23, adjusting obviously for revenue and cost of in-operative care homes. In the Gurgaon Care Home Unit, which is really the unit that we wanted to establish unit economics, has been clearly established. The margins have moved sharply from minus 1% in Q2 FY '24 to 16% in Q4 FY '24. And hopefully, with the ramp-up occupancy of 59% in Q4 FY '24, the margin would tend to be higher. We have much higher occupancy in April as well, but those results we will declare in the next quarter. On Care at Home, that vertical has done very, very well. We achieved the highest ever net revenue of INR 3 crores in Q4 FY '24, grew by 97% over Q4 FY '23. The overall contribution margin for NCR now is 19% in Q4 FY '24, and we have touched about 14,500 lives since inception. On MedCare, as I said earlier, we achieved the highest-ever net revenue of INR 2.7 crores in Q4 FY '24. It's a growth of 106% year-on-year. The contribution margin at minus 5% in Q4 FY '24, primarily driven by some old inventory that we had to dispose of in this quarter. We have over 800-plus SKUs, which include Antara-labeled products for sales and rental. We are gaining great traction on Amazon and offline channel. Our walkers are the fifth best seller on Amazon with 3,000 units sold. On an average, we sell about 20, 25 per day. On AGEasy, the net revenue scaled up to INR 1.43 crores in Q4 FY '24 from INR 0.95 crores in Q3 FY '24, a growth of 53% sequentially quarter-on-quarter. And we have already hit an era of INR 6 crores within 6 months of launch. 30-plus products have been launched across 3 chronic conditions with good performance in the marketplace on braces and pain relief products. We have more than 26,000 customers in a short period of time, and more importantly, 2,600 repeat customers. This is much more than what we had expected. Some of you who have joined the call for the first time, I just want to reiterate, we are the only organization in India trying to create an integrated care ecosystem for seniors. Our belief is that seniors' needs will change with age and medical condition. And therefore, once they become our customers, we should be able to serve them through many means, through many products and services. And recently, there was a paper released by Blume Ventures, which is a global venture capital firm. And they have also suggested that full stack is the way to go in elder care. That's the statement they have made, which vindicates what our vision is. We are essentially in 3 business verticals. On the asset side, which is independent housing for seniors, which are meant for more healthy seniors who want to stay in a safe and secure community. The Services business, which has Care Homes/Memory Care Rooms and Care at Home, these are meant for people with more immersive interventions, have gone through a medical episode, can't be taken care of at home or memory care meant for seniors with disorders like Alzheimer's, Parkinson's or dementia. We also have Care at Home services, which cover critical care diagnostics, x-rays, et cetera. And the third is the product business, so asset, services and products, which is the latest digital platform, AGEasy. This is a platform meant to address chronic conditions and empower seniors with self-protocol. So while we offer a minimum assistance for them to choose really a products business, that's how the money is made. Currently, we're getting very good traction on this. The seniors can approach us through our physical spaces, through a WhatsApp video call or call the expert home. And if seniors require products for their convenience, we have an entire range from wheelchairs, commode chairs, power wheelchairs, diapers, walkers, walking sticks, hospital beds, which we provide through this vertical. Our focus is to continuously customize innovate, so we don't sell vanilla products. We try to look at pain points of seniors and putting something specific, which takes care of that pain point. The market size continues to grow. It is still a $10 billion to $12 billion market. And if you add the AGEasy size, where the estimate done by McKinsey with us is about INR 40,000 crores in addition to this, which is the size in the top 30 cities in the Sec A, Sec B category. Recently, you may have seen a study by Colliers, where they're saying the demand for senior housing has gone up to 18 to 20 lakh units, which is a very significant increase from what numbers we saw last in 2010. So it's a large growing market with a long-term trend. To summarize, in Antara Assisted Care, so far, we have served about 50,000 patients. On the Medical Equipment side, about 800 SKUs, including Antara-labeled products, some of which are available on Amazon, Flipkart and 1mg. So hopefully, in the next 5 to 7 years, our promise of having 8 to 10 communities, 4,000 to 5,000 units of senior living, 1,500, 2,000 beds of care homes/memory care rooms, 50-plus health studios in both physical and online presence. In this North, West and South cluster, our focus continues to be 4 million customers, Sec A, Sec B household income 15 lakh and above. So that's the Antara story. As I said, it's been quite an eventful year, some hits, some misses, as always life is, but we are really focused now on scale up. Thank you very much for your patience listening and happy to answer any questions.

