ROUTE MOBILE LTD (NSE: ROUTE) Q2 2025 Earnings Call dated Oct. 22, 2024
Corporate Participants:
Rajdipkumar Gupta — Managing Director and Chief Executive Officer
Gautam Badalia — Chief Strategy and Investor Relations Officer
Analysts:
Amit Chandra — Analyst
Nikhil Choudhary — Analyst
Dipesh Mehta — Analyst
Saumil Shah — Analyst
Yash Dedhia — Analyst
Jyoti Singh — Analyst
Arvind Arora — Analyst
Ashok Shah — Analyst
Divraj — Analyst
Presentation:
Operator
Good evening, ladies and gentlemen. I am Sejal Sapati, your moderator for this conference. Welcome to the conference call of Route Mobile Limited arranged by Concept Investor Relations to discuss its Q2 and H1 FY ’25 results. We have with us today Mr. Rajdipkumar Gupta, Managing Director and CEO; Mr. Gautam Badalia, Group Chief Strategy Officer and Chief Investor Relations Officer; and Mr. Suresh Jankar, Chief Financial Officer. [Operator Instructions]
Before we begin, I would like to remind you that some of the statements made in today’s earnings call may be forward-looking in nature and may involve certain risks and uncertainties. Kindly refer to Slide number 2 of the presentation for detailed disclaimer. [Operator Instructions]
I now hand the conference over to Mr. Rajdipkumar Gupta. Thank you, and over to you, sir.
Rajdipkumar Gupta — Managing Director and Chief Executive Officer
Thank you. Good evening, everyone. Season’s greetings to all of you and your respective family. I’m pleased to share that Route Mobile has achieved its highest revenue to date even though Q2 is typically a slower period for us. With the worst of July and August being holiday season in many part of the world, we usually see a decent activity. However, despite the seasonal challenges and the ongoing geopolitical issues, we have delivered approximately 10% revenue growth and over 20% PAT growth year-on-year basis. Looking ahead, with the festive season approaching, we expect to see a strong increase in revenue and expanded margin and we remain confident in meeting our guidance for the year.
In terms of business momentum, we had some solid deal wins this past quarter. Along with continued progress in realizing synergies with Proximus Group, here are a few key highlights. We signed a significant deal in September with global e-commerce company to cover multiple regions. Traffic has already started and will ramp up over the time. Proximus and Infosys form the long-term strategic partnership, which combines Route Mobile solution [Indecipherable] services and this offering with Infosys Digital services. This partnership following the Microsoft deal strongly validates our group synergies. We’re also working on several other long-term partnerships that we believe will drive significant value for Route Mobile.
Beyond these group synergies, we have laid out a clear roadmap. We are already receiving additional traffic from Telesign on routes where Route Mobile offers a clear advantage in pricing and quality. Our cross-selling efforts are well underway and we anticipate revenue momentum to follow shortly. We have launched our shared service initiative this past quarter and expect to see rapid progress in this area. We also continue to lead in the metro ticketing space and with a new development for Maharashtra/Mumbai Metro. Additionally, we have implemented a WhatsApp-based utility communication service for IRCTC. Our new product revenue are showing strong growth, up by 32% year-on-year basis.
A few other highlights since Q1 FY ’25. Route Mobile was named Asian Partner of the Year 2024 at the Meta WhatsApp Business Summit in India. Proximus Opal successfully completed its offer for sale to meet minimum public shareholding criteria. This attracted strong interest from long-only funds and we are grateful to our investors for their continued trust. We will remain focused on delivering value for all our stakeholders. Lastly, based on our strong performance in the past half of FY ’25, I’m pleased to announce that Board of Directors has recommended an interim dividend of INR6 per share.
With that, I will hand it over to Gautam to go over the financial highlights. Over to you, Gautam.
Gautam Badalia — Chief Strategy and Investor Relations Officer
Thank you. Thank you, Rajdip. Good afternoon, everyone. Season’s greetings to all of you. We have already uploaded our quarterly earnings presentation on our website as well as the stock exchanges websites. Hope you had a chance to go through the presentation. I’ll quickly summarize our financial and operating performance during Q2 FY ’25 and H1 FY ’25 before opening the floor for Q&A.
