Aurum PropTech Limited (AURUM) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Aurum PropTech Limited Earnings Conference Call hosted by Emkay Global Financial Services Limited. [Operator Instructions] Please note that this call is being recorded. I now hand the conference over to Mr. Shivang Bagla from Emkay Global. Thank you, and over to you,Shivang.

Good afternoon, everyone, and welcome to Q2 FY '27 Earnings Conference Call of Aurum PropTech Limited, hosted by Emkay Global Financial Services. We are joined today by Mr. Ashish Deora, Non-Executive Chairman of Aurum PropTech, Mr. Onkar Shetye, Executive Director; Mr. Kunal Karan, CFO; Mr. Shrikant Jagtap, Deputy CFO; and Mr. RihenShah, Lead Strategy and Investor Relations at Aurum PropTech. . Before we begin, I would like to remind you that certain statements made during this call may be forward-looking in nature and subject to risks and uncertainties as detailed in annual report and other investor disclosures available on the website. With that, I would now like to hand the call over to Mr. Ashish Deora for his opening remarks.

Thank you, Shivang, and good evening, everyone. It is my privilege to welcome you to the 22nd earnings call of Aurum PropTech. I'm delighted to share with you our performance for the second quarter of FY '27. Since 2021, we have been building towards a bold idea to capture the end-to-end real estate value chain within our ecosystem. The addition of Housing.com in Q2 of FY 2027, marks the beginning of Aurum PropTech bringing consumer discovery at scale together with our transaction, tech and living platforms. Our vision of becoming India's AI-native real estate operating system is getting deeper. And our mission to change the way India experiences homes is getting broader. Our promise to every developer, every consumer and every partner is that we will deliver the best ROI in the industry. and we want to do this while ensuring that trust across stakeholders increase with every interaction. I would like to walk you through 3 defining developments of this quarter. that sets the launching pad for Aurum 2.0. First, profitability continues with rigorous discipline on unit economics. FY '27 is our fourth consecutive profitable quarter. A full year of profitability means our unit economics has been tested through the cycle and has held even in the cyclical nature of real estate. Despite Q2 being the industry's softest quarter, our PBT margins improved by 1,200 plus basis points. It gives us immense confidence that this is a great time to integrate with housing. Housing is the largest possible opportunity in the Proptech segment. We intend to lead with a long-term view and at the same time, apply our playbook ensuring discipline of unit economics on a daily basis. Second defining development of the quarter is the integration and road maps for autumn Housing.com to come together and compound capabilities. I would like to begin by extending a warm welcome to every member and every stakeholder of the housing team. I would also like to thank Ari Group for retreating their faith in India Protech and their continued support in both transactions. First Prop Tiger and now housing. We are also grateful to them for a seamless transition of housing into the our ecosystem. We have learned a lot from the REA Group, and we look forward to building on this relationship in the years ahead. Housep.com brings to this ecosystem consumer intent at scale. -- with 58 million plus visits every month. By connecting this intent with our developer, broker and transaction platforms, we see opportunities to create a seamless consumer journey while we improve lead quality conversion and monetization across the ecosystem. We have already begun deep cost optimization and AI-led initiatives at housing. So that we can place it firmly on the path to profitability. We are targeting to make Housing.com profitable within 12 to 18 months, I repeat, within 12 to 18 months. Simultaneously, we are unlocking synergies across our ecosystem, spanning all 3 segments. At Aurum, we believe that brokers and channel partners are the lifeline of the real estate industry. And our endeavor is to be booker first and enable them with a stronger ROI. On the developer side, we have a potential to extend our offerings and become a virtual partner. Third defining initiative for this quarter has been to continue to reimagine AI across functions and across consumer and customer journeys. Business value optimization continues to remain our focus. We have been improving our metrics of revenue per team member that we track very closely. We believe revenue per team member will continue to go up quarter-on-quarter for next 10 to 12 quarters. Using AI and various tools, our medium-term goal is to create a seamless consumer layer, spanning discovery intelligence, transaction, financing and living, ensuring that every interaction makes the entire ecosystem smarter. What started as an idea to connect the stages of home buying or renting journey through our portfolio companies is now evolving to become the single largest platform with network effects. Aurum platform is becoming a partner that families, developers and brokers can trust up. It's my belief that with the acquisition and integration of housing.com, with Aurum has triggered consolidation in the Indian Proptech segment. Our view is that strong business models in our sector will also move towards profitability, taking a cue from Aurum. Looking ahead to rest of FY 2027, we will focus on 3 things: one, improving our financial metrics each quarter; two, delivering the Housing.com integration road map on time; and three, taking AI deeper across all 5 layers of our business. With that, I now hand over the call to Onkar. Thank you very much.

