CarTrade Tech Limited (CARTRADE) Q2 FY23 Earnings Concall Transcript

CarTrade Tech Limited (NSE:CARTRADE) Q2 FY23 Earnings Concall dated Oct. 21, 2022

Corporate Participants:

Vinay Sanghi — Chairman and Managing Director

Aneesha Menon — Executive Director and Chief Financial Officer

Analysts:

Siddhartha Bera — Nomura Holdings — Analyst

Vijit Jain — Citi — Analyst

Sachin Dixit — JM financial — Analyst

Karthi Keyan — Suyash Advisors — Analyst

Ankit Kanodia — Smart Sync Services — Analyst

Abhishek Singh — Individual Investor — Analyst

Amit Shah — ACE Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Q2 FY ’23 Earnings Conference Call of CarTrade Tech Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Vinay Sanghi, Chairman and Managing Director, CarTrade Tech Limited. Thank you and over to you, sir.

Vinay Sanghi — Chairman and Managing Director

Thank you good afternoon everybody, and I’d like to welcome you all to this Q2 call. We’ve, you know uploaded a presentation for each one of you.

And, if you can go to straight away slide number three of the presentation. I have great news informing you, we’ve grown revenues by about 30% half one. Adjusted EBITDA has grown by 47% in the first-half of the year as well. And of course the adjusted packages, profit-after-tax not including deferred tax and [any sub about 80%].

We continue to be the number one two-wheeler and automobile portal in India. We have now 190 plus physical locations, including Automall and outlets. And auction rate we did over 300,000 in Q3 that takes us to 1.2 million auction listings for the year. Last quarter we recorded 37 million unique visitors on our platforms, which is highest traffic — consumer traffic in the quarter. What is more remarkable is 86.6% of them still come organically, which means we don’t pay for that traffic.

Revenues in half one was INR195.3 crores or $1.9 billion. Adjusted EBITDA for half one was $485 million or INR48.5 crore rupees and adjusted PAT was about almost INR28 crores for half one. We continue to have strong cash balance. Debt — being debt-free with almost over INR1,000 crores as investable surplus.

If we, go to Slide four. it breaks down the consolidated financials of the company. Our net revenue for the quarter was INR102.5 crores, which was up from INR90 crores in the previous quarter. And up from INR86 crores the previous year same quarter, which gives us 19% growth in the quarter and 31% for the six-month ending 30th of September 2022. We achieved approximately INR195 crores as below — below the financials and INR192 is the operating net revenue, which is a 31% growth in half-one.

As we discussed in the last call, our costs do not move in relation to our revenues. So even though the revenues have gone from INR90 crores in the previous quarter to INR102 crores this quarter. Our costs have more or less remained flat QonQ and resulted — our EBITDA going from INR17.74 crores in the June quarter to almost INR30.74 crores in the September quarter, which takes us to a total of INR48.48 [Phonetic] adjusted EBITDA in the first six months, which is a growth of 47% for the six months and 26% growth in EBITDA in the quarter year-on-0year.

Adjusted PAT, which is adjusted for tax and is at INR19.26 crores, which is a growth of 40% year-on-year and 80%. So the six months, the adjusted PAT for six months is INR27.84 crores. Company’s profit after taxes, which is after deferred taxes, with deferred tax adjustment of INR5.73 crores entry and an ESOP entry of INR7.9 crores for the quarter, takes profit-after-tax to INR5.57 crores, which is compared to a loss of INR35 crores the previous year. For the six month ended the profit after-tax is INR8.89 [Phonetic], which is against a loss of INR81 crores in the previous year, which is due to the ESOP of INR93 crores and the deferred tax of INR3.59 crores. So this gives you a rough synopsis of the consolidated financials. We — with 31% growth in revenue in the first half and 47% growth in adjusted EBITDA in the first half as well and 80% growth in adjusted profit-after-tax.

If you go to slide five, it gives us standalone results. The standalone results show INR48.28 crores of revenue for the quarter and INR88.98 crores revenue for the six months. The quarter growth is 30% and the six month growth is 36%. Again here the costs, QonQ are more or less flat. EBITDA for the quarter has gone to INR16.2 crores or 51% growth, 65% growth for half year, so that’s the adjusted EBITDA. PAT is at INR14.54 crores, which is 56% growth adjusted practices and 74% growth for the six month at INR21.46 crores.

I think the one thing to be highlighted here is the adjusted EBITDA margin is at 34% and 13% without other income, which is up from [Indecipherable] the previous quarter, so it’s almost three times up than the previous quarter. I just want to also go back to Slide four, and the consolidated adjusted EBITDA margin is now at 30% versus 20% the previous quarter.

