In 2000, Samir Jasuja started B2C property zones to provide data on secondary market homes to sell to brokers, he ran this company till 2005. Then he joined as head of developer and marketing at a Private Equity firm, simultaneously FDI opened up for the real estate sector, which in turn created the demand for real-time real estate data for the new 200 PE firm that came into India at that time. During those days no one was providing the data conveniently and accurately, This led to the birth of P.E Analytics LTD.
Product Offering:
PE analytics ltd has 200 people on the ground tracking every project, providing real-time data on commercial and residential projects. They layer all that data with some analytics and update it into Google Maps on which users can draw a 2 Km radius and see what’s been happening in that circle or along the roads.
The company claims around 60 data points related to projects are covered as part of their analytics which includes re-sale value, sale value, rental value, stage of construction, unsold supply, and registration data of the last 5 transactions etc (mentioned below).
• Supply-Demand dynamics dated from year 2008 onwards.
• Vacancy trend for organized asset class supply in city.
• Rental value trend for organized asset class supply segments classified between anchor and vanilla tenants.
• Price movement of property over the various period.
• Capital value trend for organized asset class segments.
• Highlighting of upcoming / proposed organized asset class developments across city.
• Percentage development of small, medium and large scale residential developments supply led and lots more.
• Absorption rate and inventory level.
• And many more data points.
On the other hand, the CRM business has been growing the most from a low base-
Where their on-the-ground staff helps BFSI institutions with LAP valuations and risks involved with projects etc.
Clientele :
Key Services Offered Under CRM:
Retail valuation for Home loan and Loan Against Property cases
• Trusted name in banking industry having presence in all major Metros.
• Specialized team of experienced engineers spread across the cities delivering reports on individual selfconstruction cases checking for approvals and report the stage of construction completed in reasonable time.
• PE Plus application has a twelve-year data repository which helps in analyzing the catchment and finding comparable.
• Independent price audit team is tracking registration data and in continuous contacts with brokers to get the accurate price of the property.
• Technical report on individual self-construction cases to check for approvals and report the stage of construction completed.
• Online support to provide photograph and technical status of Unit under consideration to facilitate part/ full disbursements and highlighting deviations if any. Project Monitoring & Land Loan Verification (report downloadable form CRM portal includes).
• Stage of construction and pricing.
• Delay in construction.
• Latest images etc.
• Online support to provide status of execution of project under consideration to facilitate part disbursements and monitor deviations from plan.
• Verification of Land loan cases and updating the bank on status of construction on the site.
Approved Project Financial
• End to End Management of entire APF Process.
• One stop shop for all Project Master Files.
• Online access to all Project Master Files at a click of a button.
• Detailed Technical Assessment of Approvals related to the Project.
• Significantly reduced turnaround time.
Property Search Micro Website Management
• End to end Web Site creation & Management for BANK / NBFC customers.
• Project tracking on a regular basis where the customer can view the completion status on the web for the desired projects.
• The Lead Management system for near real time lead flow.
Paint Point they are solving -
Real Estate is very Opaque sector there is a need for data analytics to make better decisions, that is what PE Analytics has been providing to its clients.
So, on the Data analytics side, there is a much-needed investment that is needed to come in because as per estimates there are about $100 B stalled projects in the market today means these have been built and funded without much due -diligence/data analytics.
Snap Shot of Our Business Intelligence Platform/Dashboard/Applicat
Dash Board
City Comparative Dash Board
Customized dashboard helps the user compare cities on critical parameters including supply absorption, inventory, overhang etc. The above search is very insightful in comparing sales velocities in context inventories for multiple cities. The absorption potential and future growth prospects of a city can thus be predicted.
Location Analysis
Location Analysis report provides critical data points like average execution delays, leading developer details of recently launched projects in a given micro market are available at a click of a button.
Detailed Project Report
LEADING MACRO MARKETS:
Competition:
Most proptech India the likes of 99 acres, magicbricks , housing.com, proptiger.com have invested only on one side of the industry that is demand side which classified listing, these companies have not succeeded as much as they would have if there was some exclusivity in their listing. In all of them, brokers (instead of direct sellers) have come up with their listing & customers had to source through brokers rather than real properties.
It’s fascinating that rather than disrupting traditional brick & mortar brokers these classified listing platforms ended up uplifting these brokers, I am sure that’s what not they would have originally dreamt of solving.
Today on niche PropEquity is the oldest and market leader in B2B analytics services.
How does their Tech Team look like?
https://www.linkedin.com/company/propequity/people/
On scanning through 129 people profiles over likedin,They have lots of people for CRM and Market Research, it doesn’t looks like they hire the not notch industry latent in Data Analytics, AI/ML and Database management.
USP
First mover advantage Historical MoM data, Early client engagement, and over 1 lac projects coverage.
Pan India Cover (competition does cover 5-6 cities)
Feet on the streets ( competitors 10-25 people vs 200 )
Technology team with domain expertise.
