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Info Edge India
Overweight; INED.BO, INFOE IN
Riding the wave in online classifieds
• Assuming coverage with Overweight rating. Info Edge holds a leadership
position in online recruitment services. The company is well placed to take
advantage of increasing hiring activity driven by broad-based economic growth,
increasing online migration with attendant benefits of operating leverage.
• Strong fundamentals and strong, credible management: We expect internet
subscriptions in India to grow at a 15% CAGR over CY10-CY13E leading to
continued market share gain for online media and driving revenue growth for
Info Edge (INFOE). INFOE has a strong and experienced management team as
demonstrated by its number one position for 12 years in the online recruitment
market that we expect to continue. INFOE also operates other sites in online
real estate and matrimony that are sub-scale but which we think represent option
value to investors.
• Solid earnings growth outlook: We expect decent 27% revenue CAGR and
32% EPS CAGR over FY10-12. The pick up in hiring activity is visible,
particularly in IT services and infrastructure sectors, which are the largest
customers for INFOE. Recruitment services business, which contributes more
than 80% of total revenues, should continue to drive the top line and earnings
growth, while other businesses, particularly matrimony, are also inching closer
to break-even. We expect recruitment services EBITDA margins to be around
51% in FY12 driven by operating leverage, as primary expense items relatively
fixed or semi-variable in nature.
• Share price view and risks: The key upside risks to our price target, in our
view, are: (1) higher margin leverage in the recruitment business, and (2)
stronger revenues in real estate/matrimony sites; downside risks are: (1) a drop
in market share due to increased competition across sites and (2) higher
advertising expenses in response to competitor activity (e.g. Monster.com)
which puts the assumption of operating leverage at naukri.com at risk.
• Our Sep-11 price target of Rs635 is based on a one year forward P/E multiple of
35x, which is slightly above earnings CAGR of 32%. We find it justified given
the leadership position of Naukri.com and option value of currently loss-making,
but in development, non-recruitment businesses. Almost all of our target
company value is derived from recruitment business, providing the investor
option value on the other internet businesses of the company.
Investment Thesis
Dominant position in recruitment job portal business and improved pricing
power should ensure better profitability.
Naukri.com is the market leader in online job portal market with about 60% traffic
share. The company has retained the leadership position since its inception in 1997
despite emergence of several competitors like Monster.com. We think this points to
the strong and capable management team, deep corporate relationships and strong
sales initiatives of the company. The large number of resumes and corporate
relationships places the company in a unique position to benefit from broad based
economic growth, improving hiring environment and increasing internet penetration.
Moreover, we expect pricing improvement driven by improving market environment
and up-selling to the customer. For example, up-selling is possible with a broader
swath of solutions made possible by newer technologies and media (e.g. mobile). We
expect the operating leverage driven business model along with improving pricing
should deliver ~30% earnings growth for the next 2-3 years.
Internet penetration should continue to inexorably rise
Internet penetration is very low in India, and is restricted to metros and tier-2 cities
only, but it has started to penetrate the smaller towns. In terms of advertising spend
the penetration levels are even lower, as only 4.8% of the total Indian advertising
spending in 2009 was through internet, according to IDC. The industry research firm
expects proportion of internet advertising spend to increase to 16.1% by 2014 (a
CAGR of 34.8%), which points to the strong market growth expected in the next 5
years. As a dominant player in the business, Naukri.com should be a primary
beneficiary of this increase.
Operating leverage is the name of the game in network-centric internet
businesses
Info Edge witnessed strong operating margin performance driven by strong EBITDA
margins from recruitment services business. The primary expense items for the portal
are personnel costs, advertising, network expenses and G&A. As the company gains
scale, these expenses, primarily advertising, tend to increase at a much slower rate,
hence margins improve. The company reported 49% EBITDA margins for 3QFY11,
and we expect another 300 bps of margin expansion in FY12, driven by operating
leverage. However, higher advertising expenses as a response to competitor's actions
is a key risk to our margin expectations.
Option value of other business may be under-appreciated by the market
Our analysis suggests that on an EV/EBITDA basis Naukri.com alone is worth more
than the current stock price of the company. We agree that 99acres, Jeevansathi, and
Shikha are in development phase and in crowded segments. However, 99acres.com
has a leadership position in the real estate portal market, with about 50% traffic
share, while Jeevansathi.com is at #3, as Shaadi.com and Bharatmatrimony.com lead
the market. Siksha.com is still in the early phases of development. We believe that
these businesses do hold some option value and the success of any of these ventures
would provide further upside to our suggested target price.