[Operator Instructions] First question is from the line of Chaitanya Shah from Silverline Capital.

My question is regarding the Gurugram Care Home. Now, in the Care Homes segment, you're planning to add around 500 beds this year. But the Gurgaon Care Home, which is where you say the unit economics are established, the occupancies have been stagnant for almost 2 years now, and I was just wondering -- at 58%, 59% occupancy. First question is, why is it stagnant? And secondly, what gives you the confidence to add another 500 beds when the 1 care home that you have is still operating at a 59% occupancy?

Yes. Fair question, Chaitanya. Fair question. So as I said, the occupancy has gone up in April. I was not at liberty to share that number, but that is about 71% now. So it's now gone up. But if you look at our economics in terms of contribution margin, what we had said, and the revenue per bed, that has been established. We are doing a lot better on cross-sell. We would imagine there will be 10% cross-sell services, but there are 38% cross-sells, so the average realization per bed on per day is ranging between 55% to 63%. In fact, it is above 6,000 now, right, which is not our expectation. So in that sense, I would say, while there was a plateauing for some quarters, it has gone up now, and that is giving us the confidence. Secondly, the question of scale up is a fair question. As I said, it's no longer that we are looking for facilities. The Bannerghatta Facility, 83 beds is going to be -- is already open for show around and will be inaugurated in June. The 53 beds in Noida in July and August will go live. The last bit of fit-outs is happening on that. On Gurgaon, the LOI has been done on 98 beds, the fit-outs are happening. So that will come through on Whitefield. The LOI is signed, the design is made. The RFP has now gone out for quotations for construction. And therefore, that will come up by Q3 FY '25. So those 225 beds are already done. It's just a question of the launch date now. The 212 in Chennai is what we're looking out for. And hopefully -- that's a Q4 launch, that also should be done. So that should give you some confidence of how the beds are coming up.

Sir, the reason I asked this question primarily was because -- I am from Mumbai, and I've spoken to a few doctors who run these unorganized sort of care homes. And not only being full, they have a waitlist right now. So I just want to understand, the demand is there and why it has been stagnant for so long. It was something that I could not really understand.

So I can help you with that. So you'll find in the West, Pune, Mumbai, and South, this category is fully established, and therefore, the demand is higher. And some people also operate transition care homes. In North, it has taken a while for this category to come up. So if you look at most players, they haven't expanded in the North. We're the only ones who now have -- almost 200 beds by August in North. We will be the first ones. So South and West have been better markets. For this reason, you find this. But as I said, in April, this 59% has become 71% now for us.

Okay. That's good to hear. My second question is on the real estate vertical. Now, the second phase that you're going to launch, I'm assuming that will be at a much higher price than what you launched the first phase at, right, in the Noida community. So I just want to understand, are you revising your IRR expectations from the project? And if you are, what is the surplus that we can expect 3, 4 years down the online?

This is Ajay. So yes, you're right, we will be obviously launching at a better price. Just to give you a sense, presently, the Noida market for Antara-like standards is selling at approximately INR 11,500 to INR 12,000. So it will be up of that. We are not changing our IRR expectations because of the reason that once we get the RERA approval, then we have to review the costs and the construction costs, et cetera. And with the escalation coming in, I want to be in a comfortable zone. But intuitively, I feel that there will be an upside provided we get the RERA as soon as possible. I will not be able to give you the forward-looking numbers from what turnover would be. But definitely, it will be better than what we have been able to achieve in Phase I.

Understood. And for the expansion in the Care Homes, are you going to do any capital raise? Are you looking for any capital raise in the future?

Not as yet. We could be, but not as yet. We are well funded now, but maybe when we see scale up and growth coming through, yes, we could be. But we can't confirm them as yet.

Next question is from the line of Kunal Shah from Anova Capital.

Yes. Can you please share some insights on the revenue growth of Care at Home segment? What specific factors are driving the revenue growth for the segment? What projections do we foresee for FY '25?