Thank you, Chairman. I will briefly cover our business performance and AI led productivity. Q2 FY '27 delivered INR 137 crores in total income, growing 56% year-on-year. Adjusted EBITDA margins expanded 840 basis points to 11.5%. And while PBT improved 170 basis points to 4.8%. Our performance reflects improving monetization, cost discipline and increasing operating leverage. Our distribution business digitizes, developers and brokers through demand generation, data intelligence, CRM and transaction services. The business delivered INR 70 crores in revenue and INR 11 crores in segment profit. We generated revenue by enabling developers and brokers with data lytics, sales automation and transaction management solutions. Our platform sold 117,000 leads, growing 79% year-on-year, supported with 10,560 active technology licenses and facilidated INR 850 crores in home sales with gross commissions growing 144% year-on-year. Our rental business digitizes rental discovery occupancy, optimization and property management for property owners and consumers. The business generated INR 56 crores in revenue. Co-living and student living operated 16,500 beds at 82% occupancy with 137 buildings, about 90% occupancy within this. Residential rentals managed 8,900 signed units, collecting INR 35 crores in quarterly rent, while AI-enabled bookings grew 7.6x quarter-on-quarter. Housing.com dominates app leadership in India with 45 million monthly active users, 1.2x its nearest competitor. And 52% app downloads that shared the majority leadership amongst 3 platforms measured. It ranks #1 across brand awareness, brand consideration and brand preference across the country. This transmissions Aurum PropTech towards India's AI-native real estate operating system accelerated with Housing.com's consumer intent and digital discovery at scale. and Aurum PropTech capabilities to convert the intention into transactions, financing and living solutions. I will now hand over to Shrikant to take us through the financial results.