Industry Growth Drivers
Strong growth in Internet penetration in India
Internet penetration has increased in India at a CAGR of 33% from 2000 to 2009, as
it has started penetrating the smaller towns and villages in the country. However, still
penetration is less than 7% of total population, which is minimal compared to 38% in
Brazil and 50% in Chile. In smaller towns, where the largest chunk of population
lives, the penetration levels are dismal, as number of internet users in top 8 metro
cities is almost equal to the number of users in all the towns with less than 0.5
million population. However, the penetration levels have started to pick up in these
areas over the last few years, and these should be the primary driver of internet user
growth in the coming years. We believe the solid increase in penetration levels
should continue as there is substantial head-room for growth. We expect internet
subscriptions in India to grow at a 15% CAGR over CY10-CY13E
The usage of devices other than computer has caused rapid increase in penetration
levels. Mobile phone penetration is already above 600 million and 3G can be another
driver for high end applications.
Proportion of internet advertising should continue to
inexorably increase
Internet advertising spending is at about 4.8% of total advertising spending in India.
The total Indian advertising market is about $5 billion, out of which less than $250
million is through internet. The worldwide average for proportion of internet
advertising is 10.5%. Industry research firm IDC expects internet advertising
spending to quadruple to $1.0 billion over the next five years, making up 16.1% of
the total advertising spending. Hence, the total pie is expected to increase at a strong
35% CAGR over the next 5 years for the companies operating in internet advertising
business.
An economy expected to grow at more than 8% in the coming years, with growing
but minimal internet penetration and very low internet based advertising spend
provides an attractive market for Info Edge, which is uniquely placed in a leadership
position in recruitment services and real estate portal market to take advantage of this
incremental spending.
Investment Positives
Dominant position in online recruitment services market
Recruitment services accounts for about 84% of company revenues and more than
100% of operating profits. This business includes Naukri.com, Quadrangle,
Naukrifirst.com and Naukrigulf.com. Naukri.com has about 60% of total job search
traffic share according to Comscore. The company has built a strong brand over the
last decade, maintaining its leadership position since its inception in 1997 and
building strong relationships with large recruiters.
The strong relationships are visible in Table 1, which exhibits that the number of
recruiters continued to increase despite downturn in FY09.
The company continues to take initiatives to maintain its leadership position reflected
by launch of Naukrifirst, targeted at freshers and Nauktrigulf to cater to the Gulf
region market. INFOE has also launched Naukri WAP, which can be accessed by
mobile phones, while the company continues to explore options in social platform
side. Brijj is one of its professional social networking initiatives.
Improved pricing power as the environment improves
The leadership position also provides pricing power driven by up-selling, different
pricing models such as pay-by-use, larger resume database, strong client
relationships, high management credibility and better scale. Info Edge reported
increase in revenue per customer for 5 of the last 6 quarters, and we expect this trend
to continue.
Pick up in hiring activity is a positive
Hiring activity has started to pick up meaningfully after the downturn, particularly in
IT/ITes and infrastructure space, which are the largest customer for the company. IT
Services contributes about 26% of total recruitment services revenues, while
Infrastructure makes up about 22%. Different IT services companies, including Tier
1 companies like Infosys, TCS, HCL Technologies, as well as smaller companies
like Hexaware and Patni, have guided to hire thousands of employees during the next
fiscal year. Infrastructure, which is a focus sector according to government five year
plans, is also expected to drive meaningful pick up in hiring.
With about 60% traffic share and market leadership position, we think INFOE is well
placed to benefit from the hiring activity pick up.
Operating leverage should boost margins
Job portal business model is such that most of the expenses are lesser
related/unrelated to the revenue growth rate. The primary expense items are salaries,
network expenses, advertising and G&A. Some of these expense items are semi
The strong growth in revenues should drive margin expansion through operating
leverage. We expect recruitment services business, which reported 49% EBITDA
margins in 3QFY11, to continue to expand about 300 bps in FY12 to about 52%.
99acres and Jeevansathi may have good growth potential
99acres has leadership position in real estate portal market with about 50% traffic
share. The portal gained meaningful market share during the downturn as the traffic
remained relatively stable for the company, while competitors witnessed meaningful
traffic decline. Jeevansathi is at #3 in terms of market share, but management points
out that the focus in this segment is on specific communities and regions, where the
portal is doing relatively better. Jeevansathi generated about Rs200 mln in revenues
in FY10, while losses were negligible.
