Dhani Services- A Techno Momentum Trade


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July 29, 2021


Strategic Alpha

Dhani has created a trend change upward breakout on daily charts, trend change level being 229, pattern failure level is at 198, Let’s see where the trend takes us too, near resistance on the charts are placed around 370 odd. A big thanks to our Mentee- Mr. Nilesh Jain to Compile the below information.

Through Whatever I have researched about this business, I am not getting a feeling to make it my 5-year vision story stock, However, I might be wrong too, so trading here with a strict price based stop loss makes sense and if I get lucky, might get a multibagger trade too.

Latest about the company  

The name of the Company has been changed from ‘Indiabulls Ventures Limited’ to ‘’Dhani Services Limited’’  (‘DSL’, ‘the Company’, ‘the Holding Company’) in Oct ‘2020.  

Moved away from our traditional business of giving out unsecured personal loans and it has been a very important first year for the company where it has laid down all the necessary foundation for a good growth trajectory over the next couple of years.  

We are building a fee-based business through various product offerings in finance and healthcare on our app, Dhani 

We originate and sell loans to third parties and therefore don’t require growth capital to serve our growing customer base 

We offer easy and affordable monthly subscriptions to our customers for accessing different products on Dhani Basis the current customer traction, we expect to double our customer base every 6 months for the foreseeable future 

On the fast-growing customer base of our Dhani app, we expect a take-up rate of 5% to 50% for our various subscription-based finance and healthcare products 

Completed with New Business model in March ‘21 its first year in new Avatar where the entire focus has been on  paid subscriptions on monthly basis and “Shop now and pay later”  

The company is focussing on “Klarna” US considering the similar business strategy for its own future business  prospects in India  

Payment Platform launched first by any non-bank entity – Dhani Wallet and RuPay Card  New Products Launch: Dhani Super Saver, Dhani Doctor & Dhani Medicines, Dhani Insurance  During the quarter ended 31 March 2021, the Group has made an investment in Dhani Limited (incorporated in  Jersey), Dhani Limited (incorporated in the United Kingdom) and Dhani Health Middle East FZ LP (incorporated in  UAE) making this wholly-owned subsidiary of the Group.  

Summarised financial Data 

Secured 17% 23% 51% now pay later product based on the monthly subscription fee 


Business Strategy  

Dhani is a consumer business delivering cutting-edge technology-enabled products for various financial and healthcare requirements of the vast growing Indian population.  

Dhani is a 100% digital platform. Dhani app has evolved over the last 3 years and has given loans to over 5  million customers. 

Dhani is now focussed around a fee-based model through its various product offerings like Dhani Instant  Credit Line, Dhani Doctor, Dhani Pay, Dhani Insurance, Dhani Rupay Card, Dhani Stocks, etc. We bring together a large number of people under the Dhani umbrella and offer them subscriptions across various Dhani products.  

The Company had decided to build a balance sheet light business. To strengthen its liquidity position and diversify its funding profile, the Company endeavors to mobilize funds by sell-down of its loan portfolio apart from raising funds through traditional sources of funding like Banks and Commercial Paper’s/Debentures.  

The Company sells its loans under both the structures, Pass-through Certificate (PTC) and Direct Assignment  (DA). This mode of raising funds is in sync with the Company’s objective of building a strong fee-based income with no need for any additional equity capital for funding future growth. Sell down transactions are an efficient means of raising liquidity, ensure high capitalization as the loan portfolio is moved off-balance sheet while retaining the spread. During the FY 2020, the Company has raised funds of Rs 7,014 Crores by sell-down of its loan portfolio, which has helped the Company to manage its liquidity and lending activities in an efficient manner.  


The Company continues to invest in technology to provide solutions to millions of customers. The Company  will focus on the following themes in FY21:  

Will deepen the investment in in-house analytics, data science & technology for greater agility and innovation  in our products and maintaining our competitive edge in digital solutions  

Continuous innovation & improvement to provide a seamless journey at the same time ensure robust system  performance  

Machine learning-based analytics to determine customer product requirement basis life cycle of the consumer The technology platform allows the company to deepen the engagement with its customers through various products & services. Some of the customer engagement initiatives which the Company has  undertaken are as follows:  

  • Bill Payment, Mobile recharge, and other services  
  • Flights, Bus, Hotel, and other travel services  
  • Money Transfer facility  
  • Dhani Cash Loyalty Program  
  • Credit Lines, Top-Up Loans  
  • Refer & Earn &  
  • Dhani News
Future Strategy 

– Q4FY21 call Transc highlights  

🡺 we completed in March ‘21 our first year in new Avatar where our entire focus has been on paid subscriptions on monthly basis.  