If you look at the standalone, which is our consumer business or the consumer group, some other key ratios and numbers for you. The new business in the half — in first six months has grown by 31 [Phonetic] versus the new car business. The used car business has grown by 160% year-on-year for the first six months, although it is at a smaller base. Our OEM dealer now has grown at 33% or the advertising from car manufacturers, our dealer business has grown by 59%. In our consumer group, dealer business is about 40% of our business and the OEM is about 60%. So this gap is now narrowing, both are growing. of course, the dealer business is growing at a faster rate than our OEM business. And used is growing faster than new. I think this is a two big things in our standalone financials.

If you looked at the remarketing side, which is Slide number six, it’s grown to INR54 crores during the quarter, which is a growth of about 9% year-on year and 25% half one growth. So Shriram Automall, the consolidated entities were about 25%. For six months year-on-year the adjusted EBITDA has grown by 31% year-on-year and now at 14.57% [Phonetic] for the quarter. Cumulative EBITDA or adjusted EBITDA is 23.76% for six months Shriram Automall. The adjusted EBITDA margin has come to 27% for the quarter for Shriram Automall.

And I think the — one other thing you want to highlight here is that even though the Group has grown by 31%, year-on-year for the first six months, Shriram Automall has had a tough quarter with a growth of only 9% in the last quarter and that’s been highlighted due to one of our segments which is auction of repossessed vehicles, which has been close to flat for the quarter and that’s been — due to mainly two reasons, one is of course, the fact that a lot of the binds [Phonetic] find that the portfolio quality is a little better and obviously the number of vehicles being auctioned is not grown or the vehicle [Indecipherable] although it is not gone down, it has not grown.

And the second thing is of course the resale values of vehicles, the market being at higher and many of the people rather getting their [Indecipherable] vehicles get repossessed. Try and sell the vehicle on their own or pay of the loan, one of the two. So I think this is probably the reason why we find a temporary market situation where the repossession part of our business has actually remained flat whereas the rest of the company has actually grown quite well, but the overall remarketing side [Indecipherable] only 9% and 25% for the six months.

If you go to Slide seven. The average monthly unique visitors stand at 37 million, which is as, you can see over the last many quarters highest-ever traffic numbers. It’s a little reflection of the growth in the car market itself. And as, you can see in Slide number eight, the brand affinity compared to competition has remained strong, still four times the next competitor. So CarWale or CarTrade or — CarWale the brand or the brand affinity is still four times. And here it comes from the fact — and that is one of the reason why 86.6% of all the traffic is unpaid for, or organic as we say.

If you go to Slide nine, it talks about auction volumes and this is a reflection of — on the last quarter 9% growth. We auctioned 304,000 vehicles, but as you can see the growth rates of auction listings is only 12% half one and volume has grown about 30% half one. But you look at Q2 to Q2, it’s almost flat, which is a reflection of the 9% growth, and as I said that is primarily grown 9% because of a flattish growth, a repossessed part of our auction volume within Shriram Automall.

So I think this is just a rough highlights of all the metrics. To start the conversation, I want to spend 10, 15 minutes — I wanted to spend 10, 15 minutes giving out the key financial highlights and key metrics. Now we can go into detail question-and-answers to clarify all your doubts and questions which you might have.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] First question from the line of Siddhartha Bera from Nomura Holdings. Please go ahead.

Siddhartha Bera — Nomura Holdings — Analyst

Yeah, Hi sir. Thanks for the opportunity and we wish you Happy Diwali to the entire team. Sir, I just had a question on this [Indecipherable] business. Basically, like you said that the repossessed part of the business has not grown on a Y-o-Y basis. So possible to share some more thoughts here in terms of — is this more of a cyclical thing which should normalize going ahead or do you think this might continue for some more time and maybe to our auction volumes, largely at these levels or shall we expect some improvement? And second is if you can share how big is that portfolio of repossessed vehicles for [Indecipherable]

Vinay Sanghi — Chairman and Managing Director

Sorry, could you repeat the second question again?

Siddhartha Bera — Nomura Holdings — Analyst

So how big is the repossessed vehicles portfolio in case of the total [Indecipherable] if you look at?

Vinay Sanghi — Chairman and Managing Director

Just as high due to — with the auto industry growing, financing volumes in the auto industry is growing. If financing volume grows and there is a peculiar problem in the two months where repossession has gone down and I think it’s a factor off portfolios doing slightly better, it’s also a factor off resale values being higher. This is normally rare and we do believe that — I don’t know about the immediate short-term, but the medium-to-long term view it is that if you lend money against vehicles, repossession is going to be required to be done. And the rate of repossession is unlikely to go down in the medium-to-long term.

So as I said I think this is a short-term cyclical issue, not a long-term structural issue number one, this is what your question was. Number two, is you asked Shriram Automall’s repossession business last quarter was flat. We believe that with the markets I think as and when repossession of vehicles goes back to normal, which will happen in due course, I think obviously Shriram Automall will be a gainer in that.