Option value of non-recruitment businesses may be underappreciated
Our analysis (in valuation and price target section) suggests that the current stock
price reflects negative value for businesses other than recruitment services. We
calculate that on a 20x EV/FY12 EBITDA basis, recruitment services is worth about
Rs 612, implying about Rs80 discount for other businesses. These businesses are loss
making, but in an investment phase. Matrimony business is on the brink of breakeven
and real estate business enjoys a leadership position in its space. We believe
these businesses do hold meaningful option value as success of any of these can drive
meaningful upside for the stock.
Shiksha.com, Brijj and allcheckdeals are still in the nascent stages. We have not
included these in our estimates as these are in very early stages of development.
Valuation and price target
We rate Info Edge Overweight and our Sep-11 price target of Rs635 is based on one
year forward P/E multiple of 35x, which is slightly above the earnings CAGR of
32% for FY10-12. It implies 1.1x PEG, which we believe is justified given the
leadership position of Naukri and loss making but in-development non-recruitment
businesses. The target multiple is below long term average multiple of 41x.
Recruitment business, which is primarily Naukri.com, makes up most of the value of
the company. We expect recruitment revenues to growth about 25% in FY12 and
expect an EBITDA margin of 51.4%. We use 20x EV/EBITDA to value the
business, which we believe is reasonable considering 25% top-line growth. We
calculate recruitment business to be worth about Rs612. Hence, implied option value
for other businesses is only Rs23. Success of any of these ventures could drive
significant stock upside.
Implied target option value of non-recruitment businesses is only Rs23 (<4%)
Target Price Rs635
Recruitment Business Rs612
Implied non-recruitment Business Rs23
Source: J.P.Morgan estimates
Risks to our rating and price target
The primary risks to our ratings are:
1. Traffic share contraction due to competitive threat from Monster’s semantic
search (Trovix) technology, among others.
2. Increasing interest rates and inflation may hurt real estate market, impacting
99acres.com business.
3. Advertising expenses pick up in response to competitors’ actions.
Company Description
Info Edge operates in different businesses including online recruitment services, real
estate portal, matrimony and education. However, the company generates more than
80% of its revenues and more than 100% operating profit from its recruitment
business led by its flagship job portal Naukri.com. In addition, the company operates
a matrimony site Jeevansathi.com, a real estate site 99acres.com and an education
site Siksha.com.
Recruitment Services
Info Edge operates India’s largest online job portal, Naukri.com, which has about
60% of total traffic share. In addition, the company also runs an offline executive
search firm called Quadrangle. Job seekers can register their resume with Naukri free
of charge. Naukri gets its revenues from:
(1) Recruitment advertising from corporate clients,
(2) Granting corporate clients access to resume database, and
(3) Job seeker services such as resume enhancement, display and mailing of resume
to recruitment consultants.
The company has launched some other initiatives over the last two years, including
Naukrifirst, a job search site for candidates fresh out of campus, and Naukrigulf, for
job search in the gulf region.
Real estate
Info Edge launched its real estate portal in September 2005. 99acres currently has
about 50% of total traffic share. It supports the buyer/landlord and seller/tenant in the
sale, purchase and rent of residential and commercial properties. While the listings
are generally free, the company charges developers for advertising their projects on
the website.
Matrimony
Info Edge also operates Jeevansathi.com, India’s third-largest online matrimony site.
India has a cultural tradition of arranged marriages based on region and caste subdivisions.
The revenue model is more retail customer oriented—customers can
register their profiles free of charge on the site but have to pay in order to get contact
information. The company also has 14 offline outlets to educate people and augment
their online presence. In our view, conversion of people from free to paid listings is
largely dependent on the number of suitable people they find in the database with
regional biases among sites. The company plans to be a dominant player in certain
regions and castes, building a niche market for itself as it is a very crowded space.
Education
Info Edge operates in the Education segment though Shiksha.com, where education
and coaching institutes advertise their offerings and attract students. The institutes
pay the company for the leads generated through the website. The increase in private
education and entry of foreign institutions make it an attractive market, but the
education advertising space is still dominated by print media.
