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).
Yeah that can be a way to look at it, but I won't expect much more than a dead cat bounce from this situation as the inherent business model itself if flawed and the SME segment as a whole has become India's crypto investing equivalent.
1. Any comparable companies in the US or other developed markets and how they performed over real estate cycles?
2. If the end industry is cyclical in nature, how can this B2B service be any different? Does this look like a long term structural story and not prone to any tech/gov disruptions?
Great questions, On US equivalent i cannot find any but US Gov /FED publishes out lots of real estate data for free. In india Real Estate sector is more opaque for some reasons.
On your question -2 , I don't think their services are prone to cyclicality as PE firms, developers and banks using it many not give up the subscription during down cycle. Even in last down cycle from 2018 to 2021 they have grown revenue.
I think company has a sticky business as in terms of cost subscription fee must be something PE firms , developers and banks would worry about the least. It is kind of low input cost for their customer moat for the company and chances of disruption are there always in tech but i don't see any for now and i think they have significant early movers advantage over new players coming in. In terms of data collections and relationship with clients.
something i am not sure about is where the growth will come from and how scalable is this business is.
Whats with the F&O Trading revenue ? Massive red flag !
yeah if you look at AR, it was just Rs 19 lac in FY21 and FY 22 its 0.
i won't read too much into it...
Profit from trading of Future and Options
6,406 FY 22
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).
I partially agree with you on this but i feel if it corrects -30 to 50% from here i would be a great bet.
Yeah that can be a way to look at it, but I won't expect much more than a dead cat bounce from this situation as the inherent business model itself if flawed and the SME segment as a whole has become India's crypto investing equivalent.
Its not new, SME goes through this cycle. I have lived through 2017 mania in SME & i see lots of parallel in SME markets today.
Many stock deserve to trade a Rs 0 are multibagger again.
Good one Dhruva.
1. Any comparable companies in the US or other developed markets and how they performed over real estate cycles?
2. If the end industry is cyclical in nature, how can this B2B service be any different? Does this look like a long term structural story and not prone to any tech/gov disruptions?
Great questions, On US equivalent i cannot find any but US Gov /FED publishes out lots of real estate data for free. In india Real Estate sector is more opaque for some reasons.
On your question -2 , I don't think their services are prone to cyclicality as PE firms, developers and banks using it many not give up the subscription during down cycle. Even in last down cycle from 2018 to 2021 they have grown revenue.
I think company has a sticky business as in terms of cost subscription fee must be something PE firms , developers and banks would worry about the least. It is kind of low input cost for their customer moat for the company and chances of disruption are there always in tech but i don't see any for now and i think they have significant early movers advantage over new players coming in. In terms of data collections and relationship with clients.
something i am not sure about is where the growth will come from and how scalable is this business is.