Siddhartha Bera — Nomura Holdings — Analyst

So in terms of outlook do you expect to go back to that double-digit growth levels for the auction volumes in the coming quarters or do you think that may take some time, probably next year we may start seeing some improvement in overall volumes?

Vinay Sanghi — Chairman and Managing Director

It’s hard for us to predict at this stage. This is a issue for the last two to three months, it’s hard to predict whether the repossession will go back to normal, but on the other hand I think the big focus for us in Shriram Automall going all other segments of the business. So one of the fastest growing segments for us Shriram Automall and is almost now 30%, 31% of its business, is the retail side of the business of supply vehicles for auction and that’s been a big fast growing segment for us also all other segments, insurance, leasing companies, dealers, all other segments of our business. And when repossession etc. correct itself, I think you know the prospects of Shriram Automall will look even better because the other segments are rapidly growing.

Siddhartha Bera — Nomura Holdings — Analyst

Got it, got it. And sir, second question on the standalone business or the classified business. Obviously the growth has been good in the quarter, but given that now the supply situation is pretty close to normal and we have started seeing a lot of ad spend by many OEMs. Any color here in terms of the growth trends going ahead. Do you expect that — should we expect reasonable improvement in terms of trend from the current levels or this is largely the thing we should expect, any thoughts there?

Vinay Sanghi — Chairman and Managing Director

So we’ve seen, in the standalone, we’ve seen a growth of 36% in half one, right and 30% odd on new car side and 60% on the used — 160% on the used car side. Then supply-chain has got better, volumes of car got better, in fact we’ve seen the growth in passenger vehicle industry itself is pretty robust in the first six months. We feel pretty good about the new car side of the business. When the shortages in the business or supply-chain is effecting vehicle short — or there are shortage of vehicles and customers have to wait. Generally, manufacturers spend less money or dealer spend less money on advertising. With supply chain improving, volumes improving it actually — is a little more favorable for us as a business, the market. So the market is far more favorable today than it was six months ago and this year I think most estimates are putting the passenger vehicle growth at about 20% 25% this year — in the current year, in the financial year 2023.

Siddhartha Bera — Nomura Holdings — Analyst

Got it sir. Okay, I will come back in the queue.

Vinay Sanghi — Chairman and Managing Director

Thank you. Thank you and Happy Diwali to you too.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Vijit Jain from Citi. Please go-ahead.

Vijit Jain — Citi — Analyst

Thank you. Hi Vinay, hi Aneesha.

Vinay Sanghi — Chairman and Managing Director

Hi Vijit.

Vijit Jain — Citi — Analyst

My question is you know, the first is just a housekeeping question. At the start of this call you highlighted the 1H business mix for new, used and OEM dealers in the consumer business. Could you give the same numbers for 2Q specifically only? That’s first. And my next question is on just an update on abSure would be helpful.

Vinay Sanghi — Chairman and Managing Director

Sure. Okay. Q2, I got to find the numbers, but you wanted the mix or what do you want?

Vijit Jain — Citi — Analyst

So 2Q the growth rate for the new and new vehicles and used vehicles in consumer business and OEM business growth rate and the dealer growth rate in that consumer business. The same numbers. I think you mentioned four numbers for 1H. I was just looking for 2Q?

Vinay Sanghi — Chairman and Managing Director

Aneesha, you want to bring these out. I think maybe easier. In the mean time I can talk about, abSure. So actually I see you got about 62 locations now and our objective has been to keep growing locations and get to about another maybe between about 100 by the end of the year. Our focus had earlier been to rollout locations, now the focus is really operational efficiency and customer experience within the location and within the abSure model itself. What is the customer experience in the [Indecipherable]. And that all explain the booking it online and picking-up the vehicles. So our focus is on the certification product, the warranty, the money back guarantees and all of that and there we find it we made a lot of progress there. I think one of the questions all of you had a year-ago was that in a model which is franchised out whereas most of our competitors are full stack, which means our competitors are the buying the vehicle themselves, towing it themselves, refurbishing it themselves and selling it themselves, how will we work with the franchise asset-light model and what we had indicated year ago was that we don’t have a dealer or the franchisee to buy stock [Indecipherable] and we’re going to provide all the online services, booking, technology tools, etc. etc. and the certification, the warranty, the money back to the customer, but we’re going to get — the heavy-lifting to be done by the franchisee. We feel the biggest question mark to us was the quality of the car and the quality of experience. And feel now in the last year, very confident that the customer experience is best-in class, even though we’re running a fully franchised asset-light model. So that is the second — after the rollout that was second theme we wanted to work hard towards.

And the third thing we’re working on now is also the franchise viability, how many cars we need to sell to breakeven. How do you make profits, How do we make sure that they are having a very healthy business. And then of course how do we make sufficient return from this business right. So these are all the four things we’ve been working very closely with. We feel pretty confident, a year later now that the model has played out. The one good thing is that we are asset-light and you know at a particular scale, it will ramp-up very quickly as we keep appointing franchisees across the country.

