Propequity grew sales by 37% in FY24 and plan to maintain this trajectory. They are launching a number of new verticals which might keep margins in check. Management seems very growth hungry and want to scale to 500-1000 cr. revenues. Concall notes below.
FY24Q4
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Website subscription
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Clients increased to 215 (vs 205 in Q3FY24) in website subscription business. Retention ratio is 81% (vs 85% in Q3FY24)
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47 of top 50 developers are their clients
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Average client generates 10L/year, they are now selling at 5L/year to smaller developers to increase market size
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Residential peers: Liases Foras, Commercial peers: Propstack, CE matrix
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Valuation
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Clients increased to 70 (vs 65 in Q2FY24) in home valuation business
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Valuation business is now operating at 2 cr./month in March 2024, targeting 75-100% growth in sales in FY25 (vs 17.85 cr. in FY24)
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Make 1200-3000 per valuation report depending on city and bank
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Will make 15-25% EBITDA margins until they reach 100 cr.
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Auto financing
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TVS and Mahindra are the 2 incumbents (100 cr.+ revenues each), they outsource employees. Propedge has started this division on request of banks
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In housing finance business, 10-15% of housing valuation business of a single bank can be given to Propedge, however there are no such restrictions in auto valuations
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50L second hand car market annually; Rs. 600/inspection (atleast 300 cr. market size)
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5-6 valuations done at one shot which makes unit economics better than housing
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Will be launching in 3 cities in next 3 months
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Plant & machinery valuations: Will be launched in next 6 months
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Will be going overseas (Middle east) & launch B2B consulting services
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Project monitoring vertical (B2C)
- 2300 cr. project monitoring market size – if this picks up it will be bigger than all their other verticals put together
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Developer asset management
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Charge 8-10% of project revenues
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Will raise separate real estate private equity fund which will be used for project financing (won’t use Propequity’s balance sheet for this)
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Original plan with Berkshire Hathaway was to do high end valuations, however then Berkshire pivoted to development only which has also not taken up
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Forbes will be involved only when developer asks for the Forbes brand name
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In other developer asset management, will do standalone and not partner with anyone
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Social media
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Will help them generate leads for developers + give them a captive user base for their project management vertical
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Invested 50 lakh in FY24 (social media + developer management)
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Will be investing 1.2 cr. in social media vertical in FY25
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10% army discount for TATA projects, don’t know how they will monetize the Youtube channels so far
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60 leads in last 2 months
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Research & consulting will reach 2-2.5 cr. in FY25 (50% EBITDA margin)
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No plans of paying dividends as they have lots of growth opportunities
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Current focus is on growth and not on optimizing margins
Disclosure: Invested (position size here, no transactions in last-30 days)