🡺 We moved away from our traditional business of giving out unsecured personal loans and it has been a very important first year for us where we have laid down all the necessary foundation for a good growth trajectory over the next couple of years.  

🡺 an overall customer franchise of 26 million customers.  

🡺 launched a very important product which is e-pharmacy where now people can now order even the branded  medicines on the Dhani platform  

🡺 being #4 on the store of Google Play in the Business category in India  

🡺 with the launch of the new UX, our daily active users have now crossed 10 lakh users on daily basis on play store  🡺 DHANI Pay Rupay Card for shop & payback later in easy EMI’s an instant loan up to 15 lacs:- Launched physical as well as digital card last quarter as a very core and central to the entire business of Dhani. Now  1.1 million customers finished their full KYC.  

🡺 Currently, on daily basis over close to around 50,000 people, unique people use our Dhani card with credit a daily basis. As a comparison, the global leader in ‘shop now pay later’ business which is Klarna, valued at  around $48 billion in the private market has around the usage of 1.4 million customers of their services on a daily  basis  

🡺 Dhani health shops:- We were able to achieve a presence in 42 cities against the target of 50 cities due to covid restriction. the main thesis for opening these Dhani health shops on the ground is that our focus is basically to look after customers on the primary care which is basically the non-hospitalization spectrum. In that, a lot of feedback we received was that even some people want only branded medicines and they want it immediately because they can’t wait for the next day for the delivery of medicines which is currently how the  Indian landscape is for the e-pharmacy companies. They take 24 to 48 hours to deliver the medicines.  However, if somebody’s having a stomach ache or has all of a sudden fallen sick and needs antibiotics people need those medicines within one hour and they need only the medicines which are prescribed by their own doctors which are branded.

🡺 The card as well as the health shops and e-pharmacy are important gears that work in tandem and that are fueling a lot of growth for the Dhani. And every day we are progressing at a very-very rapid speed in terms of acceptance of our different and new products amongst the vast customer base that we have now.  

🡺 In terms of our subscriptions update, we were able to get 2.1 million subscribers last quarter. Out of that 2.1  million subscribers, we ended the quarter with almost close to around 1.8 million paid subscribers. Last quarter this number was 1.3 million paid subscribers in total.  

🡺 we exited out quite a bit of the ARC portfolio owned by Dhani. Our focus as Dhani is only on the app business, we are exiting out of all the legacy businesses. We have shut down many of our branches. We even moved the stocks entirely on the app.  

🡺 At Dhani Health we have made very good progress so now every day we deliver almost close to around 3000  to 4000 packets to our customers. This number was like a very small number last quarter. These are all new products but we get the benefit of our customer base that we talked about that we closed the year with 26 million customers. If you see some of the other companies who are in this space backed by some major private equity  firms and have been in business, their cash burn every month is like 100 crores and they have been in  business for 7-8 years and then they have now traction where they cater to around 20,000-30,000 orders on  daily basis  

🡺 Amazon packet is going to come after 48 hours, Dhani medicines, branded medicines will reach within 60  minutes and that is how we are differentiating ourselves and have a plan in place how to win vis-à-vis the competition that we have in front of us which is very strong as you know.  

🡺 We have hired a lot of new talent, we have hired lots of people from graduating, engineers from a different IIT  is also this year would be joining July onwards.  

🡺 For technology, the role model is clearly Amazon for us and we keep trying to copy some of the stuff that they do wonderfully. Customer ratings were at 3.6 and at one time even reached 3.5. We are back to now 4 and  these will only increase as we go forward  

🡺 This shopping browser that we are introducing within the Dhani app itself and is going live like next week.  This is not available anywhere in any of the markets; only Klarna has it and now we will have it. We keep quite up to date in terms of the new features that can enhance the product experience for customers as best as we can so that’s on that.  

🡺 the second half of our homepage on the Dhani app which is a platform for doctors and doctors can cater to their  private customers etc. With the lockdowns etc. this is a product which needs to be talked to the doctors. It  has not taken off very well so far and frankly, we need a physical workforce to do this  

🡺 Segment reporting in the annual report:- Going forward it would be a separate segment but as I said currently,  we cater to around 3000 deliveries every day. One delivery is approximately around Rs. 1400 at a GMB level and with discounting it goes to like 1000 bucks so that’s the sort of big picture.  