Vijit Jain — Citi — Analyst

Got it. Thanks. Vinay, if I can ask within the abSure, is there — is there a number you can give me on the number of cars that you’ve branded with that abSure label so far this year. What — what inventory or what throughput of cars do you think you would get to in terms of just branding, not necessarily sales, where you’ve certified them, inspected them and all of that. Any metrics on that.

Vinay Sanghi — Chairman and Managing Director

Off hand I will not be able to give the number of path unfortunately, but we will check this up and try to put it back, but I would offline, offline remember the number of cars actually. But here the objective is to keep growing this out and get to a 100 — 100 outlets by the end-of-the year is what we had indicated. Each one bring them 15 to 25 [Indecipherable] somewhere in that range.

Vijit Jain — Citi — Analyst

15 to 25 [Indecipherable] And my next question is on so obviously this year so far and in this quarter also I can see that the marketing spends on the standalone business side have been you know flat Q-o-Q and, not a lot of growth on a Y-o-Y basis as well. Just wondering now that we’re heading into auto OEM cycle recovery happening, is there — is there a chance that you might up your investments on the marketing side and what are you seeing your competition doing on that front?

Vinay Sanghi — Chairman and Managing Director

Yeah, you know Vijith, we’ve consistently said that for us growing traffic at 37 million a month is, a huge amount of users, right. And you know what’s been more and then we’ve always said 86%, 87% we don’t pay for it’s only 13% of the traffic which we buy. I don’t see any significant change to be honest the marketing cost. In fact with the car industry growing, more and more users come to us automatically, right. We call it 87% factor and that’s really — that’s reflected in the 37 million users that the car industry grown, our traffic which has grown. If you see the competitive data and we showed you Google trend, we brand index or the digital index and we see traffic numbers, we’ve just got relatively better to competition. So we’re still multiple times some of the other competitors.

So also I think we had space where as you can see that a profitable company, it affected our EBITDA margins and adjusted EBITDA margin and profits, whereas many of our competitors are still investing in the businesses. And you Know even when they’ve invested a period of [Indecipherable] invested in marketing, our traffic has continued to grow as you can see in the last quarter itself. So we don’t see any significant change actually, frankly.

Vijit Jain — Citi — Analyst

Got it. And just one final question on the marketing side, I’m just wondering all the content development, be it on the website or in terms of car reviews and all those kinds of things. Where does that fit-in your cost? Does that fit in marketing or in other expenses?

Vinay Sanghi — Chairman and Managing Director

Content development, the website content development you mean?

Vijit Jain — Citi — Analyst

Yeah, I mean there are videos produced on —

Vinay Sanghi — Chairman and Managing Director

Mostly in — it is mostly on basis. Employees of the company while our content — almost all our content development internal, we are content team. So it makes [Indecipherable] today’s cost.

Vijit Jain — Citi — Analyst

Got it. Understood. Thanks. Yes, those are the questions [Speech Overlap]

Vinay Sanghi — Chairman and Managing Director

Aneesha, you have answers, then you can quickly highlight it.

Aneesha Menon — Executive Director and Chief Financial Officer

So I’m just confirming, because you wanted to know the new vehicle growth within consumer group of Q2? That is one question right?

Vijit Jain — Citi — Analyst

Yes.

Aneesha Menon — Executive Director and Chief Financial Officer

Which was about 19%. The used car grew Q2 versus Q2 within the consumer group of about [Indecipherable]. Were there any other metrics that you want to know?

Vijit Jain — Citi — Analyst

The dealers and OEMs, so I think when Vinay mentioned earlier in the call dealers grew 33% Y-o-Y, sorry OEMs grew 33% and [Speech Overlap]

Aneesha Menon — Executive Director and Chief Financial Officer

Yes, the same number is 21 and 47, which is OEM groups have 21% and dealers group has “47%”.

Vijit Jain — Citi — Analyst

Got it thanks. and sorry for belaboring on this, but on the new and used you said. 19% and 160 %is that it?

Aneesha Menon — Executive Director and Chief Financial Officer

19% and 160%, you are right.

Vijit Jain — Citi — Analyst

Got it, got it thanks. Thanks, those are my question thank you so much.

Vinay Sanghi — Chairman and Managing Director

Thank you Vijith. Thank you. Happy Diwali to you. Happy Diwali to you.

Operator

Thank you. We have our next question from the line of Sachin Dixit from JM Financial. Please go-ahead.

Sachin Dixit — JM financial — Analyst

Hi Vinay and Aneesha. So I had a couple of questions on the actual business in terms of how the guidance has changed. I remember the last time we were discussing 120 [Phonetic] stores. So is there a reason why we are now targeting 100 stores. I was hoping that you are probably competitors thanks to the funding being tougher and all might be going slower and this might be an opportunity for you to grow faster than others. So I was kind of surprised there.