INFOE has also started a professional networking site – Brijj and a real estate
properly site, which allows buyers/sellers to check transactions, allcheckdeals. We
believe both these portals are extension of Naukri.com and 99acres.com,
respectively. We have not included revenues from these segments in our estimates as
these businesses are still in nascent stage.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Info Edge India
Overweight; INED.BO, INFOE IN
Riding the wave in online classifieds
• Assuming coverage with Overweight rating. Info Edge holds a leadership
position in online recruitment services. The company is well placed to take
advantage of increasing hiring activity driven by broad-based economic growth,
increasing online migration with attendant benefits of operating leverage.
• Strong fundamentals and strong, credible management: We expect internet
subscriptions in India to grow at a 15% CAGR over CY10-CY13E leading to
continued market share gain for online media and driving revenue growth for
Info Edge (INFOE). INFOE has a strong and experienced management team as
demonstrated by its number one position for 12 years in the online recruitment
market that we expect to continue. INFOE also operates other sites in online
real estate and matrimony that are sub-scale but which we think represent option
value to investors.
• Solid earnings growth outlook: We expect decent 27% revenue CAGR and
32% EPS CAGR over FY10-12. The pick up in hiring activity is visible,
particularly in IT services and infrastructure sectors, which are the largest
customers for INFOE. Recruitment services business, which contributes more
than 80% of total revenues, should continue to drive the top line and earnings
growth, while other businesses, particularly matrimony, are also inching closer
to break-even. We expect recruitment services EBITDA margins to be around
51% in FY12 driven by operating leverage, as primary expense items relatively
fixed or semi-variable in nature.
• Share price view and risks: The key upside risks to our price target, in our
view, are: (1) higher margin leverage in the recruitment business, and (2)
stronger revenues in real estate/matrimony sites; downside risks are: (1) a drop
in market share due to increased competition across sites and (2) higher
advertising expenses in response to competitor activity (e.g. Monster.com)
which puts the assumption of operating leverage at naukri.com at risk.
• Our Sep-11 price target of Rs635 is based on a one year forward P/E multiple of
35x, which is slightly above earnings CAGR of 32%. We find it justified given
the leadership position of Naukri.com and option value of currently loss-making,
but in development, non-recruitment businesses. Almost all of our target
company value is derived from recruitment business, providing the investor
option value on the other internet businesses of the company.
Investment Thesis
Dominant position in recruitment job portal business and improved pricing
power should ensure better profitability.
Naukri.com is the market leader in online job portal market with about 60% traffic
share. The company has retained the leadership position since its inception in 1997
despite emergence of several competitors like Monster.com. We think this points to
the strong and capable management team, deep corporate relationships and strong
sales initiatives of the company. The large number of resumes and corporate
relationships places the company in a unique position to benefit from broad based
economic growth, improving hiring environment and increasing internet penetration.
Moreover, we expect pricing improvement driven by improving market environment
and up-selling to the customer. For example, up-selling is possible with a broader
swath of solutions made possible by newer technologies and media (e.g. mobile). We
expect the operating leverage driven business model along with improving pricing
should deliver ~30% earnings growth for the next 2-3 years.
Internet penetration should continue to inexorably rise
Internet penetration is very low in India, and is restricted to metros and tier-2 cities
only, but it has started to penetrate the smaller towns. In terms of advertising spend
the penetration levels are even lower, as only 4.8% of the total Indian advertising
spending in 2009 was through internet, according to IDC. The industry research firm
expects proportion of internet advertising spend to increase to 16.1% by 2014 (a
CAGR of 34.8%), which points to the strong market growth expected in the next 5
years. As a dominant player in the business, Naukri.com should be a primary
beneficiary of this increase.
Operating leverage is the name of the game in network-centric internet
businesses
Info Edge witnessed strong operating margin performance driven by strong EBITDA
margins from recruitment services business. The primary expense items for the portal
are personnel costs, advertising, network expenses and G&A. As the company gains
scale, these expenses, primarily advertising, tend to increase at a much slower rate,
hence margins improve. The company reported 49% EBITDA margins for 3QFY11,
and we expect another 300 bps of margin expansion in FY12, driven by operating
leverage. However, higher advertising expenses as a response to competitor's actions
is a key risk to our margin expectations.
Option value of other business may be under-appreciated by the market
Our analysis suggests that on an EV/EBITDA basis Naukri.com alone is worth more
than the current stock price of the company. We agree that 99acres, Jeevansathi, and
Shikha are in development phase and in crowded segments. However, 99acres.com
has a leadership position in the real estate portal market, with about 50% traffic
share, while Jeevansathi.com is at #3, as Shaadi.com and Bharatmatrimony.com lead
the market. Siksha.com is still in the early phases of development. We believe that
these businesses do hold some option value and the success of any of these ventures
would provide further upside to our suggested target price.