Thank you. And good evening all. I will take you through our financial performance for the second quarter and the first half of FY '27, then cover the balance sheet and cash flow. This was a quarter of 2 milestones. First, our operating business delivered its strongest quarter yet. Revenue grew 64% year-on-year to INR 130.2 crores and we reported a profit from continuing operations. Second, on September 29, we completed the acquisition of Housing.com through local solutions in an all-stock transaction. That transaction roughly doubles the size of our balance sheet and reshapes the group going into the second half. Consolidated financial performance revenue. Revenue from operations for Q2 was INR 130.2 crores, up 64% from INR 79.4 crore a year ago and up 16% sequentially from INR 111.8 crores. The first half revenue was INR 242 crore, up 67%. The year-on-year growth includes PropTiger, which we consolidated from late September 2025. So Q2 FY '26 contained only a few days of its revenue. The sequential growth of 16% is entirely organic because the group perimeter was effectively unchanged between quarter 1 and quarter 2. Operating costs Employee costs were INR 34.2 crores or 26.2% of the revenue compared with 27.9% in quarter 1. Other expenses were INR 62.2 crores or 47.8% of the revenue. That ratio rose from 45% in quarter 1, largely because distribution grew fastest, and that business carries higher variable marketing and fulfillment costs. Year-on-year, other expenses fell from 49.5% of revenue to 47.8%. EBITDA. EBITDA was INR 41 crores a margin of 29.8% of total income. That compares with INR 25.1 crores and 29.6% a year ago and INR 37.5 crores and 31.5% in quarter 1. For the half year, EBITDA was INR 78.5 crores at a 30.6% margin, up from INR 44.9 crores and 28.3% in H1 FY '26. Other income is mainly treasury and deposit income. This EBITDA is reported on an AS 116 basis -- so rent on our leased co-living portfolio sits in a depreciation and finance cost rather than the operating expenses. Below EBITDA. Depreciation amortization was INR 28.1 crores and finance costs were at INR 6.3 crores, both broadly flat on quarter 1. Most of the finance cost is the interest component of these liabilities. We have almost no bank debt. Our share of profit in Integra, our associate was INR 0.2 crores. Profit. Profit before tax from continuing operation was INR 6.8 crores against a loss of INR 8.9 crores in Q2 of FY '26 and a profit of INR 1.3 crores in Q1. Tax was INR 2.5 crore, an effective rate of about 37%, the rate is elevated because profitable entities pay tax, while losses in some subsidiaries are not yet recognized as a tax asset. Profit after tax from containing operations was INR 4.3 crore, of which INR 4.5 crores is attributable to the shareholders. Basic EPS from continuing operations was 0.52 for the quarter against a loss of 1.17 per share a year ago. First half and discontinued operations, H1 net profit was INR 49.5 crores, which includes INR 45.5 crores from the discontinued operation. That reflects the sale of our Navi Mumbai building, which closed in quarter 1 for INR 112 crores and produced a pretax gain of INR 52.5 crores in that quarter. This is a onetime item, excluding its H1 profit after tax from continuing operations was INR 3.9 crore against a loss of INR 17.9 crores in H1 of FY '26. Balance sheet, liquidity, cash flow, balance sheet, Total assets were INR 1,641 crores at September 30, up from INR 948 crores in March. Shareholders' equity roughly doubled to INR 1,020 crores. both increases are driven by housing.com. We issued INR 1.98 crores share to ARIA India, adding INR 458 crores to equity. Goodwill and intangible assets now total INR 960 crores. The Housing.com purchase price allocation was prepared by an independent valuer and its provisional as index 103 permits, it may be refined with the 12-month measurement period. Liquidity, cash, bank balances and current investments were INR 191.6 crores at the quarter end, up from INR 141 crores in March. That includes INR 22 crores of cash that came with housing.com. After the quarter, on October 13, we also received INR 29.5 crores from our promoter or real estate developers as a 25% upfront payment on 51 lakh convertible warrants -- the remaining INR 88.5 crores is payable when the warrants are exercised within 18 months. Current assets of INR 399 crores broadly matches the current liabilities of INR 404 crores and those liabilities include INR 78.3 crores of the lease payment that are matched by right of new asset. Debt. Bank and other borrowings are under INR 1 crore, so the group is effectively date our lease liabilities of INR 216 crores relate mainly to core living portfolio and are matched by INR 196.8 crores of right of new asset. We also carry a noncurrent deferred tax liability of INR 50.4 crores. It is a noncash accounting item, not a near-term tax payment. Cash flow Operating cash flow from continuing operations in H1 was INR 60.8 crores, up from INR 25.4 crores a year ago. Capital expenditure, mostly capitalized product development was INR 8.8 crore, lease principal payments were INR 47.8 crores. Operating cash flow, therefore, covered both products investment and our full lease commitments. Separately, discontinued operations generated INR 24 crores of net cash, reflecting the building sale outsets net of late obligations sector. segment highlights. Distribution is now or the largest segment and main driver of profit. Rental has turned profitable. Capital is small but growing distribution. Revenue was INR 69.7 crore, 54% of the group -- that is up 25% sequentially and 2.6x the year ago level with a year-on-year figure boosted by Proktiger's first full year in the group. Segment result was INR 11.4 crore, a 16.3% margin compared with INR 5.5 crores a year ago and INR 8 crores in quarter 1. From Q3, distribution will include a full quarter of housing of rent. Revenue was INR 56.1 crores, up 10% year-on-year and 3% sequentially. The segment reported a profit of INR 0.9 crore against a loss of INR 4.3 crores a year ago. Capital revenue was INR 4.3 crores, up from INR 1.6 crores in Q1 and INR 1.2 crores a year ago, and the segment grew even with INR 0.4 crores profit. To summarize, revenue grew 64% to INR 130.2 crores EBITDA margin was 29.8%, and we returned to profit from continuing operations, we generated INR 60.8 crores of operating cash in the half we were effectively die, and we hold INR 191.6 crores of cash and liquid investment. With the Housing.com now part of the group, we entered the second half with a larger platform and strong balance sheet. Thank you. Now I hand over the call to ashes.