Vinay Sanghi — Chairman and Managing Director

No, yeah I think — I think we had estimated about 120 stores. We probably will be at about 100 stores and I think the main reason for that is really to focus on operating because [Indecipherable] doesn’t matter for us. The focus has moved a lot from rollout to — as I say customer experience as well as you know operating efficiency of the franchise, product technology around it etc. etc. you know and we want to get that right. It’s still a very early-stage business for us. And we want to get the complete experience completely right. I think that’s just the thing.

Sachin Dixit — JM financial — Analyst

Understood. And on the timing of the site, it is almost been a year that we have been doing actual business like by when can we expect like we started to see some numbers here.

Vinay Sanghi — Chairman and Managing Director

Yeah, it has been while, but we will try and as we progressively go communicate as much as we can but it’s, very early days for the business and it’s still. As I said hardly 12 to 15 month old real business. So it is very early days yet.

Sachin Dixit — JM financial — Analyst

Sure. And finally you mentioned about in rigid you mentioned that you’re focusing on the franchise breaking even. I was — my understanding of this business was the debt that’s a business that franchisees have already been a part of and should be profitable from day-one, what else — what am I missing here?

Vinay Sanghi — Chairman and Managing Director

No. In many cases the franchise may be profitable from day one. In some cases, there will be new businesses and new locations of franchisee putting up, which has its own time to get to this particular volume. It doesn’t take time for the franchise to make profits or breakeven, but it’s our objective that everyone makes money or has certain return on the investment they have made. It is not about just breaking even. So franchise viability and health is at the core of what we want to work with, right? on one-side.

On the other side is the customer experience because the business model is really about two pillars, right customer experience and franchise viability. So, both are just things that — it’s a very early business. So we are working very closely. There are some branches which are one year-old, which will make money, but some are starting last month or starting this month and we were very conscious about them getting profitability and certain return very, very quickly.

Sachin Dixit — JM financial — Analyst

And just to clarify, are franchisees putting up a completely new location for abSure or they are just upgrading their existing [Speech Overlap].

Vinay Sanghi — Chairman and Managing Director

Some existing dealers are upgrading, some are putting on new locations. It is a mix.

Sachin Dixit — JM financial — Analyst

Sure. Understood, thanks.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Noel Vaz from Asian Markets Securities. Please go ahead.

Mr. Noel Vaz, can you please unmute your line. Since there is no response, we’ll move onto the next question. From Mr. Karthi Keyan from Suyash Advisors. Please go-ahead.

Karthi Keyan — Suyash Advisors — Analyst

Yeah, good afternoon to both of you. You spoke one on your auction business, you — can you split-up the 1% growth in volumes on year-on-year basis into what was the degrowth in reposition? What would have been the growth in retail and the other category that would be interested?

And a subset of this, I understand the market de-grew in general but for [Indecipherable] but could you have gained market-share, lost market-share, what was the scene like?

Vinay Sanghi — Chairman and Managing Director

Sure. Let me give the answers to these two questions. Just give me a second. The growth in retail is about 51% in quarter two for us, which is the other one which we track very closely, which is 31% of our business-related. And reposition as I said is black, which is the one which is actually bringing the growth rate down. Although it’s not dragging the company performance down, it’s bringing the growth rate down, but yeah — but retail is the other big one with a 20% of our business [Indecipherable] 51% Q2.

Karthi Keyan — Suyash Advisors — Analyst

Yeah, I asked you about market shares.

Vinay Sanghi — Chairman and Managing Director

Yeah the market shares are pretty strong still. I don’t think market-share have not changed. The total and this is Q2 specifically. It reposition itself.

Karthi Keyan — Suyash Advisors — Analyst

No, I understand, but do you have a numbers for that? I mean something that we can [Speech Overlap]

Vinay Sanghi — Chairman and Managing Director

No, I’m not able to — no, I’m not at this point able to give a market share number out. But we would have not lost market-share, but I am not able to give number out right now at this point.

Karthi Keyan — Suyash Advisors — Analyst

Right. Okay, sure. Sure. Let me get back into the queue. Thanks.

Vinay Sanghi — Chairman and Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Ankit Kanodia from Smart Sync Services. Please go ahead.

Ankit Kanodia — Smart Sync Services — Analyst

Am I audible?

Vinay Sanghi — Chairman and Managing Director

Yes, how are you?

Ankit Kanodia — Smart Sync Services — Analyst

Okay, great. Thank you. Thank you. Hi Vinay, hi Aneesha. So first of all I just wanted to your beginning on this INR1000 crores cash which I think we have been having for a long-time now. So how do we look at that cash? Of course that cash gives us some optionality. So what I could think of is that right now in the market that is around INR2,500 crores, INR2800 crores and you have INR1000 crores of cash itself. Hypothetically speaking, let’s say you do some macro event as the HDCL rushing the market. Would you be willing to do a buyback? Or you would be more interested in acquisition? What do you think is the taste for acquisition. Obviously [Indecipherable]. That is my first question.