Industry Growth Drivers
Strong growth in Internet penetration in India
Internet penetration has increased in India at a CAGR of 33% from 2000 to 2009, as
it has started penetrating the smaller towns and villages in the country. However, still
penetration is less than 7% of total population, which is minimal compared to 38% in
Brazil and 50% in Chile. In smaller towns, where the largest chunk of population
lives, the penetration levels are dismal, as number of internet users in top 8 metro
cities is almost equal to the number of users in all the towns with less than 0.5
million population. However, the penetration levels have started to pick up in these
areas over the last few years, and these should be the primary driver of internet user
growth in the coming years. We believe the solid increase in penetration levels
should continue as there is substantial head-room for growth. We expect internet
subscriptions in India to grow at a 15% CAGR over CY10-CY13E
The usage of devices other than computer has caused rapid increase in penetration
levels. Mobile phone penetration is already above 600 million and 3G can be another
driver for high end applications.
Proportion of internet advertising should continue to
inexorably increase
Internet advertising spending is at about 4.8% of total advertising spending in India.
The total Indian advertising market is about $5 billion, out of which less than $250
million is through internet. The worldwide average for proportion of internet
advertising is 10.5%. Industry research firm IDC expects internet advertising
spending to quadruple to $1.0 billion over the next five years, making up 16.1% of
the total advertising spending. Hence, the total pie is expected to increase at a strong
35% CAGR over the next 5 years for the companies operating in internet advertising
business.
An economy expected to grow at more than 8% in the coming years, with growing
but minimal internet penetration and very low internet based advertising spend
provides an attractive market for Info Edge, which is uniquely placed in a leadership
position in recruitment services and real estate portal market to take advantage of this
incremental spending.
Investment Positives
Dominant position in online recruitment services market
Recruitment services accounts for about 84% of company revenues and more than
100% of operating profits. This business includes Naukri.com, Quadrangle,
Naukrifirst.com and Naukrigulf.com. Naukri.com has about 60% of total job search
traffic share according to Comscore. The company has built a strong brand over the
last decade, maintaining its leadership position since its inception in 1997 and
building strong relationships with large recruiters.
The strong relationships are visible in Table 1, which exhibits that the number of
recruiters continued to increase despite downturn in FY09.
The company continues to take initiatives to maintain its leadership position reflected
by launch of Naukrifirst, targeted at freshers and Nauktrigulf to cater to the Gulf
region market. INFOE has also launched Naukri WAP, which can be accessed by
mobile phones, while the company continues to explore options in social platform
side. Brijj is one of its professional social networking initiatives.
Improved pricing power as the environment improves
The leadership position also provides pricing power driven by up-selling, different
pricing models such as pay-by-use, larger resume database, strong client
relationships, high management credibility and better scale. Info Edge reported
increase in revenue per customer for 5 of the last 6 quarters, and we expect this trend
to continue.
Pick up in hiring activity is a positive
Hiring activity has started to pick up meaningfully after the downturn, particularly in
IT/ITes and infrastructure space, which are the largest customer for the company. IT
Services contributes about 26% of total recruitment services revenues, while
Infrastructure makes up about 22%. Different IT services companies, including Tier
1 companies like Infosys, TCS, HCL Technologies, as well as smaller companies
like Hexaware and Patni, have guided to hire thousands of employees during the next
fiscal year. Infrastructure, which is a focus sector according to government five year
plans, is also expected to drive meaningful pick up in hiring.
With about 60% traffic share and market leadership position, we think INFOE is well
placed to benefit from the hiring activity pick up.
Operating leverage should boost margins
Job portal business model is such that most of the expenses are lesser
related/unrelated to the revenue growth rate. The primary expense items are salaries,
network expenses, advertising and G&A. Some of these expense items are semi
The strong growth in revenues should drive margin expansion through operating
leverage. We expect recruitment services business, which reported 49% EBITDA
margins in 3QFY11, to continue to expand about 300 bps in FY12 to about 52%.
99acres and Jeevansathi may have good growth potential
99acres has leadership position in real estate portal market with about 50% traffic
share. The portal gained meaningful market share during the downturn as the traffic
remained relatively stable for the company, while competitors witnessed meaningful
traffic decline. Jeevansathi is at #3 in terms of market share, but management points
out that the focus in this segment is on specific communities and regions, where the
portal is doing relatively better. Jeevansathi generated about Rs200 mln in revenues
in FY10, while losses were negligible.
