C.E. Info Systems Limited — Q3 FY25 earnings call

Call held 29 Jan 2025

Management summary

C.E. Info System reported a strong Q3 FY25 with revenue growing 25% YoY to ₹115 crores, driven by a 39% surge in the C&E segment. EBITDA stood at ₹42 crores with a 36% margin, a slight dip from the previous year. The company operationalized its JV with Hyundai Autoever in Indonesia and remains confident in achieving its 25% FY25 revenue growth target, despite delays in some IoT-led projects and lower margins from government business.

Highlights

  • Q3 FY25 revenue grew 25% YoY to ₹115 crores.

  • 9M FY25 revenue grew 17% YoY to ₹320 crores.

  • Q3 FY25 EBITDA was ₹42 crores with a 36% margin.

  • C&E segment revenue surged 39% YoY to ₹65 crores in Q3 FY25.

  • Successful operationalization of the joint venture with Hyundai Autoever in Indonesia.

  • Subscription services grew 31% YoY.

Concerns

  • Q3 FY25 EBITDA margin declined to 36% from 39% in Q3 FY24.

  • IoT-led business growth was only 4% YoY in Q3 FY25 due to delays in some anticipated businesses.

  • Hardware sales did not pick up this quarter due to delayed large projects, impacting overall growth.

Key financials

2 periods

Headline

  • Revenue
    ₹115 Cr
    YoY +25%
  • EBITDA
    ₹42 Cr
  • EBITDA Margin
    36%
    YoY -3%

9M FY25

  • Revenue
    ₹320 Cr
    YoY +17%
  • EBITDA
    ₹122 Cr
  • EBITDA Margin
    38%
    YoY -4%
  • PAT
    ₹99 Cr
    YoY +3.1%

What they filed

Q1 FY27: revenue up 20.4%, net profit up 10.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue84 96 118 103 85 +1%85 −11%128 +8%124 +20%
EBITDA34 39 52 56 20 −41%23 −41%53 +2%60 +7%
Net profit31 33 49 50 18 −42%22 −33%47 −4%55 +10%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹114 Cr Total
  • Consumer Tech and Enterprise (C&E) ₹65 Cr 57.0%
  • Automotive and Mobility (A&M) ₹49 Cr 43.0%

Order book

medium confidence

Total value

₹1,370 Cr

as of 2024-03-31 quantified

Inflow this quarter

₹400 Cr

Execution

Hyundai contract for 5 years

Cancellations & deferrals

  • deferred: Delays in some anticipated IoT-led businesses and large projects expected this quarter, postponing revenue to future quarters.
The exact order book will be disclosed on March 31, 2025, and is expected to be better than last year's end. Some large projects expected this quarter were delayed to future quarters.

Source: Q&A

Capital allocation

high confidence
  • M&A Hyundai Autoever (Indonesia) Joint venture · Operational

    Expanding global footprint and long-term strategy for Mappls App and brand.

    Revenue from JV expected from Q1 or Q2 of next financial year (FY26); full ramp-up expected in 2-3 years.

    So, in Q3 FY25 we successfully operationalized the joint venture with Hyundai Autoever in Indonesia, marking an important step in expanding our global footprint.

Guidance & targets

Overall Company

  • Revenue Growth Overall Company · FY25 · High confidence 0.25
    Yes, we still believe strongly that we will be able to attain the 25% growth for the whole year.

    — Rakesh Verma

  • Revenue Overall Company · FY28 · High confidence 1000
    Well, if we maintain a 25% growth rate, you can use your calculator and you will see that we will attain 1,000 crores in FY28.

    — Rakesh Verma

Segment Mix

  • Government Projects Revenue Share Segment Mix · FY25 · Medium confidence less than 0.20
    For nine months, we are at 38% and I can tell you that by the year end, we might have 20% of our revenue coming from the government projects.

    — Rakesh Verma

IoT-led Business

  • Delayed Business Materialization IoT-led Business · Next financial year · Medium confidence Materialize
    However, we anticipate it will materialize in the next financial year.

    — Rakesh Verma

Joint Venture

  • Hyundai/Kia JV Revenue Start Joint Venture · Q1 or Q2 of next financial year · Medium confidence Revenue generation
    However, we are hopeful that we will begin seeing this revenue from Q1 or Q2 of the next financial year.

    — Rakesh Verma

What to watch in Q4 FY25

FY25 Revenue Growth Achievement

next quarter (Q4 FY25 results)
Current 17% YoY for 9M FY25
Target 25% YoY for full FY25

Why it matters

To verify management's confidence in achieving the full-year revenue growth target despite slower growth in the first nine months.

Yes, we still believe strongly that we will be able to attain the 25% growth for the whole year.

Risks & concerns

  • Margin compression from government projects

    medium

    Government projects have lower margins compared to corporate and automotive sectors, which can draw down the overall company margin, though they are strategically important.

    Management acknowledged

  • Delays in IoT-led business materialization

    medium

    Some anticipated IoT-led businesses and large projects were delayed this quarter, impacting hardware sales and overall growth, but are expected to materialize in the next financial year.

    Management acknowledged

Q&A highlights

7 direct
Sustainability of C&E revenue growth and outsourcing expenses Direct
The outsourcing question I can address because that's the only item in the presentation where you will see quite a big jump in our expenses. And that relates to the corresponding government projects which is part of the revenue. We incur outsourcing expenses when certain projects need to be scaled up rapidly within a short timeframe, requiring external resources.

Clarifies that increased outsourcing expenses are directly tied to revenue from government projects, indicating it's not a standalone cost issue but a scaling mechanism.