The quarter gone by has been a good quarter considering the seasonality of our business. It is our best quarterly revenue till date and with festive season ahead of us, coupled with incremental synergy benefits, we are reasonably confident of meeting our guidance for the year. Our revenue growth in Q2 FY ’25 was impacted marginally due to two reasons; continued weakness in Mr Messaging owing to geopolitical issues in Continental Europe and our ILD revenue in India was impacted for a few days in August, mainly due to our firewall software upgrade as well as there was an infrastructure issue with the virtual machines at the cloud host. Things have completely normalized since then.
For H1 FY ’25 versus H1 FY ’24, we also had a significant currency impact owing to Naira’s devaluation, which is the Nigerian currency. Now talking about a few growth levers. So we had a few growth levers that should pave a strong runway for us over the medium term. The one that Rajdip talked about, winning a large e-commerce deal as mentioned by Rajdip, which should ramp up gradually. Then we are also working with strategic partners like Infosys to accelerate our sales lead cycle. And very recently, we’ve also participated in a very large global RFP as part of the Proximus Group synergy. So if that RFP [Indecipherable] that should add a significant layer of growth [Indecipherable] for the coming years.
The key highlights for H1 FY ’25 has been the strong cash conversion from EBITDA, which panned out to be 78%. In terms of key business metrics, in volume terms, we processed 40.5 billion billable transactions in Q2 FY ’25, which is again the highest quarterly billable volumes processed by us till date. Billable transactions increased from INR31.3 billion in Q2 FY ’24 and INR37.1 billion in Q1 FY ’25 to INR40.5 billion in Q2 FY ’25.
Average realization per billable transactions marginally decreased from 29.7% in Q1 FY ’25 to 27.5% in Q2 FY ’25, owing to increase in domestic volumes in India and partly due to the ILD revenue impact as stated above. In terms of geography, India continues to be our largest market by termination, accounting for 51% of our revenue by termination. You may refer to Slide 11 for the same. We continue to witness very strong momentum on the next-generation products, which grew by 32% on a Y-o-Y basis, as referred in Slide 9 of the presentation.
With this backdrop, let me walk you through our financial performance. In terms of Q2 FY ’21 — Q2 FY ’25 performance, revenue from operations grew by 9.7% from INR10,146 million in Q2 FY ’24 to INR11,134 million in Q2 FY ’25. Gross profit margin declined marginally from 21.2% to 21.1% due to the related party transactions, which happens at a lower gross margin.
Reported EBITDA grew by 5.5% Y-o-Y from INR1,281 million in Q2 FY ’24 to INR1,352 million in Q2 FY ’25. There was a sequential growth of 9.3% during the same period. EBITDA margin expanded from 11.2% in Q1 FY ’25 to 12.1% in Q2 FY ’25. The increase in finance cost was primarily due to the full-quarter impact of a loan availed during the month of June 2025. Effective tax rate for the quarter was 23%. Profit after tax grew by 21.1% Y-o-Y from INR884 million in Q2 FY ’24 to INR1,070 million in Q2 FY ’25 as compared to INR812 million in Q1 FY ’25.
PAT for Q2 FY ’25 includes exceptional item gain of INR62.8 million, which is net of the fair value gain on the contingent consideration and recognition of impairment loss of goodwill pertaining to MRN [Phonetic]. PAT margin was 9.6% in Q2 FY ’25 as against 7.4% in Q1 FY ’25. We onboarded 56 new employees and 45 employees left us during the quarter gone by. For H1 FY ’25, revenue from operations grew by 11.9% from INR19,819 million in H1 FY ’24 to INR22,168 million in H1 FY ’25.
In terms of certain KPIs, billable transactions increased from INR60.8 billion in H1 FY ’24 to INR77.6 billion in H1 FY ’25. We had a net revenue retention of 105%. You may refer to Slide 13 of the earnings presentation. We added over 300 plus new customers in H1 FY ’25 across all products.
Gross profit margin increased marginally from 21.3% in H1 FY ’24 to 21.4% in H1 FY ’25. EBITDA grew by 6.1% on a Y-o-Y basis. EBITDA margin contracted marginally from 12.9% in H1 FY ’24 to 12.2% in H1 FY ’25. Effective tax rate for H1 FY ’25 was 22% as against 16% for H1 FY ’24. Profit after tax grew by 4.5%. PAT margin declined from 9.1% to 8.5%. Cash and cash equivalents stood at the end of the quarter at INR11,145 million and net cash was INR5,836 million as on September 30, 2024. Average receivable days stood at 79 days and average payable days stood at 69 days. Cash flow conversion in H1 FY ’25 was very strong at 78%.