🡺 It is basically to compliment the offering that we have through the app essentially and to keep up with our promise of delivery of medicines within 1 hour because the other piece if you see; some of the competition that caters to 30,000-40,000 orders a day, who have been in business for years, 80% of their customers are chronic patients. That is how I think we will be able to differentiate in the long-term from the likes of Amazon etc. otherwise they would just eat us up.  

🡺 There are certain product categories where there are people or companies who have become leaders like there is a very interesting company called First Cry that takes care of babies’ diapers, medicines, basic clothing, and all of that. Amazon has lost very badly in that segment to First Cry just because First Cry has all  these shops all over the place there and its all-private label.  

🡺 We are trying to structure a business that has a solid competitive advantage for the long term. In the short term it is highly painful because (a) it is a lot of heavy lifting, two it is costly, you burn a lot of money to put all of this in place. We hired like 6000-7000 people in the last financial year, Dhani as a company just to get to where we are. In the short term these hiccups are there but it is a path for a long-term prosperity.  

🡺 The subscribers are increasing quarter-on-quarter. we actually acquired almost close to around 8-9 lakh paid subscribers last quarter but then from the previous ones that we had, some have fallen off that’s why I said the renewal rate on average is kind of like 70% to 75%. 

🡺 The cost of new customers last quarter has been around Rs. 860 per customer. Now next few years if we are able to do things that we envisage and if we are successful then we should be having like 5000 of these health shops which cater to every small neighborhood, the relevant neighborhood in the country. If our reach is that massive through our franchisee model and our own health shops, then the number of customers we can acquire at a very low acquisition cost can be another differentiating point.  

🡺 Today everybody is competing for these customers only through digital marketing where if you have a physical shop, which the main agenda of our physical shop is to actually just compliment the app offers. The walk-in  customers they will get to know about Shop Now Pay Later product, they will be given that. Out of 100 people  15 people will get converted. Those 15 people would come to us at zero cost. I am just talking about  from one health shop on a single day. There are these kinds of hidden benefits of these physical health  shops that clearly differentiate between us and the competition.  

🡺 Cost of setting up one health shop is approximately all in put together, depending on which location it is, it is  10 to 15 lakhs.  

🡺 There is no plan it’s a subscription-based offering you can we don’t charge any brokerage or anything. So, it’s Rs. 500 of subscription fee on monthly basis and we’ve also been working on a margin trading product there which would be first of its kind and no other broker has it which should be launched over the next month or  so. So, our interest is to just keep having this offering for our customers who are also exposed to the stock markets. It’s not like a major thrust area for us because again it’s a small market and highly competitive but with the traffic that we have we expect a few hundred thousand subscriptions over the next year or so, just by  default without doing anything much just by way of the incoming traffic on our app.  

🡺 we have not grown up with a view of losing money and then building a business. It’s the first loss and of Dhani in the last 15 years and it really upsets me and we’re trying to burn as little money as possible and sooner or later people will get to know about our services. We’ll definitely take your feedback and try and do more marketing  around our products. The other competitor guys the younger guys who have one ton of money behind  them, they don’t really you know really care they can advertise and they are with a paid fresh different mindset  which I think is probably the mindset one once shouldn’t have to build a business of these consumer businesses, I guess.  

🡺 winding up of the legacy personal loan segment:- So, personal loans were given out for we used to do 48- month loans, 60-month loans. We are way above the 50% threshold. So, there should be completely wound  down over the next I would say 18 months or so something like that. I mean I will have to check the data but  that would be my gut feel. So, probably by next financial year-end, we should not have these legacy loans left like last quarter, and this quarter the reduction is like 10 billion.  

🡺 winding up of the legacy personal loan segment:- last quarter our (+90) NPA number was close to bought little about 9.7%. we are winding down this legacy book, so there will be some credit costs that will continue to get associated. we are in that ballpark, obviously, there will be some bit of being which will continue to come through this book but I think we made aggressive provisioning and we will continue to do so as we go along.  

🡺 within this financial year mostly we should be out of ARC business is my expectation.  🡺 guidance for the coming year on your customer addition:–  

— We are not allowed to issue a card till the time we have a full KYC and card is the central theme to Dhani  — One thing easily without doing any math I can tell you that next year same time our customers even with all  these restrictions we have ourselves we our customer base would be at least more than 5 crores customers.  

🡺 NASDAQ listing :- We have started the process; it’s a very long drawn process as we understand. So, we’ve hired bankers and lawyers. this is more like a full-blown IPO in the US, so it is a time-consuming process.  But  

🡺 Breakeven level at PBT level:- At EBITDA level, not PBT level which is the way we are thinking about it because we don’t give out any loans and interest is no longer remains as a main relevant factor. We expect it to be in that zone somewhere next financial year sometime.  