[Operator Instructions] We will take our first question from Nikhil Gupta from au Capital.

I hope I'm loud and clear. I have only 1 question. So let's assume a hypothetical black 1 event which, let's say, we have an impact on the real estate demand and the prices also fell by, let's say, 15% to 20% due to a hypothetical scenario. What do you think how our business will get impacted in that particular scenario?

Yes. I think very interesting question, and we all plan for our risk mitigation plans. We -- there are 2 things to it. One is, of course, there's a risk mitigation plan in place. which takes care of short-term and long-term things like these. What principally we will be doing in this kind of hypothetical events, we will be focusing on our cost base, taking temporary poses in each micro market that it has affected and then, of course, go back with rigor whatever the -- whenever the markets get better. That's 1 part of it. The other part of it is Blackstone events, which all of us have in our business professions gone through in very recent times have given time and opportunity to reflect and come back with innovation and come back with more rigor and speed back with more products back with more offerings and back with more business to be captured in a very recent fund being COVID, which is where Aurum Group took a pause and came back with a new business model of Cote and it has taken us where we are today.

So Nickel, just adding on to Onkars point. In real estate, when sales actually are outperforming then come the cycle when there is a slowdown and slowdown is generally going into a calibration phase. And in that phase, we typically see spending by real estate developers increase on the sales and marketing budgets to attract new customers to bring in more demand, which is when the spending over platform companies like Aurum actually increases a lot. . So the initial phase where now we are seeing launches actually outperformed the even sales numbers, we still feel that there are good great tailwinds coming in from the sector to us.

Also -- also to add 1 point to a what Aunkar and Rihan have already covered. Look, as two-sided marketplace, excessive demand or excessive supply will tend to benefit Aurum in either case. So we are the poised and geared up to kind of do that. Thank you.

In addition, I also wanted to -- like the major question was in regards to which segment of our business is mostly affected by the deepen real estate prices, in fact, all it happens, whenever that happens. So which particular segment will be the most affected one.

Before we move to the next question, just very quickly, we have not seen dip for last several quarters. We believe cycles are part of any business, and there really a demand and supply correction always in every micro market, whether it's residential, commercial and also in every asset class and in every micro month. I think as I said, as a platform, we are pretty geared up for that as and when that happens. Thank you very much.

We have a text question from Ruben Matthews from Equity Intelligence. The question is congrats on a fantastic quarter and results. Square Yards earned a significant share of revenue from its mortgage business. Does Aurum a similar opportunity to scale its capital business? Or are there structural reasons why it will remain a smaller part of the business? What needs to change?

Juan, thank you for your demands for the results Look, what Squeriords has done with urban money is very, very evitable -- they have built a very strong franchise on the housing loan and the mortgage business. Aurum has recently launched their business in the same segment with the name of be -- and Kuber ag is in the month of September, they have disbursed INR 200 crores of -- INR 200 crores of loans, which means that they are at INR 2,400 crores of run rate -- this business has just started. So we believe that it can be scaled up to INR 25,000 crores of disbursement very quickly. The question is that what is -- how do we distribute these loans -- do we do it directly to the consumer as within the housing brand or we do it through the aggregators do we do it directly through the debt numbers. So as of now, this business is run by -- run within the top tire team. And at some point of time, can also be called housing loans and taken directly to the consumer. So this INR 2,400-odd crores of current run rate will, we believe, spiral up to INR 25,000 crores in next 4 to 6 quarters.

[Operator Instructions] The next question is from Josh Patel from Patel Enterprise. [Operator Instructions]

Yes, yes. Conversation to take over the housing.com. My question is, is Housing.com, you can earn the money, how much percentage per year in year or quarter to quarter give me the answer, please?

Yes, sir, you cannot know your question clearly. -- possible you can repeat the question? .

Yes question is this. First, you origination to housing.com take over to you. And my question is how much you can earn the money for Housing.com ? Percentage you can gain the profit?