With these highlights, we open the floor for Q&A.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Amit Chandra from HDFC Securities. Please go ahead.
Amit Chandra
Yes, sir. Thanks for the opportunity. Sir, my first question is on the margin guidance that you have said that you are maintaining the margin guidance, but the ask rate for the second half is quite steep. So considering we have a festive season in quarter three. But now what — apart from that, what gives us the confidence looking to achieve more than like 10% sequential growth rate for the next two quarters? Is it a — the DI deal which is already in the base. So apart from that, which other deals will start to contribute or is it you’re seeing revival in the base business?
And also in terms of the — in terms of the synergies that you mentioned that you have seen some synergies coming from Telesign. If you can like throw some light, are we in the early stages of the synergies or we can see that to be a — to be a major contributor to the growth going forward?
Rajdipkumar Gupta
Hi Amit, Rajdip here. So as we — as I stated in my statement also, like we are very much confident that we will achieve the guidance which we have given to the market. Looking at the current run rate for this quarter also, I think we believe that we will achieve the numbers which we have guided. Being a festive season, we definitely add value to our revenue. As far as the synergy is concerned, we are working very closely with Telesign as we speak. And as Gautam has mentioned, there is one large RFP which has now been floated and we have been invited to participate in that RFP.
There are multiple deals like Infosys as well as the Microsoft deal kind of deals are already in pipeline. So we are very much confident about our guidance and we are working towards that and we will definitely try to achieve that. And we believe that we will achieve that. Gautam, you have to add anything to this?
Gautam Badalia
Yeah. So just adding to what Rajdip said, I think historically, I mean, seasonality has always played out. I mean, typically it’s 45%, 47% H1 and balance, I mean, happens to be H2. So if that were to play out, I think we should be, I think in that touching distance of the guidance that we have given. And a lot of these growth that we are talking about should come without any adjoining overhead cost. I mean, so that is the operating leverage, I mean, should play out and that should lead to the margin expansion.
So in the past, I think we have been able to kind of deliver significant expansion on EBITDA margins during H2. So I think, some of those things as Rajdip mentioned, I think the run rate today, I think for this quarter seems very, very promising and hence we are reasonably confident that we should be able to kind of get — meet the guidance that we have committed.
Amit Chandra
Okay. Sir, in terms of the VI deal, you mentioned that there were some headwinds in terms of some of the issues with the like [Indecipherable] and with some of the like AWS issues. So ex of that, what is the current run rate and also where we are in the journey in terms of hitting a steady state in which we were earlier, the full potential of the deal was INR100 million, which is INR800 crores, but still we are just around like half of that in terms of the full potential. So when we expect to allocate the full potential in that deal?
Gautam Badalia
So the infrastructure issue was, I think for a few days. I mean it’s about seven days impact, I think in terms of the ID revenue, but everything is kind of working fine now. I mean we had the sale with Amazon, I think everything worked at scale, I mean from a platform standpoint. So there is no concern whatsoever on that. And from a VID standpoint, I think we are on track in terms of the values that we’ve committed. And we believe, I mean, we’ll be able to subsume the entire commitment, I mean, during the course of this year.
Amit Chandra
Okay. And in this quarter, we had volume jump. So I assume that the ILD volumes were mostly stable to — on the policy side, but there was a sharp drop in the realization. So is there a change in mix which has caused that or no —
Gautam Badalia
So the ILD volume was marginally impacted, as I said, I mean because of — because of those seven days. So to that extent, I think there was a little bit of an impact on the ILD volume growth. But the domestic volumes had ramped up and it’s because of the mix of — I mean, got skewed more towards domestic versus ILD and hence, I mean the realizations kind of had a kind of a little bit of an impact.
Amit Chandra
Okay, sir. Thank you. I’ll be back in the queue. Thanks.
Operator
Thank you. The next question is from the line of Nikhil Choudhary from Nuvama Wealth Management. Please go ahead.