Vinay Sanghi — Chairman and Managing Director

Yeah, thank you for the question. You’re right, we are sitting with almost INR1,000 crores of — more than INR1000 crores of cash in the bank. And we are generating cash is a profitable business so we are generating cash everyday. The intent here is at this point to look at investments and acquisitions in our ecosystem and we got 30 million customers a month. You know can we provide [Indecipherable] to buy a new car or used car, or two wheeler on our platform. Still we provide additional services to them, value-added services or other services, financing, insurance, car servicing, etc, etc. So the intend is to look at in investments and acquisitions. In our ecosystem. And that’s why we — at this point, we have now kept the cash. We have in the cash-generating. Over the next — over the last six months. we’ve actually aggressively looked at this space that we haven’t yet zeroed down on a particular acquisition or investment year but, we’re continuously looking actively added and over the next few months we will see if we can get a target business which can give us a product or a service in these adjacencies which will help all these car and two-wheeler buyers on our platform. The intent would be to do that. Of course in a specific duration or time, if you are not able to get these target companies or other investments and acquisitions done. We would look to obviously. distribute. parts of that — part of that — part of that liquid surplus.

Ankit Kanodia — Smart Sync Services — Analyst

Thanks. So is it fair to assume that [Indecipherable] your equation, I don’t know today.

Vinay Sanghi — Chairman and Managing Director

I don’t think anything is out-of-the question right now. I think we just have not at this point our Board is still not taken decisions on buybacks, etc. etc.

Ankit Kanodia — Smart Sync Services — Analyst

My second question is just a follow-up on this cash [Indecipherable] as an acquisition. So while we are hitting on a cash, I believe. Some of our competitors are having a very tough time in terms of cash crunch. So do you want to give some thoughts as to how do you see the competitive space? How is new car and old car. So — used car impact. So if you can throw some color into what is happening there in terms of competition?

Vinay Sanghi — Chairman and Managing Director

Sure. So one of the things we’ve been embarked on in 2018 and you’ve seen the company for the last five years also published our five-year results in our annual report. We’ve always been focused on unit economics and profitable growth. It’s not been growth at any cost, but profitable growth is the — this is the mantra of the organization which means getting value for the services you deliver from your customers. I think in markets where money is harder to get, we feel that because we have this profitable growth mantra and the generating cash, when a really good position and our business gets stronger, we also feel that some of the competitors who have not as of now sorted-out the unit economics and where money raising becomes harder. You know obviously, dial down and dial-up and that that typically is that sometime beneficial to us.

But we are just focused on more than all the factors. I think eventually the biggest things we’re focused on is delivering better value to our customers and experience to our customers. So can we build great products on CarWale or at Shriram Automall, which helps our sellers and buyers. That’s what eventually differentiate one from the other. As you are you seeing Google trends and it’s in the digital brand multiple times competitors because our focus has really been on building car value as a fantastic shopping destination for all car users. I think that’s the focus really and as long as we can keep investing in our product and technology and tomorrow when you come on our website you can make sure you can buy a car on one click as we call it with one click experience. We will win in this game or we will continue to grow.

So our focus is really on customer experience. I think. United and again within that experience we should have our second month which is really about profitable growth, right it has to be on profitable growth.

Karthi Keyan — Suyash Advisors — Analyst

If I may, ask one last question. So when you are taking about customer experiences, how involved we are volume we are with our team and ex-family. so is it the timing. Management and they are old already Management and in which had been looking at that business for last 10 years. They are only taking part or we are actively involved in day to day activities because in terms of customer experience what we see on something like the CarWale that then what we see in Shriram Automall. Do we have any day-to day discussion or involvement with [Indecipherable] or we let them run independently?

Vinay Sanghi — Chairman and Managing Director

People ask what the culture of the organization is and the Group. The culture of the organization is entrepreneurial, which means what a car consumer coming on CarWale requires — auction on Shriram Automall requires something completely different and I think the way we build the culture of the organization is to do what it is best required for the customer. Also the culture of execution is about or the culture of people is about — as I said entrepreneurial so Sameer who runs or the MD of Automall is of course empowered to deliver fantastic value to his customers and at the same time return — making given out returns to his shareholders at the same time and create value for the company. What are the help Sameer needs, people like me, or Aneesha, or the entire Board. Including independent directors will provide to him. So we are available at is back and call when he want. But of course he is fully empowered to create value for his customers and all other stakeholders and shareholders in that business.

Ankit Kanodia — Smart Sync Services — Analyst

Thank you so much. And all the best for the rest of the year.