Long relationship with banks & PE firms.
Ptential Growth Drivers -
Growth in real estate sector, which will attract more investment into the sector thereby increase in demand for analytical data.
Growth in number of PE firms? Not sure what will drive this as the blackstone and blackrock of the wrold is eating everyone away.
Growth in the number of banks & NBFCs paying subscription, this is highly unlikely as RBI makes sure number of banks decrease rather than increase and Real Estate focus NBFCs are in decline as regulations have made their life little harder, Smaller ones will come & go but i double small ones will every look for subscription service.
Increase in subscription fee? I guess they should be at least able to increase subscription fee with inflation as they don’t face much competition for now.
Retail Initiative (B2C Expansion Plan):
The company is presently focused on the B2B segment and the revenue verticals and expenditures are fully contributed by B2B business. Now, the company has plan to enter and penetrate the B2C segment i.e. retail segment, which is a highly ignored or low-penetrated segment in the real estate industry. Generally in past retailers managed to source information related to property in part and pieces either through the real estate brokers or near by local public or some websites. So, just to take this gap as an opportunity and to empower retail buyers and sellers with accurate and real-time information related to desired properties, our company has planned to enter the B2C segment as a new business vertical.
Company already has huge data base and can easily take leverage of the existing quality data base to cater direct customers. Company has plan to create Tech Enabled Data Platform that will help the retail real estate buyer & seller for data analytics that help in informed decision making. This platform will deliver data, information and data analytics along with the various reports related to macro and micro details of the real estate/property in desired location for the interested retail buyer and sellers.
This B2C initiative will be launched on pilot basis in two to three metro cities. This platform will include customized reports, Project Rating report that can be made jointly with rating agency or by the company, Tech Enabled Project Monitoring solution that with Unique tool with every project plotted on Google maps along with the social and physical infrastructure, ability to draw own catchment on a single road or up to 5 Km radius.
Big Picture on Protech overall - (from Aurum Prop Tech conf call)
Financials :
No revenue concentration risk-
In Fiscals 2019, 2020 and 2021, revenue generated from our top five clients amounted to Rs. 81.05 Lakhs, 97.82 Lakhs and 100.02 respectively, accounting for 6.07%, 7.07% and 7.18% respectively.
Trade receivables - On revenue to 24 Cr they have 4 Cr of receivables (16%). which is okay.
Over last 5 years profits have gone up 15% cagr but operating margins have drastically improved from 14% to 45%, Which i am not sure how and is sustainable or not. Maybe operating leverage came into the play.
Company makes good ROE of 23%.
They have around 62 Cr of cash.
On liability side nothing much alarming except the current liability looks high, which is due to OFS received from IPO need to be transferred to the promoters.
Interesting research links on this company -
Twitter thread on it by Chins-
On valuation :
It’s a Rs 156 Mcap company today with cash of Rs 62 Cr on the balance sheet I think Rs 17 Cr of it will go to promoters as a part of OFS and Rs 6 Cr or so they going to spend on R&D. That means they will have about Rs 35-40 Cr to spend FY24 and beyond.
If they will be able to generate 20% ROI on this Cash that means, additional Rs 8 Cr revenue every year which means 30% growth in revenue next year, and the revenue run rate will become about Rs 30 to 32 Cr. If we assume the same net margin of 40% in Fy22 then it will translate into Rs 11 Cr of net income which is 22% growth for next year.
I don’t know if this should be considered as a base case scenario as hard to see their B2C venture becoming a success, if so then for sure stock is trading cheap. if not then
I am not sure what will drive growth for them as there is massive consolidation going on in the B2B space. One really has to ask -
Are real estate PE players going to double in 5 years?
Are the number of Builders using their service going to double in the next 5 years?
Are the number of Banks going to double using their CRM service?
Will they be able to increase the subscription fee by 15% cagr ?
Will they be able to maintain the similar margins?
Currently, I don’t have answers to these questions but I think these are the broad drivers that will drive the growth of this company.
Whats with the F&O Trading revenue ? Massive red flag !
Nice analysis Dhurva. I also looked at the company but had my own reservations due to its very small size and options trading revenue (a small red flag for me) along with a structural issue of having many clients from banks to PE but but a glass ceiling in the subscription based model. Another company, Apollo Finvest (Into Lending Tech Stack), presented a different view where they envisioned that most of the data regarding their customers would be in the hands of the platforms like Zomato, which could have better knowledge regarding the restaurant rather than a bank or some other lender. Similarly, I believe companies like MagicBrick and 99acres would eventually have better prospects as they have both customer property data along with a transaction history and an integrated direct banks and NBFC tie-ups. Along with this real estate is subject to more negotiation in pricing than any other asset class. These factors reduces the need for their services for retailers who are more interested in at least seeing and buying along with this the company's subscription model makes it very hard for them to go to retailers (Similar to Bloomberg Terminal, which is used mostly by Big Firms).