Nikhil Choudhary
Yeah, thanks for the opportunity. My first question is regarding the growth. In last two quarters, the incremental revenue which we have added is approximately INR100 crores, right, in the first half of FY ’25. This is broadly in line with what you have guided in terms of revenue synergy plus Vodafone Idea, right. So can you help us understand that in first half, we haven’t seen much growth in organic revenue with this two [Phonetic] in days in first half FY ’25, what gives you confidence of such a high-single digit kind of growth to achieve lower end of guidance that too when Mr Messaging which forms, if I’m not wrong, 15%, 20% of our revenue having its own challenges. Thank you.
Gautam Badalia
So Nikhil, I think we have registered almost — in H1 you’re talking about, right?
Nikhil Choudhary
Yes, yes.
Gautam Badalia
So H1, I think we had almost 11.9% growth, right?
Nikhil Choudhary
So my point was Gautam good part of it should be — could have come from revenue synergy as well as Vodafone Idea deal. So ex of those two deals, which both are now in H1 base, how you will be able to drive the growth when —
Gautam Badalia
No, no. So I think — so let me clarify a few things here, Nikhil. I think what is happening is, so Telesign was already kind of part of our organic revenue, right? So whatever incremental revenue that we have got, I think from Telesign during the course of last quarter, that could be attributed to the synergy, but a large part of the Telesign revenue for H1, I mean, pans out to be part of our organic growth, organic revenue, so to say. And from a Vodafone — Vodafone essentially, I mean the deal is where they are the suppliers. So we are actually monetizing their infrastructure with the customers.
So whatever growth that you’re seeing is actually coming from customers where we are getting the benefit of the pricing and quality because of the commitment that we have with VI and the exclusivity that we have on the network because of the firewall.
Nikhil Choudhary
Okay, Gautam. But just continuing with thesis of what will happen in the second half where at least Vodafone Idea will be in date and Mr Messaging continue to impact our — or continue to drag our revenue growth.
Gautam Badalia
Sorry, I didn’t get your query.
Nikhil Choudhary
So next two quarters required run rate to achieve lower end of our annual guidance is at least high-single digit, right? That means we have to grow on Q-on-Q basis despite a Vodafone Idea deal in our base, right? So no more benefit from Vodafone Idea deal. So where you think we will get such a high Q-on-Q kind of growth despite of —
Rajdipkumar Gupta
So Nikhil, Rajdip here. If you see our numbers also, our domestic volume is also growing. We have — because of the festive season, because of some of the large e-commerce companies using a platform, we have seen a huge amount of a growth in this quarter, in fact in this month. And because of the festivity — festive season, we see lots of other brand also using our platform very aggressively as far as the idea is concerned, plus the domestic traffic as well. So we do see lots of growth will come from the existing customer. At the same time, we already signed a few large customers whose traffic have already started coming to our platform.
So based on those like numbers, we believe that we are at right track and there are definitely some synergies we are working with Telesign also as Gautam mentioned, the entire synergy was not there in entire H1. The entire synergy will be there in this H2 for sure where Telesign and Route Mobile work very closely to get more traffic from Telesign.
Nikhil Choudhary
Sure, sir. Can you give me just color on Mr Messaging? What’s the update there and what are our plans going ahead?
Gautam Badalia
So Mr Messaging, I think right now, they are kind of grappling with a little bit of issues around some of the markets, I mean, which were strong markets for them. But having said that, I think the basis, I mean the clients that they’re talking to, I mean some of the deal wins that they have, I mean they are already kind of alluding to decent growth I think coming through in Q3. And at this — at the same time, I think we as a team are now working together in terms of integrating and optimizing a lot of, lot of cost, I mean within the Route Mobile umbrella.
So some of those, I think benefits will start to kind of play out from this quarter, along with, I mean some amount of growth also coming back into the Mr Messaging’s revenue numbers.
Nikhil Choudhary
Sure, Gautam. Thanks again for the opportunity and good luck for coming season.
Operator
Thank you. The next question is from the line of Dipesh from Emkay Global. Please go ahead.
Dipesh Mehta
Yeah, thanks for the opportunity. Couple of questions. First of all, just want to get sense about new products. Now WhatsApp has already done some price increase, utility message and all those stuff. So if you can provide that sense and RCS also from monetization perspective. So if you can give some broad overview about how this new product things is playing out because it is some kind of implication on our base business also? And second thing is how we are participating in overall growth opportunity.
Second question is about some of the large deals which you announced in partnership with Proximus Group, Microsoft, Infosys. And I think one of the large global RFP, I think in earlier your prepared remarks you mentioned. So if you can provide some sense, what would be the role of Route and what would be the role of parent and how one should understand overall dynamics?