🡺 Vision: -as my ending comments I would just say that there’s a business which we need to build out patiently.  And the patience we have learned far better over the last few months looking at the global leaders such as  Klarna etc. they process 1.4 million customer transactions on daily basis, worth $50 billion I think they raised around the day before yesterday some $700 million at that value and they still remain in losses. So, we are trying to find the optimal balance and to grow our business and build it for the long term which once the critical mass of customers happens then every incremental customer just goes straight away to the bottom line because the expenses don’t rise. And as you see in our presentation there’s a $10 aspiration that we have to make out of every customer and the population in India is very vast, so these numbers can be staggering. We just hope that we can be successful in our pursuit. We are trying our level best, there are no guarantees but I mean we will do everything in our powers to make a big success out of this.

– Concall Feb21 (Dec Qtr)  

🡺 last quarter we did over 200,000 doctor consultations only from 900 in the quarter before because our  product was launched end of September  

🡺 We further launched our unique offering of Health 365 last week where only for a sum of Rs. 750 per month,  a family of ours can get unlimited doctor consultation and unlimited medicines prescribed by our doctors  🡺 monthly family health bag for a subscription model again which would include discounted essential vitamins,  minerals, Chyawanprash, etc.  

🡺 we stopped giving any loans a few months back. So we don’t do any traditional lending which is up to 36  months or 48 months.  

🡺 The legacy book of finances in the wind down mode and being replaced by our subscription-based transaction  finance which is only available to a maximum tenure of three months  

🡺 what would make us happy is that we can get 10 million paid subscribers in the next financial year. we feel  that this is achievable because we have the proof of concept, lots and lots of people consult our doctors, lot  of people use our transaction finance.  

🡺 On a daily basis our doctors are able to handle about 40 calls. What we have observed based on the subscription that we have, the breakeven cost for a doctor from a subscription point of view is around Rs. 65.  So roughly on a Rs. 150 per month that we charge our customers we have around 50% margin.  

🡺 The one way to look at this is let‟s say if there are 500 million potential people out there, what percentage of this market can we capture through our subscription products over a period of 5 years. That would give you a  sense of what this company can be worth given some global peers who are also in the subscriptions business  in entertainment or music or even something else.  

🡺 If you see a model of let‟s say a firm, they have reported their earnings yesterday or day before, they have 4.5  million customers globally. The company is worth $35 billion not on basis of what it is today because it‟s  making losses and they have said that they won‟t be able to make profits until next 2.5 years also.  

🡺 I won‟t be surprised if we are able to capture a significant percentage of this massive 500 million people population that exists in India and what are we asking for, you imagine, you are giving a doctor for $2 a month,  Rs. 150. It may go out they will spend for one consultation they will spend $5 and it will take 2 hours for them to even get that consultation.  

🡺 Our model again of discounted medicines also, we think we will get adapted in the psyche of the customers as they experience the ease and affordability and as and when we keep reaching out to customers more and more, paid subscribers would come through our doors and that is what we are building out for.  

🡺 Our focus is to get people to experience the affordability and ease of our services, get them addicted, build  that whole ecosystem around transaction finance power and digital healthcare power in their pocket at a very paltry sum of Rs. 100-200 on a monthly basis  

🡺 stock broking:- It is not a big focus area for us. It is a product that we are working on but for us, it‟s also a  subscription product there. We will charge only Rs. 500 per month for accessing unlimited trading on options,  future, stocks everything else, no brokerage whatsoever but it‟s certainly not a flagship product for us. We are building it out. what we are doing on the doctor’s side and on the stocks, we are currently in the process of building this out on the same lines as what we have all other products where customers have a flat subscription fee to pay every month. This is in the process of being built out, we expect it to be starting to take more traction by the next quarter, and that‟s our mission. This adds on to the basket of products that we have available for you as available on subscriptions.  

🡺 The current run rate on daily subscriptions would be almost like we have touched 40,000 subscriptions on  daily basis and as I said the percentage of paid subscribers is also inching forward from 30% to higher  numbers  

🡺 basically implies if you get 10 million subscribers, you get about Rs. 23 billion of the top line. 

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The author of the blog Mr.Suyog Dhavan is a Full-time Investor / Value Trader and Value investing/Trading Mentor. His style of Investing is inspired by Mohnish Pabrai, Peter Lynch, and Porinju Veliath. He is the founder of Strategic Alpha Wealth, A Premier stock market mentorship firm with a mission to touch the lives of 1Lakh people through its mentorship program.



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