Asked by Shobhit Singhal

Performance of IoT-led business and hardware sales Partial
Yes, in Q1, due to certain constraints within Gtropy, there was an issue. Now, in Q3, we have incurred expenses, and as I mentioned, the delay in some expected IoT-led business from customers has had an impact. However, we anticipate it will materialize in the next financial year. But at the same time if you look at the good part of the IoT led business, subscription revenue has increased dramatically.

Explains the reason for slow hardware sales (delayed projects) but highlights strong growth in higher-margin subscription revenue within the IoT segment.

Asked by Shobhit Singhal

Confidence in achieving FY25 25% growth guidance Direct
Yes, we still believe strongly that we will be able to attain the 25% growth for the whole year.

Reaffirms the full-year growth guidance despite 9M performance being lower, indicating management's confidence in Q4 execution.

Asked by Shobhit Singhal

Margins in government business Direct
Definitely in the government work the margin is not high like what you see in typical corporate and automotive sectors. So, it does draw down the overall margin of the Company. But at the board level also we are very clear that we must undertake them for hundreds of good reasons.

Acknowledges that government projects have lower margins, impacting overall company profitability, but justifies their strategic importance.

Asked by Anmol Garg

Strategy and spend on Mappls App B2C Direct
As far as the Mappls App is concerned, I don't think we have ever viewed it as a B2C business. Rather, the Mappls App serves as a driver, showcasing a lot of our R&D and innovation... Moving forward from Q4, we are calibrating our approach and have decided not to invest in building a business around the Mappls App at this point.

Clarifies the strategic role of Mappls App as a B2B/B2B2C enabler rather than a direct B2C revenue generator, and signals a shift in investment strategy for it.

Asked by Anmol Garg

Progress and revenue timeline for Hyundai/Kia JV Direct
The JV in Q4 has just become operational in terms of its legalities and other formalities at the end of last year... we are hopeful that we will begin seeing this revenue from Q1 or Q2 of the next financial year.

Provides a clear timeline for revenue generation from the newly operational Indonesia JV, which is a key global expansion initiative.

Asked by Abhishek Kumar

Competitive advantage in quick commerce against Google Maps Direct
The quality of our product specifically the map data and the underlying APIs or SDKs we provide plays a crucial role. When our offering is better than the competition, especially in quick commerce, which is highly hyper-local, that level of detailed mapping is helping us to win.

Highlights the company's core competitive strengths in product quality and detailed mapping for hyper-local use cases, differentiating them from larger competitors.

Asked by Abhishek Kumar

IoT hardware unit sales and discrepancy with revenue Direct
Yes, I mean the number of devices over the nine-month period is approximately around that figure. ... The retail side has not declined. However, some of the large projects we were expecting this quarter did not materialize. Had they gone through, we would have likely reached the 300,000 mark. That's the reason for the shortfall.

Confirms the analyst's estimate of IoT hardware units sold for 9M FY25 and explains the shortfall from previous year's full-year numbers due to delayed large projects, not a decline in retail sales.

Asked by Nishant Chandra

2 min read 6 chapters

Detailed narrative

Q3 FY25 Financial Performance Overview

C.E. Info System reported a Q3 FY25 revenue of ₹115 crores, marking a 25% year-on-year growth. For the first nine months of FY25, revenue reached ₹320 crores, growing 17% YoY. EBITDA for Q3 FY25 stood at ₹42 crores with a 36% margin, a slight decrease from 39% in Q3 FY24. The nine-month EBITDA was ₹122 crores at a 38% margin, compared to ₹114 crores at 42% in the prior year. PAT for the nine-month period was ₹99 crores, up from ₹96 crores in 9M FY24.

Segmental Growth Drivers

The Consumer Tech and Enterprise (C&E) segment was a significant growth driver, with revenue surging 39% year-on-year to ₹65 crores in Q3 FY25. The Automotive and Mobility (A&M) segment grew 9% YoY to ₹49 crores, outperforming the overall auto industry. Over the first nine months, A&M revenue grew 16% YoY, with the number of licenses increasing by 23%. The Map-led business demonstrated a strong 33% growth in Q3 FY25, while subscription services across the company grew 31% YoY.

Strategic Initiatives and Joint Venture Operationalization

A key strategic milestone in Q3 FY25 was the successful operationalization of the joint venture with Hyundai Autoever in Indonesia. This JV is expected to contribute revenue from Q1 or Q2 of the next financial year and fully ramp up over 2-3 years. The company also noted significant deal wins across various sectors, including a major global social media network, quick commerce, and BFSI, though specific details were withheld due to NDAs.

IoT-led Business Challenges and Subscription Strength

The IoT-led business experienced a slower growth of 4% YoY in Q3 FY25, primarily due to delays in some anticipated large projects that were postponed to the next financial year. This impacted hardware sales, which did not pick up as expected. However, the company emphasized its focus on building the IoT business with higher-margin subscription revenue, which grew 31% YoY and resulted in the IoT-led EBITDA margin improving from 8% in 9M FY24 to 12% in 9M FY25.

Government Business and Margin Impact

The company is increasingly pursuing government-led GIS projects, recognizing them as strategic opportunities despite lower margins. Management acknowledged that government work typically has lower margins than corporate or automotive sectors, which can draw down the overall company margin. However, they are confident in getting paid, with government receivables generally under 100 days, and expect government projects to constitute a double-digit percentage of FY25 revenue, though less than 20%.

FY25 and Long-term Growth Outlook

Management reiterated its confidence in achieving the full-year FY25 revenue growth guidance of 25%, despite the 17% growth observed in the first nine months. The company also maintained its long-term target of achieving ₹1,000 crores in revenue by FY28, based on a sustained 25% growth rate. They emphasized strong execution and a capable team as key enablers for these targets.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Information Technology earnings calls