And last question is about the gross margin. Now I understand because of ILD loss of revenue, it could have implication on revenue, but it ideally should benefit your gross margin. Now if I look gross margin is still down despite some benefit of mix change in favor of domestic traffic. So if you can help us understand how one should look gross margin from medium-term perspective? Thank you.
Gautam Badalia
Sure. So I’ll answer the gross margin query first. So I mean, because of the related-party transaction, I mean this full quarter, I mean we recorded the entire throughput between Telesign, BICS and Route Mobile as a related party, which was kind of indexed at a lower gross margin than the portfolio margin. So if you adjust for that, I mean, there would be a gross margin expansion that would play out.
Coming to, I think, WhatsApp, I think one to WhatsApp, we have seen almost a 20% plus kind of a volume increase on a quarter-on-quarter basis. And on a Y-o-Y basis, you’ve increased — you witnessed about a 100% kind of a pricing — the volume increase, I mean, on a Y-o-Y basis. So you’re right, I think WhatsApp has kind of reduced the pricing, I mean, for some of these utility messaging and stuff. So that had a little bit of a negative kind of an impact on the revenues.
Rajdipkumar Gupta
It has just been done, I think one, I think starting of the month — implemented last quarter, I think maybe the beginning of the last month. But I think apart from that, I think there’s another question related to — can you repeat the second question, Dipesh?
Dipesh Mehta
Yeah. So overall, let’s say, because of pricing raises, RCS is also where monetization has started to pick up. So I just want to get broad sense about these new product portfolios [Speech Overlap] —
Rajdipkumar Gupta
So let me just clear one — let’s go one by one Dipesh, it’s better like you ask one question and we answer one question and then you go to the next question that’s better for our clarity. So in terms of RCS [Indecipherable] like some of the use cases which we have deployed with our customers are completely based on a conversational base. We are not focusing as a company to try to build the traffic, which is promotional type of traffic. We really want to build use cases, this will solve the customer problem, whether it’s your metro ticketing option which we have built for various metros in India.
And I think — and we have deployed conversion of commerce kind of solution also where people can buy ticket using their WhatsApp bot as well. So we — our focus — is completely going to be on the use cases where we can build use cases where we can actually solve customer problems and typically on the conversational side, we do not get into those promotional kind of activities through RCS or even for WhatsApp. And for I think promotion for RCS and WhatsApp is not the right channel to do a promotion on that and [Indecipherable] is the right channel to do promotion on that side.
So that’s our strategy as of now and we will continue to follow this because we really want to build a sticky business for long-term where we try to solve customer problems through our solutions.
Dipesh Mehta
No, understand. So let’s say, if I look overall ecosystem perspective new product for us is somewhere around INR78 odd crore and as a percentage, if one looks at it, it is still in single-digit kind of thing, somewhere around 7-odd percentage. It is inching up, but the pace of that increase is fairly moderate. That is what I try to understand now partly because of price changes obviously as implication, despite 100% volume growth Y-o-Y, revenue growth might be lower than that number. So if you can provide some sense apart from these two channels, what other area where you are seeing promising signs of growth in these new products side?
Rajdipkumar Gupta
Go ahead, Gautam.
Gautam Badalia
So Dipesh, I think one thing where we have kind of extensively worked with [Technical Issues] —
Operator
Mr. Gautam sir, we are not able to hear you.
Gautam Badalia
Am I audible now?
Operator
Yes, sir.
Gautam Badalia
Yeah, yeah. So what I’m saying is one thing we have kind of indexed ourselves, I mean on the cross-selling synergies with the group is we have kind of mobilized, I mean the sales teams across the group to start powering the sales of the new products, especially the WhatsApp business messaging and all these IT messaging —
Dipesh Mehta
There’s a problem I think, we can’t hear you properly.
Gautam Badalia
Okay.
Operator
Sir, I’ll connect you again.
Rajdipkumar Gupta
No just Dipesh to answer a question what Gautam was trying to highlight out here. So we as one team at — between Telesign and Route Mobile, we have started working very closely with sales team presence in all different regions, especially Asia, I think it might be aware that there are multiple events that have been jointly with [Indecipherable] in Indonesia, in Singapore, in Malaysia and now in Middle East and Europe also. So this is also giving a lot of traction with the customer who are actually using telephone products either on SMS and I think we are reaching out to all the customer which has been served by Telesign to offer our email and WhatsApp and RCS services through our platform.
