CMP: Rs. 812.35; Market Cap: Rs. 9,765.75 Cr; 52 Week
High/Low: Rs. 1015.05 / Rs. 523.70.
Total Shares: 12,02,16,159 shares;
Promoters : 5,33,32,091 shares –44.36 %; Total Public holding : 6,68,84,068 shares – 55.63 %; Book Value: Rs. 64.32; Face
Value: Rs. 10.00; EPS: Rs. 12.08; Dividend: 25.00 %; P/E: 67.24 times; Ind. P/E: 40.11;
EV/EBITDA:41.60.
Total Debt: 0.48 Cr; Enterprise Value: Rs. 9,648.13 Cr.
INFO EDGE INDIA LTD: Info Edge (India) Ltd was incorporated in 1995 and is based in Nodia, India. Info Edge (India) Limited is an India-based
company engaged in the business of providing online classifieds and certain
related services. The Company operates its business principally through four
different divisions: Naukri.com,
Jeevansathi.com and 99acres.com. It provides recruitment classifieds and
services through its Naukri.com and Quadrangle
business divisions. The company came out with an IPO on November
2006 offering 53,23,851 equity shares of Rs. 10 each for Rs. 320 per share
raising Rs. 170.36 Cr, the shares of INFO EDGE got listed on 22 November 2006
at Rs. 623.80 per share. The company has given bonus shares in the ratio of 1:1
in the year 2010 and second bonus shares in the ratio of 1:1 in the year 2012. Info Edge (India) Limited provides recruitment
classifieds and related services to job seekers and employers and recruitment
consultants through its website:
www.naukri.com, as well as through its office network. Through the
Quadrangle division, the Company provides executive search services to its
various corporate customers in the information technology and information
technology-enabled services. Naukri.com
is an online job posting website that offers services for recruiters, job
seekers, and employers. Jeevansathi.com provides matrimonial classifieds and related
services
for prospective brides, grooms, and relatives. The Company also offers a real estate classifieds service through its
Website: 99acres.com and an
education portal Shiksha.com. Info Edge
also owns Allcheckdeals.com, an
online real estate brokerage firm which is run as a subsidiary company. Company
also owns naukrigulf.com in Middle
East. It also operates brijj.com, a professional networking site; firstnaukri.com, a fresher hiring site; quadrangle.com, an offline executive search business site; Meritnation.com that offers kindergarten
to class 12 assignment and tuitions; and zomato.com,
an online food guide portal. The company’s subsidiary as on 31 March 2014
includes: Naukri Internet Services Private Limited and Jeevansathi Internet
Services Private Ltd both of which is own internet domain names and related
trademarks used in it business, Allcheckdeals.com India Private Ltd, Applect
Learning Systems Pvt Ltd which owns and operates meritnation.com, Zomato media
Pvt Ltd , MakeSense Technologies Pvt Ltd and Info Edge (India) Mauritius Ltd. Info
Edge India Ltd is locally compared with HOMESHOP 18, Justdial Ltd and Globally
compared with Monster.com , Seek.com, carsales.com , Truila Inc, HomeAway Inc,
Zillow Inc, SouFun Holdings, REA Group, Rightmove PLC, Yelp Inc of USA, Yahoo!
Inc of USA, eBay Inc of USA, Googlr Inc of USA, Facebook Inc of USA, Linkedin
Corp of USA, Pandora Media Inc of USA, Shutterstock Inc of USA, Sciquest Inc of
USA, Zillow Inc od USA, Monster Worlwide Inc of USA, America OnLine from USA,
Bazaarvoice Inc of USA, Xo Group Inc of USA, Twitter Inc of USA, Verisign Inc
of USA, Yelp Inc of USA, Carsales.com Ltd of Australila, Moneysupermarket.com
from UK, XING AG of Germany, United Internet AG of Germany, Opera Software ASA
of Norway, Vistaprint N.V. of Netherlands, Baidu Inc of China, Beijing 58
Information and Technology Co Ltd of China, 21Vianet group Inc of China,
iProperty Group Ltd of Malaysia, Nifty Corporation of Japan, Wix.com of Israel,
Ateam inc of Japan, CROOZ Inc of Japan, F@N Communication Inc of Japan,
Infomart Corp of Japan, Excite Japan Co Ltd of Japan, Asahi Net Inc of Japan,
Nexyz Corporation of Japan, Drecom Co ltd of Japan, Zappallas Inc of Japan.
Investment Rationale:
Outlook and Valuation:
Info
Edge (India) ltd is India’s one of the largest leading online company with its
strong brands and sustainable growing businesses. It has a very excellent and experienced
management team. The company have invested in several internet start-ups
ventures. Info Edge’s Naukri has garnered higher market share in this slowdown,
also its innovative products helps naukri to combat threat against
Linkedin.com, naukri continues to invest in its brand, sales team, customer
service, tech and product innovation and support. Info Edge’s 99acre.com is
benefiting from the increase in the real estate advertising and has increased
its market share. 99acres.com have improved its site by improving user
experience- pricing trends, photos and videos, android Apps and the site is now
have spread its sales coverage across cities, this has helped 99acres.com to
bring in more traffic, 99acre.com soon plans to launch a verified listings.