So we are just -- we have acquired it on 30th of September -- it's still early days to give some kind of a projection on that. We, of course, have a very strong integration plan because this is our eighth actition in Aurum over the last 4 years. So we have a path to profitability for the business, but it's still early days, Jayesh to kind of talk about the quarter or the annual numbers on housing.

Next question is from Prem Shah from Trinetra Asset Managers.

Am I audible?

Yes. Please go ahead.

I just wanted toask, I think you've previously alluded multiple times that -- so every Indian listing platform has lost money for multiple years. If you look at the last 10, 12 years, almost all of them have been into losses for 8 to 10 years. Now I understand that you alluded that your intent is to do a lot of data mining and convert the leads into actual transactions and not just stop at listing. But can you just give us a clearer view on while it's too early for numbers, as you alluded on the last question, how will this happen? And what are the kind of -- or what are the volume of transactions that we'll see in the next few quarters? And secondly, while we are saying that we'll break even in 8 quarters, what happens in the real estate cycle softens or something along that line happens.

So let me address the second question first. We believe that we will breakeven in 4 to 6 quarters. And irrespective of the softening of the prices in real estate. We feel that as a platform, you have an opportunity and you have an advantage to take that softening of industry and still convert that into an opportunity. So we believe that 4 to 6 quarters is our internal target, 6 to 8 quarters is our external target and we believe that we will be profitable with housing before that. To answer your first question, I think you're absolutely right. We have been staying away from listing for last almost 3 years. And the reason behind that was that we thought that listing 1 is a very crowded marketplace, very crowded. And second, it is -- it was getting difficult to think about profitability in the marketplaces 3 years ago. But if you see the recent trends, another company which is public, they have come out with their numbers that they are EBITDA positive with their marketplace. There are very clear leaders now with the space dominated by 2 or 3 marketplaces across 25, 30, 35 geographies of India. And we believe that what housing does is housing gives us that opportunity not only to now make it very profitable also to kind of ensure that compounding it with the other Aurum companies, the intent and the transaction can be compounded fairly well. So that's the. That is why now listing now marketplace and now housing, which us didn't make sense a few years ago

does that answer your question. [Operator Instructions] Question from the line of Jimmy Ghandi from Mr.

so my question is more directed towards the rental segment. So I see that the rental units or bets that we may call or define has declined this quarter as well. So this is around eighth quarter of either, say, flattish or decline in rental units and similar decline sequentially for -- hello World as well. So I'm just trying to understand to what extent is the rationalization or cut still pending to be done -- or what is a plan rather as and when we move forward considering the rental segment? So that's the first question.

It for your question. In our Rental segment, we have Nestea and Helloworld -- next away was a planned rationalization or consolidation actually of properties across pincodes. We had planned this optimization to make Nestea profitable at a unit economic level. which is when you see the decline in terms of quarter-on-quarter reduction in rental units, but you see the revenue that we are driving from those units is increasing on a quarter-on-quarter on a Y-o-Y basis. . Hello World was more onetime in last quarter, which was Q1 FY '27. Otherwise, we've been growing the number of beds by 20% to 30% on a Y-o-Y basis. And it was purely one-time onetime mainly from taking occupancy higher. So we actually let go of properties which were not making -- not being profitable at operating level at our building. And now the consolidation has gone through, we are actually going to be increasing the number of beds across both Helloworld and extra -- so the consolidation across Pen code is now done. We are profitable across the rental segment and now we'll be growing the number of beds in those segments.

Also, when we bought this business, this was at INR 38 crores of revenue. And now we are at around INR 160-plus crores of revenue. So the idea was to go to the markets, test those markets -- and now on the network level, we are at 88% occupancy. 82% occupancy, and the team has projected it to be 88% occupancy in the -- by the end of this year. So to my mind, there's no reason to cut banks now on a net basis. We just wanted to ensure that wanted to ensure that -- hello World becomes profitable, and that is why this optimization is suited.

Fair. This is helpful. And just 1 more question with respect to the distribution segment. So can we have some sort of visibility in terms of the Aretec business say, in terms of projects or say, in terms of the pipeline that we have either in terms of any KPIs that can help us understand in terms of how we are thinking scaling this piece of the business. So this goes for analytic and even sell to a certain extent. So if you can share some color on that, it would be helpful.