I hope that I’m able to answer your question.
Dipesh Mehta
Understood. And last thing, if you can give some sense about progress on some of these large deals. One deal which you said around large e-com, 10 destination kind of deal, where we are in that because the earlier quarter, I think progress was slower, whether you are seeing any material uptick there and Microsoft, Infosys even large global RFP, which you highlighted?
Rajdipkumar Gupta
Yes. So I think we have — as I mentioned at the beginning, we are very much integrated with this large e-commerce company. They have started using our platform. The ramp-up started — already started and we do see the huge potential coming from this customer.
In terms of the large RFP, if you see this large RFP is the customer-base globally, they are looking up for foundation global — globally. And probably Asia, Africa and Middle East is where Route Mobile will provide the entire connectivity to this large — being a part of this large RFP. So I think whether it’s Telesign or Route Mobile, we believe that our connectivity in the emerging countries will pan out as a clear advantage to Route Mobile and that is exactly where we are very excited about this risk.
Dipesh Mehta
Understood. Rajdip, related question about all these put together is about gross margin because of related-party transaction, gross margin, I think even in this quarter, it has implication on gross margin. Considering some of these large partnership deals, do you see our gross margin likely to remain under pressure in medium-term?
Rajdipkumar Gupta
No, no, no, not at all, not at all because these are direct deals and I don’t see there’s any impact because of that. So that I can assure you.
Dipesh Mehta
Okay. So broadly, where we are currently operating somewhere around low-20s is sustainable kind of gross margin?
Rajdipkumar Gupta
Yes, indeed.
Dipesh Mehta
Okay. Thank you.
Operator
Thank you. The next question is from the line of Saumil Shah from Paras Investments. Please go ahead.
Saumil Shah
Hi, sir. What is our EBITDA guidance for this financial year? Sorry, I missed the opening remarks.
Gautam Badalia
So it’s around 13%.
Saumil Shah
From 13%. And for the first half, I think we are less than 12%. So for the remaining half —
Gautam Badalia
We are around 12.2%, so we’ve kind of guided at 13%.
Saumil Shah
For the first half, we are at 12.2%?
Gautam Badalia
Yeah, 12.2% on a reported basis, adjusted basis is 11.9%.
Saumil Shah
Okay, okay. So for the remaining half, we need to go about 13% EBITDA margin. Is it doable?
Gautam Badalia
Yeah. So the fact is, I mean if — because I mean H2 happens to be very strong. So the incremental throughput that we get, I mean in terms of revenue and gross profit directly flows to EBITDA because I mean the adjourning overhead costs are largely fixed in nature. So there is a high operating leverage in the business.
Saumil Shah
Okay, okay. And so when we grow our revenues by 18%, 20% this year in terms of bottom line, can we grow at a similar rate of 18%, 20%?
Gautam Badalia
It should — it should be. I mean, just only KVR is I think tax rates have increased. So that’s the only KVR. I mean to that extent, I mean maybe it may be a little muted.
Saumil Shah
Okay, okay, because the current tax rate would be in the range of 20%?
Gautam Badalia
Yeah. So it’s around 20% to 23%.
Saumil Shah
Okay, okay. And so last question, what is the other income of INR32 crore for this quarter?
Gautam Badalia
Sorry, come again.
Saumil Shah
There is other income of INR32 crores for this quarter.
Gautam Badalia
A large part of that is — I mean, so that’s interest income and also, I mean, there is opex gain. So these are largely, I mean, emanating from translation, so there is — I mean, these are the two large components there.
Saumil Shah
Okay, okay. So this is not a recurrent income for the remaining quarters?
Gautam Badalia
No, no, no, no.
Saumil Shah
Okay. Yeah, that’s it from my side. Thank you.
Operator
Thank you. The next question is from the line of Yash Dedhia [Phonetic] from Maximal Capital. Please go ahead.
Yash Dedhia
Hello. Thanks for the opportunity, sir. Sir, firstly on the effective tax rate, like you alluded earlier as well. So our tax rate now since the mix will shift towards you can relist also will be levying tax. So for full-year basis and going ahead, we foresee tax rate to settle between — with what rate now?
Gautam Badalia
Yeah, it should be between 20% to 22%.