This is Ishaan here. I think the growth, if I was to talk about what we saw in the last year, was attributed to our penetration in the NCR market. It was attributed to increase in the higher-margin services like critical care, nursing and patient caregiver services and the fact that we launched the services in Bengaluru and Chennai. Our projections for the year are strong, and we feel that we will be able to grow well because Bengaluru and Chennai, we've spent 4 and 8 months since launch, and there is a scope for penetrating much deeper there. Delhi NCR itself also, the kind of digital promotions and hospital network expansion that we have seen, we anticipate that, that penetration will also go further deep as we saw in the last year as well. So I think we are very well positioned to grow in double digits in the current year as well because there's a lot of scope in the Care at Home. But we have to be very careful of the fact that this is a service that has to be built with a lot of operational efficiency in mind because we feel that we have to make sure the margins are also held. So we focus on high-margin services and their promotion.

Okay. And 1 more question. Can you please share some key metrics for AGEasy, contribution margin, ROAS, capital employed or extraction on the e-commerce websites?

Repeat that again, please, sorry. We missed that.

Just wanted to know some key metrics for AGEasy, like contribution margin, ROAS, capital employed and its traction on the e-commerce websites.

Yes, yes. So that, it's too early basically, but the metrics we're looking at now is revenue, capital, repeat customers and NPS, right? So if you look at the conditions launched, we have served about 26,000 customers. If we look at repeat orders, about 2,600. If we look at product market fit with that determines, we have 12 products rated 4 on Amazon, NPS of 50. So basically, it's about revenue, product launches, customers served, repeat customers at this point in time. And, of course, ROAS.

[Operator Instructions] The next question is from the line of [ Ashish Rauth ] from [ Greenedge ].

I have a couple of questions. The first question is the employee expenses are on a higher side. Why are corporate overheads at such an elevated level?

Yes. So I can answer that for you. If you look at, first of all, our HO services all business lines, and there are sales and marketing, for example, and command center all part of it. So we have to look at that -- look at that as well. But if you look at what has gone up, and I have the numbers with me, so about INR 24 crores is the expense on human capital compared to last year. Out of that, INR 7 crores is Antara Senior Living, where it's basically partly the ESOPs, partly variable pay because we did very well this year. And if you look at Antara Assisted Care, most of the expenses are because of the investment in AGEasy and entering Bengaluru and Chennai, where we have to invest in teams. On the corporate side, the INR 312 crores number that you see, basically, it's ESOP about INR 2 crores. It's a noncash item, right? So that's the breakup of the cost. So it's a combination of growth, partly ESOPs and the team that we need to build. And partly, as I said, in HO, some functions are consolidated with some businesses. So next time, maybe we'll provide a split between, what's supposed to be like, sales and marketing to be separated out. That we will do. But that's the reason you find the corporate cost to be that.

And I would just like to add also in this. Since we are in a growth trajectory, the team has to be very well curated, very well -- L&D should be there. So a lot of engagement activities have taken this year, and the company has been completely focused in giving absolutely impeccable training to people and to explain them the culture, et cetera. And we have really invested in that. And that should get them settled in future years, and it will give that benefit of having a good, strong team for all businesses in place.

Okay. Okay. The second question I have is, can you provide the insights in terms of feedback from existing residents on services provided by the company? Also, what positions of customers are repeat customers in terms of cross-sell or up-selling services?

Yes. Absolutely. As I said, if you look at our customer satisfaction scores; 93% for Care Homes and Care at Home, 95% for MedCare, 53% NPS score for AGEasy and 90% resident satisfaction score in Dehradun. As I said, 40% of our sales came through resident referrals in Dehradun. We have 2,600 repeat customers in AGEasy, right? So quite, quite high satisfaction scores. And if you look at cross-sell in our care homes, there's a 38% cross-sell of services.

Next question is from the line of Karan Mehra from Mehta Investments.

Sir, a couple of questions from my end. Sir, the first one is, what portion of the revenue in percentage are we spending on marketing and branding? And also, have we implemented any performance marketing for physical products in AGEasy?

Yes. We have a well-oiled machinery for performance marketing, both for AGEasy as well as Care Home and Care at Home. In the new businesses, that's required. So we have that function. In terms of total spend and marketing for brands...

It's around ballpark 7%, 8%.

About 7%, 8%.

Sorry, sir, I didn't get you.

About 7%, 8% to -- on marketing in brand.