Option value of non-recruitment businesses may be underappreciated
Our analysis (in valuation and price target section) suggests that the current stock
price reflects negative value for businesses other than recruitment services. We
calculate that on a 20x EV/FY12 EBITDA basis, recruitment services is worth about
Rs 612, implying about Rs80 discount for other businesses. These businesses are loss
making, but in an investment phase. Matrimony business is on the brink of breakeven
and real estate business enjoys a leadership position in its space. We believe
these businesses do hold meaningful option value as success of any of these can drive
meaningful upside for the stock.
Shiksha.com, Brijj and allcheckdeals are still in the nascent stages. We have not
included these in our estimates as these are in very early stages of development.
Valuation and price target
We rate Info Edge Overweight and our Sep-11 price target of Rs635 is based on one
year forward P/E multiple of 35x, which is slightly above the earnings CAGR of
32% for FY10-12. It implies 1.1x PEG, which we believe is justified given the
leadership position of Naukri and loss making but in-development non-recruitment
businesses. The target multiple is below long term average multiple of 41x.
Recruitment business, which is primarily Naukri.com, makes up most of the value of
the company. We expect recruitment revenues to growth about 25% in FY12 and
expect an EBITDA margin of 51.4%. We use 20x EV/EBITDA to value the
business, which we believe is reasonable considering 25% top-line growth. We
calculate recruitment business to be worth about Rs612. Hence, implied option value
for other businesses is only Rs23. Success of any of these ventures could drive
significant stock upside.
Implied target option value of non-recruitment businesses is only Rs23 (<4%)
Target Price Rs635
Recruitment Business Rs612
Implied non-recruitment Business Rs23
Source: J.P.Morgan estimates
Risks to our rating and price target
The primary risks to our ratings are:
1. Traffic share contraction due to competitive threat from Monster’s semantic
search (Trovix) technology, among others.
2. Increasing interest rates and inflation may hurt real estate market, impacting
99acres.com business.
3. Advertising expenses pick up in response to competitors’ actions.
Company Description
Info Edge operates in different businesses including online recruitment services, real
estate portal, matrimony and education. However, the company generates more than
80% of its revenues and more than 100% operating profit from its recruitment
business led by its flagship job portal Naukri.com. In addition, the company operates
a matrimony site Jeevansathi.com, a real estate site 99acres.com and an education
site Siksha.com.
Recruitment Services
Info Edge operates India’s largest online job portal, Naukri.com, which has about
60% of total traffic share. In addition, the company also runs an offline executive
search firm called Quadrangle. Job seekers can register their resume with Naukri free
of charge. Naukri gets its revenues from:
(1) Recruitment advertising from corporate clients,
(2) Granting corporate clients access to resume database, and
(3) Job seeker services such as resume enhancement, display and mailing of resume
to recruitment consultants.
The company has launched some other initiatives over the last two years, including
Naukrifirst, a job search site for candidates fresh out of campus, and Naukrigulf, for
job search in the gulf region.
Real estate
Info Edge launched its real estate portal in September 2005. 99acres currently has
about 50% of total traffic share. It supports the buyer/landlord and seller/tenant in the
sale, purchase and rent of residential and commercial properties. While the listings
are generally free, the company charges developers for advertising their projects on
the website.
Matrimony
Info Edge also operates Jeevansathi.com, India’s third-largest online matrimony site.
India has a cultural tradition of arranged marriages based on region and caste subdivisions.
The revenue model is more retail customer oriented—customers can
register their profiles free of charge on the site but have to pay in order to get contact
information. The company also has 14 offline outlets to educate people and augment
their online presence. In our view, conversion of people from free to paid listings is
largely dependent on the number of suitable people they find in the database with
regional biases among sites. The company plans to be a dominant player in certain
regions and castes, building a niche market for itself as it is a very crowded space.
Education
Info Edge operates in the Education segment though Shiksha.com, where education
and coaching institutes advertise their offerings and attract students. The institutes
pay the company for the leads generated through the website. The increase in private
education and entry of foreign institutions make it an attractive market, but the
education advertising space is still dominated by print media.
INFOE has also started a professional networking site – Brijj and a real estate
properly site, which allows buyers/sellers to check transactions, allcheckdeals. We
believe both these portals are extension of Naukri.com and 99acres.com,
respectively. We have not included revenues from these segments in our estimates as
these businesses are still in nascent stage.
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