Yash Dedhia
So current tax rate is something that will change?
Gautam Badalia
By around 22%, that’s correct.
Yash Dedhia
Okay. And sir, one more question. The large RFP which we were depending on. So this — our whole guidance of 18% to 22% growth this year and the future projection of say FY ’28 $1 billion revenues. Our guidance depends on this particular RFP or it will still stay even if we somehow not be able to —
Rajdipkumar Gupta
Yes. So this RFP has not — I think for next H2, we should not consider this RFP because it will take some time to integrate. But for sure, for three to four year down the line, if you have given any kind of guidance, that will definitely going to be part of the guidance.
Yash Dedhia
Okay. And sir, one broad question on the growth which we are projecting, say CPAS industry is actually not growing the industry per se. So in this the growth — the higher growth which we are guiding on, part of which will come in — will be coming from energy benefit and part of which should come in — should be coming from the organic business which we have. So what is the organic growth, which apart from synergy benefit we are projecting on or you have built it in your internal estimates?
Gautam Badalia
No, so we are not trying to kind of break that into two buckets. Essentially, I mean, the thought process of this deal, I mean this partnership was to kind of a truly global company and access to all the enterprises globally. So I mean, sir, from that standpoint, we are looking at this whole bucket. I mean, Telesign continues to be an existing client. So I mean all the revenues that we are able to garner from them, I mean, happens to be organic revenue. So from an organic growth standpoint, I think we kind of reassure I mean the guidance that we have given for this. And I think over the next three years, we can — so we are working along with the group on a lot of these synergies where we also have a lot of inherent strengths in emerging markets. So a lot of that will also play out in terms of the organic growth strategy that we have planned.
Yash Dedhia
Okay. And we are confident on achieving this target because of better half two and stronger half two than half month.
Gautam Badalia
Yeah, H2 happens to be strong and historically — but for last year, where because there were a few headwinds, I mean, historically, it has always been like 45%, 55% or 47%, 53% in terms of the between H1 and H2.
Yash Dedhia
More or less to achieve lower band of guidance, we will have to grow by 22% to 24% at least.
Gautam Badalia
That’s correct.
Yash Dedhia
Okay. Great. Thank you so much, sir.
Operator
Thank you. The next question is from the line of Jyoti Singh from Arihant Capital Markets Limited. Please go ahead.
Jyoti Singh
Yeah, thank you for the opportunity. Sir, my question is basically on the Gen AI side. And does we expect Gen AI-based services to start contributing meaningful to the revenue? As earlier, I saw a few of the posts that we are talking big move in AI. So if you can guide us.
Rajdipkumar Gupta
Yes, indeed, there are multiple use cases, especially on customer support. Our team especially our bot, which is called the [Indecipherable] and our entire omnichannel stack has a Gen AI capabilities and we are solving some of the problem of the customer who has Gen AI. So we are very much aligned with the progress in this space and we are using the technology to help our customer to have a better outcome.
Jyoti Singh
And sir, any meaningful revenue that we are expecting?
Rajdipkumar Gupta
So Jyoti, it will [Indecipherable] customer right now and we are just testing multiple things from Gen AI with our customer right now. We cannot quantify at this point of time, probably in next few quarters, we will give some kind of a — like numbers to that.
Jyoti Singh
Okay, thank you so much.
Operator
Thank you. [Operator Instructions] The next question is from the line of Arvind Arora [Phonetic] from Enam Capital. Please go ahead.
Arvind Arora
Hello. Am I audible?
Operator
Yes, sir. Okay.
Arvind Arora
Thank you for the opportunity. So my question is with regards to the [Indecipherable] benefit that we are drawing — drawing due to the arrangement with Proximus Group. So is there any saving in the cost part due to these arrangement?
Gautam Badalia
Sorry, can you repeat your query? Is there any?
Arvind Arora
Is there any saving in the cost like as we are talking synergies in the benefit. So we are talking on the top line. But is there any cost paying part also where we will get a reduction in product transition cost due to this arrangement with Proximus Group.
Gautam Badalia
Not yet done, some of those things I think are being assessed, but nothing of that sort of kind of laid out.
Arvind Arora
Okay. That’s all from my side.
Operator
Thank you. The next question is from the line of Ashok Shah from Investeco [Phonetic]. Please go ahead.
