In an interaction with Outlook Business, Magicbricks CEO Sudhir Pai talks about the possible growth engines for the company in the next five years
Proptech firm Magicbricks is eyeing robust double-digit revenue growth in the next few years as India’s real estate market expands at a rapid pace. The real estate market in India is set to reach the $1 trillion-mark by the end of 2030, according to some estimates.
Magicbricks CEO Sudhir Pai says the company wants to be the one-stop destination for all real estate needs of consumers in the country. In a recent interaction with Outlook Business, Pai spoke about profitability, revenue targets and the growth engines of the company for the next five years.
Edited Excerpts:
In the last one year, what kind of trends have you observed in the real estate market? Has the demand been skewed towards the luxury and premium segments?
The last 18 months have been the best period for real estate firms since 2014. Not only luxury and premium, even the affordable segment is witnessing good growth. However, the consumption pattern has witnessed some changes recently.
If you compare to the year ago period, prices have increased quite a bit. Our data shows that prices have risen by at least 30 per cent. But the surge in prices has moderated if we look at it sequentially.
For a lot of consumers, it is straining their budgets. Post pandemic, the demand for buying 3BHKs was marginally higher than 2BHKs. In the last three to six months, this has flipped in favour of the latter. While price hikes are a red flag as they affect demand, the good news this time around is that supply is shrinking unlike the 2014 phase where there was a supply overhang. Moreover, we are seeing healthy balance sheets of developers and under-construction projects are finding takers.
How has the last financial year been for Magicbricks in terms of revenue, profitability and traffic?
Our revenue in the last three to five years has consistently grown at 25-30 per cent CAGR. The traffic on our platform has also seen good growth. Our market share in terms of traffic is at 40 per cent. It has marginally increased in the last few years. As a result of this, our profit margins have moved from high single digits to mid-teens.
To grow further, we will keep innovating and getting into new spaces. Profit at the moment is not the priority. But at the same time, we want to grow the company sensibly. In the next three to five years, revenue should continue to grow at 25-30 per cent CAGR.
Magicbricks has entered several segments, ranging from home interiors to home loans in the last one year. What business segments will the company focus on to unlock potential for more growth in the future?
There are three thrust areas as far as our business strategy is concerned. One is our core search engine platform. We are working on scaling the platform to increase traffic and volume of inquiries and listings. In our core platform, we are also continuously innovating to introduce more products. We recently introduced MagicHomes where people can buy under construction projects as there was good demand.
The second thrust area is to go deeper into the transaction funnel of the user. We have recently launched a site visits programme which is currently operational in Bengaluru and Hyderabad. By Q2, we will be present in the top eight cities. In this programme, we arrange visits of users to projects which they want to buy. This is helping us move from search and discovery to site visits in the real estate funnel.
The third thrust area is helping people with services they need after the transaction process. In this, we have ventured into home loans and interiors. Under our home loan disbursal programme, we are distributing between Rs 500 crore to Rs 1000 crore every month.
Overall, the goal is to make Magicbricks the supermarket for all real estate needs.
Is the company looking for fund infusion to fuel growth and invest in new segments?
All the investments that are happening are through internal accruals as we are a profitable company. In the last few years, we have invested quite a bit and in future, all the new areas we are getting into will require significant investment.
With many companies going for public listing to gain from the momentum in stock markets, is IPO on the cards for Magicbricks?
We tick all the boxes to go for an IPO. The question is, if we want to do it and when. At the moment, the focus is on maximising the growth areas we have identified for ourselves. In the immediate future, we are not looking to go for a public listing but we keep our options open.