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Info Edge - 3QFY11 results
Revenues grew 5.5%QQ despite December being a seasonally weaker
quarter and importantly deferred revenues (cash received but revenues
not booked) were up 7.1%QQ underlying the continued improvement in
the job market. A strong margin performance (+660bpsQQ) was driven
by a cut in advertising spend with further buffers from higher pricing.
Meanwhile, Naukri and 99acres continue to strengthen their leadership
position even as Jeevansathi remains in investment phase. With a
strengthening market position, the year ahead holds a lot of promise for
Info Edge and current market forecasts may prove too low. OPF stays.
Momentum in recruitment business remains strong
Strong hiring activity at IT companies (~40% revenues) drove a 5.1%QQ
growth in recruitment revenues to Rs620m. A strong demand environment
coupled with greater focus on lateral hiring at IT companies augurs well for
Naukri in 2011. Manpower rationalisation in Insurance industry has impacted
Naukri but has been more than compensated by improved hiring elsewhere.
While social networking sites like Facebook/LinkedIn remain medium-term
competitive threats, for now, Info Edge is looking at capitalising from these.
Big cut in advertising by competitors Monster and Timesjobs has seen Naukri
also cut back on ad-spend and that is unlikely to change for now. Improved
pricing environment should also further buffer margins ahead.
99acres doing well; Jeevansathi remains work in progress
After a drop last quarter, number of paid transactions in 99acres (real estate
listings site) is up. While a rising interest rate environment and decreasing
market transactions are worries, 99acres’ improving competitive position
should help it tide over these. Cash burn in 99acres has also come down and
Ebitda loss in the quarter was just Rs4m. Jeevansathi remains at #3 among
matrimony sites and we do not expect any quick resolution here. Info Edge is
attempting multiple initiatives to gain share, increasing call centre capacity
and investing in more site analytics being two such. These investments will
likely keep Jeevansathi in the red over the next few quarters; the lower
advertising spends in 2HFY11 notwithstanding.
Expect more investments in start-ups
With Sanjeev Bikchandani now focused on exploring new investment
opportunities; we expect more investments in ventures on lines of Applect,
Policybazaar and Foodiebay. Info Edge has now expanded the scope for new
investments from marketplace websites to include Indian consumers’ internet
business models. Another area of investment includes the Noida premises
which will result in a cash outflow of Rs800m over the next 24 months.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Info Edge - 3QFY11 results
Revenues grew 5.5%QQ despite December being a seasonally weaker
quarter and importantly deferred revenues (cash received but revenues
not booked) were up 7.1%QQ underlying the continued improvement in
the job market. A strong margin performance (+660bpsQQ) was driven
by a cut in advertising spend with further buffers from higher pricing.
Meanwhile, Naukri and 99acres continue to strengthen their leadership
position even as Jeevansathi remains in investment phase. With a
strengthening market position, the year ahead holds a lot of promise for
Info Edge and current market forecasts may prove too low. OPF stays.
Momentum in recruitment business remains strong
Strong hiring activity at IT companies (~40% revenues) drove a 5.1%QQ
growth in recruitment revenues to Rs620m. A strong demand environment
coupled with greater focus on lateral hiring at IT companies augurs well for
Naukri in 2011. Manpower rationalisation in Insurance industry has impacted
Naukri but has been more than compensated by improved hiring elsewhere.
While social networking sites like Facebook/LinkedIn remain medium-term
competitive threats, for now, Info Edge is looking at capitalising from these.
Big cut in advertising by competitors Monster and Timesjobs has seen Naukri
also cut back on ad-spend and that is unlikely to change for now. Improved
pricing environment should also further buffer margins ahead.
99acres doing well; Jeevansathi remains work in progress
After a drop last quarter, number of paid transactions in 99acres (real estate
listings site) is up. While a rising interest rate environment and decreasing
market transactions are worries, 99acres’ improving competitive position
should help it tide over these. Cash burn in 99acres has also come down and
Ebitda loss in the quarter was just Rs4m. Jeevansathi remains at #3 among
matrimony sites and we do not expect any quick resolution here. Info Edge is
attempting multiple initiatives to gain share, increasing call centre capacity
and investing in more site analytics being two such. These investments will
likely keep Jeevansathi in the red over the next few quarters; the lower
advertising spends in 2HFY11 notwithstanding.
Expect more investments in start-ups
With Sanjeev Bikchandani now focused on exploring new investment
opportunities; we expect more investments in ventures on lines of Applect,
Policybazaar and Foodiebay. Info Edge has now expanded the scope for new
investments from marketplace websites to include Indian consumers’ internet
business models. Another area of investment includes the Noida premises
which will result in a cash outflow of Rs800m over the next 24 months.
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