Ashok Shah
Thank you for taking my questions. Sir, regarding this region distribution and further capex or the money to be deployed in the business, can you throw some light?
Gautam Badalia
Yeah. So I think from a guidance standpoint, we have kind of given a guidance of distributing up to 20% of the PAT as dividend. I mean, so the dividend distribution is in line with the guidance that we’ve given. And from a capex standpoint, I mean, but for the research and the product development, I mean, we don’t have any significant capex. I mean, we are largely — I mean more an asset light kind of a business model. So per se, there isn’t any significant capex required for the business.
Ashok Shah
So how the debts should be would be deployed or it will be invested in this [Indecipherable] or something you —
Gautam Badalia
Sorry, sir. I didn’t get your query.
Ashok Shah
Sir you told that there is no capex to be involved. So how the cash generated to be invested in future?
Gautam Badalia
Yeah so I think we have a dividend distribution policy. And on top of that, I mean, we keep looking at kind of opportunities where we can augment the capabilities of the platform. I mean, so we keep looking for some of those opportunities. And when we find an I mean, appropriate kind of fit from our product and our vision standpoint, I mean, we would like to kind of do maybe a few tuck-in acquisitions.
Rajdipkumar Gupta
And just to add out here, we already have our decent-sized R&D team and new product team. We have already been working on new products and new technology because I think we already invested and I think we’ll continue to invest in those areas well.
Ashok Shah
Okay, sir. Thank you, sir. Thank you. That’s all from my side.
Operator
Thank you. The next question is from the line of Dipesh from Emkay Global. Please go ahead.
Dipesh Mehta
Yeah. Just I think in your prepared remarks you said weakness in MRM and ILD revenue, I think 7 odd days because of certain reasons revenue growth was impacted. Can you provide more detail around it? And what was the total quantum because of these factors?
Gautam Badalia
Yeah. So I think on the ILD side, I think the impact was about close to $3 million for about seven days of revenue impact. And on the Mr Messaging side, I think we had seen, I mean, weakness on a Q-o-Q basis to the tune of about INR19 odd crores.
Dipesh Mehta
Okay. Thank you.
Operator
Thank you. The next question is from the line of Divraj [Phonetic] who is an individual investor. Please go ahead.
Divraj
Yeah, hi.
Operator
Mr. Divraj, I would request you to unmute your line and speak, please.
Divraj
Yeah, hi. Am I audible now?
Operator
Yes, sir. Please go ahead.
Divraj
Okay, hi. So I had a question or two, but I think the question on the allocation of capital has already been answered, but I just want to understand the future trajectory of the debt that the company is taking on because we’ve really ramped up on the debt, right? And I understand some of the compulsion, I’ve been following this company for a while. But what’s going to be the future trajectory on the debt that the company plans to take on?
Gautam Badalia
Yeah. So I think what we are embarking on is leveraging the strengths of the group. So I mean, just to kind of give you a color, I mean so BICS has one of the largest infrastructure, I mean in terms of the telecom infrastructure, I mean, so they enable a lot of the voice cost, I mean over 50% of voice traffic, I mean, terminates on this BICS platform. So we’re going to use the strength of BICS globally. Then we are going to use the digital identity strength of Telesign. I mean, so they have kind of really evolved in terms of rendering more security to every digital transaction. So — and at this point in time, as we speak, we are doing few sandbox testing, I mean even in India with the regulators and few large banks. So that would be the wrapper on every digital transaction.
So — and on-top of that, we would kind of power our RCS platform with all the digital transactions for an enterprise. So we would be a one-stop solution provider for the entire digital journey of any enterprise to their consumer in any form and shape, I mean, they will be — we’ll be able to kind of power a very secure digital transaction seamlessly over the infrastructure layer of the group. So that’s the thought process I think that we are embarking on.
Rajdipkumar Gupta
I think just to add to this, I think our entire platform, like now Telesign as a company and maybe the company have access of entire platform of ours and they can take this entire platform to European countries and U.S.-based customer that is another big strength we believe in coming quarters down the line where we can see lots of sale coming from this part of the world to portfolio.
Divraj
Right. Right. Okay.
Operator
Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Gautam Badalia for closing comments.
Gautam Badalia
We thank you all for your participation. In case you may have any additional queries, clarifications, feel free to reach out to us. I will be more than happy to answer any queries. Thank you.
Operator
[Operator Closing Remarks]