Info Edge’s Jeevansathi.com has leveraged its IP built over last 5 years
through investing in brand building. Management will continue to invest its
analytics and algorithms. Info Edge’s other brands like Shiksha, FirstNaukri,
naukrigulf continues to perform well. Management is committed to invest in
potential big businesses of future like zomato, meritnation, policybazaar and
is vouching for potential start-ups and M&A’s. On financial side Info Edge
posted revenue growth of 18.1 % to Rs. 145.7 Cr on the back of healthy increase
of 19 % YoY in recruitment business and mere 15.5 % YoY the lowest in last 20
quarters growth in other verticals. Operating profit declined by 14 % YoY, as
A&P expenses increased by 55 % YoY while employee cost was up by 30 % as
headcount increased by 32 % YoY. Though operating margin in the recruitment
vertical was at 49.8 %, other verticals posted operating loss of Rs. 18.4 Cr
including Rs. 14.4 Cr loss in 99acres. PAT was up by 20 % on the back of high
other income. Management has guided for 18-20 % revenue growth for the
recruitment vertical for the next 2 years. It is believed that with the upturn
in the economy, new product launches and client additions will spur growth.
While IT sector has grown at a healthy pace, and so it can be safely believed
that the other sectors will follow suit in the near term. With market share of
65-70 %, the company can maintain margins in 50 % range. Revenue growth in
99acres slowed down to 20 % YoY which is lowest in past years during the quarter
as key cities including NCR, Mumbai, Chennai did not show much activity in the
real estate sector due to uncertain market conditions. At the same time, hyper
competition from recently funded portals resulted in higher client acquisition
cost impacting operating performance wherein operating loss was the highest
ever at Rs. 14. 4Cr. However, with market share of 30-35 %, new product
launches such as listings verification, new UI design, analytics and focus on
mobile phones with 30 % traffic will help the company in the medium to long run. Zomato is focusing on expanding business
and this could result delay in breaking even however, Urbanspoon, acquisition is
a stepping stone for Zomato in US market giving it a foothold in the US,
where Urbanspoon enjoys number two position. Zomato has learnt from the tough
experience in the UK, where it found it difficult to expand organically. In
terms of business, Urbanspoon serves three million unique monthly visitors or
1/12 of Zomato’s user base. Its valuation of US$52 mn needs to be seen in this
context versus US$670 mn valuation of Zomato based on the recent transaction. Info
Edge had expected the Zomato business to break even at a top line of Rs. 40. Cr to Rs. 50 Cr. This is in
contrast to the current losses at projected topline of Rs. 80 Cr to Rs. 90 Cr in FY2015E.
It believes Zomato will leverage its recent acquisitions to cross-sell products
and establish a presence in new markets. Presently most of the revenues of the
portal come from India and the UAE. However, given that Zomato will need
additional funding, there is a chance that INFO EDGE might not be able to
retain its 50 % stake in Zomato unless it decides to raise further capital or divert
some of the $125mn raised from the recent QIP towards Zomato. The QIP money was
raised by Info Edge with the intention of investing into 99acres which is the
real estate classified business. Post the last round of fund infusion into
Zomato which was in January 2015, INFO EDGE would have Rs. 1060 Cr in cash of which
Rs. 750 Cr is earmarked for investment into 99acres. There is a high growth potential of Infoedge to unlock the actual value of the stock over the years to come. Listing of its subsidiaries can also be supporting to the company’s valuation. On SOTP (sum-of-the-parts) basis, the value of INFO EDGE alone comes at Rs. 505.00 per share valueing 29.70 x its FY17E EPS of Rs. 17. The valuation of the Investee comapnies - the value of 99acers comes at Rs. 167 per share, Zomato Media valuing it at 10x to sales having 50 % stake comes to Rs. 178 per share; Applect Learning Systems valuing 6x to sales having 56 % gives Rs. 13 per share; Canvera Digital Technologies valuing 6x to sales having 33 % stake gives us Rs. 35 per share, totaling this gives us the value of its subsidiaries at Rs. 332 per share. And valuing the whole gives us the value of INFO EDGE of Rs. 986.00 per share. It is expected that the company’s surplus scenario is likely to continue for the next three years & will keep its growth story intact for the coming quarters also.
SOTP VALUATIONS :
Business Subsidiary
|
Value Per Share (₹)
|
|---|---|
InfoEdge Standalone
|
505.00
|
99acres (Non-Listed)
|
167.00
|
Zomato (Non-Listed)
|
178.00
|
Applect Learning Systems (Non-Listed)
|
13.00
|
Canvera Digital Technologies (Non-Listed)
|
35.00
|
Other Investments
|
88.00
|
TOTAL
| 986.00 |
| KEY FINANCIALS | FY14 | FY15E | FY16E | FY17E |
|---|---|---|---|---|
| SALES (₹ Crs) | 505.09 | 604.70 | 736.50 | 891.70 |
| NET PROFIT (₹ Cr) | 128.50 | 155.70 | 203.80 | 251.70 |
| EPS (₹) | 11.80 | 13.00 | 17.00 | 21.00 |
| PE (x) | 74.00 | 62.30 | 47.60 | 38.50 |
| P/BV (x) | 11.60 | 6.00 | 5.50 | 5.00 |
| EV/EBITDA (x) | 47.90 | 44.10 | 34.40 | 26.60 |
| ROE (%) | 18.40 | 13.10 | 12.00 | 13.50 |
| ROCE (%) | 14.30 | 9.30 | 8.30 | 9.50 |
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