Vinay Sanghi — Chairman and Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Abhishek Singh, an individual investor. Please go ahead.

Abhishek Singh — Individual Investor — Analyst

Hi, thanks for the opportunity. I’m good. Hope everyone is doing well. Just wanted to understand, we have INR1000 crores of cash and compared to the business is very small like INR200 crores of revenue and INR10 crores of profit in first-half. So what is the outlook on that — I mean even if you go for acquisition what size or scale you are planning to and over what time horizon you are looking to invest those INR1,000 crores?

Vinay Sanghi — Chairman and Managing Director

As we discussed earlier, the intend here is to look at investments or acquisitions, which can help our current customers or a current products and services which we offer. We are not a fund so we haven’t put a size in mind. It could be a small acquisition or it could be — as you have seen in the case of that is CarWale in 2015 is quite sizable. Our intend to be over the next few months and years is to make sure that we are able to you know try more and more products to our current customers. For example we’ve launched an automotive financing product on CarWale, which allows customers to get approval for a new car or used car loan within minutes. So that’s an internal investment we have made in product and technology, but like this we continue looking at other opportunities so the customers coming on our platform to get multiple products and services. I think that is the intent over the next six to 12 months until we find a target acquisition or investment to do, it’s very hard to talk about the size of it because it could be large or it could be, very small. I mean it just depends on what provide value to our consumer.

Abhishek Singh — Individual Investor — Analyst

Okay. And sorry. I have not been tracking this for a long-time so what is the source of this cash? Because I believe the IPO was more of a secondary sale of private-equity investors. So how did we acquire [Speech Overlap]

Vinay Sanghi — Chairman and Managing Director

The IP was 100% offer for sale, which means the company did not get any money during the IPO it was only they’re only selling shareholders there was more company — the company did not raise cash so this cash is not coming from the IPO. This cash has come previously from of course profit is generated even profitable or cash profitable from 2018 number one and number two is also from equity raises we did in the past. I think it’s a combination of both of those.

Abhishek Singh — Individual Investor — Analyst

Okay. so I believe we have been looking for right investment opportunity from long-time and we have cash on our balance sheet again from last, few years. I’ right?

Vinay Sanghi — Chairman and Managing Director

That is correct.

Abhishek Singh — Individual Investor — Analyst

Okay. Okay. Thank you, thank you so much. Wish you all a very happy Diwali. Thank you Abhishek. Thank you. Happy Diwali too.

Operator

Thank you. We have our next question from the line of Vijit Jain from Citi. Please go ahead.

Vijit Jain — Citi — Analyst

Thank you again for the opportunity. Just on the ad business, Vinay, I just wanted to get overall thoughts. If I look at the traffic rate on a Y-o-Y basis it’s up about 10% and obviously one part of your ad business growth is driving better conversion — driving better results for OEMs or for dealers, but the other part is also ad load on the website versus each of these traffic, right. So I just wanted to get your thoughts on — do you think there is significant scope to increase the ad monetizability per unit traffic or that — or is that the right way to think about it?

Vinay Sanghi — Chairman and Managing Director

Yeah, we are seeing it is public. right. I think that one of the drivers of the ad business is what percentage of our manufacturers budgets are digital-first or a dealer budgets are digital first right. So if a dealer spend INR100, our manufacturers spent INR100 on advertising, what part was digital? and then digital what is our share versus maybe the horizontal the Google or Facebook right. And part of the — I mean the one of the drivers of the revenue is probably this metric right if a manufacturer [Indecipherable] some much of digital comes to CarWale. And that over the last few is growing. First the digital part is growing. second part is a volume of vehicle sales growth. The total advertising budget of manufacturers [Indecipherable] so they about two drivers of this but it’s not nothing traffic is the only driver for digital ad spend or for growth in ad business, it’s also manufacturers commitment to digital and then from digital what our share comes. So I think that’s probably the bigger driver if you ask me.

Vijit Jain — Citi — Analyst

Great. And so from more two to three -year perspective, growth here or significant growth here will come as and when new OEMs signed relationships with you like MG has done for example, let’s say or is it that you expect to grow into the wallet share of existing OEMs? Or is it going to be a combination of both?

Vinay Sanghi — Chairman and Managing Director

It’s — actually most OEMs are fined so the real drivers are growing wallet share, which means more money going — there are two-parts one is ad budget they manufacture themselves in whole growing because car sales are going right so if had INR6,000 crores you got to automotive advertising, [Indecipherable] 7,000, 8,000, 9,000, 10,000, that’s one part total advertising. Then the second part is if 13%, 14% is digital, is it going to — in many countries it is 40% today in US, China, it’s almost 40%. So is that going on 13% 14% in India to 20% to 25% digital. And then within digital, even if settlements [Phonetic] is same, we automatically start growing rapidly. I think it views very well. The secular trend over the last few years and predicted in the next few years is that overall spend advertising on automotive will grow and digital spending will also grow. I think these are the two drivers to us.

Vijit Jain — Citi — Analyst

Got it. Thanks Vinay. Thanks Vijit. Thank you.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Amit Shah from ACE Securities. Please go ahead.

Amit Shah — ACE Securities — Analyst

Hi, sir. Sir congratulations on good set of numbers. Sir. I have couple of questions. Sir, just wanted to understand more on the increase in unique visitors. How did this change come in place and how do you see this going forward?

Vinay Sanghi — Chairman and Managing Director

This quarter is one of the car market has grown and you can see the passenger car market itself has grown, which is grown in the number of customers in our platform. And the second part is you know previous quarter one of the things we got to keep in mind is that. you know July to September is a much better quarter normally then April to June quarter. I mean just on the car sales and customer engagement and traffic so. I would say these are the two drivers, car market growing is normally a reflection of our traffic. You’ve seen the competitive brand indexes which we showed you slide. Our ratio with the competition has been actually got stronger. so that’s also more positively, but I think the main factor is that the car market in the first-six months as shown robust growth.

Amit Shah — ACE Securities — Analyst

Understood, sir. And sir a follow-up on that, what kind of impact this would have on our revenue in short-term as well as longtime?

Vinay Sanghi — Chairman and Managing Director

Well as I discussed in the earlier question, it is not necessary that the traffic increase has any — it has some correlation with the revenue growth but our revenue growth — a lot of revenue growth impact comes from manufacturers of cars or dealers spending more money right because they’re real paying customers and that comes from how much money we spend on digital advertising. As that traffic continues to grow, they obviously give us a little more money and allocate more money is out because the impact they are making to their users is greater. So there is some relation, but a lot of the contribution or the direct impact comes from manufacturing without increasing their spend on digital advertising.

Amit Shah — ACE Securities — Analyst

Understood sir. Thank you.

Vinay Sanghi — Chairman and Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] Our next question is from the line of Sachin Dixit from JM Financial. Please go ahead.

Sachin Dixit — JM financial — Analyst

Hi, just put in one more question. With regards to what’s happening on that tax expense side, we were getting deferred expense credit last year in Q3, Q4, now we are getting expense. Can you explain how should we think of it going-forward?

Vinay Sanghi — Chairman and Managing Director

Sure Aneesha you want to explain this out? [Speech Overlap]

Aneesha Menon — Executive Director and Chief Financial Officer

Yes, sure. I will do that. In March 2021 is when we have booked the DTAs. The DTA is based on the pro forma losses of the company. What we do every year and every quarter is that we need to revisit on how and when we will give the [Indecipherable] losses, whether they would get consumed or they get expired. It is an unwinding of DTA’s that is created in the past. From Q1 to Q2 the two changes one is the — other income the funds that have realized more income than in Q1 has resulted in higher income which has resulted in some unwinding of the MTPL happening in Q2 versus Q1. Also we had an ESOP charge for the INR2 crores in this quarter. This is for the increase DTA charge corresponding to that in Q2 versus Q1. So just to simplify it there is DTE which got charged or created in March 2021, which is based on the pro forma losses and depreciation.

Over the years as and when we consume all those losses lapsed, we need to unwind DTA which is called the BTL, deferred pretax liability. This is what will happen in the future also, but from Q1 versus Q2 there are two changes one is increasing the other income, which is the mutual funds investment value going up and the second one is on the [Indecipherable] currently Q2 versus Q1.

Sachin Dixit — JM financial — Analyst

Got it. And on the other expenses going up like is there a driver of such a sharp growth in that or it’s just your investments sales provide better results?

Aneesha Menon — Executive Director and Chief Financial Officer

I’m sorry, other expenses you mean or other income?

Sachin Dixit — JM financial — Analyst

Sorry, other income.

Aneesha Menon — Executive Director and Chief Financial Officer

This return from the other income has been better. We have not changed anything from Q1 versus Q2. It is the same funds that it’s been invested.

Sachin Dixit — JM financial — Analyst

Sure, okay. Thanks.

Operator

Thank you. I would now like to hand the conference over to Mr. Vinay Sanghi for closing comments. Over to you, sir.

Vinay Sanghi — Chairman and Managing Director

Thank you. And I just want to thank each of you for joining in. It’s been a you know a very active quarter for us. I think we’ve shown in some areas of business strong performances, margins have got better compared to the previous quarter. Overall revenue growth has been much stronger compared to the previous quarter as well. And one part of our business, I’ll be discussing Shriram Automall, shown a lower-growth rate, but, we’re pretty optimistic about the future of our business on the whole. As we continue to invest in product and technology for consumers.

And I do want to thank all of you for joining and taking the time-out and Happy Diwali to all of you and enjoy the festivals period ahead. Thank you everybody, thank you.

Operator

[Operator Closing Remarks]