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Key Takeaways
Scalability in unique user additions not an issue, Info Edge sees no competition
affecting it yet
Info Edge (INFOE) does not see a problem in scaling up its number of unique
customers, which totaled over 42,000 in FY11. A healthy growth environment will
see organizations scale up, which should facilitate the additions of new customers.
LinkedIn has established an active sales team in India, and INFOE will watch the
space for effects on its Naukri business. The company does not anticipate a significant
impact from this as they operate in different segments. LinkedIn offers a passive
environment vis-à-vis the active job-seeking environment at Naukri.com. However,
the fact remains that it would be able to tap resources, especially at the senior
level, which would be out of Naukri's reach.
Positive on getting price increases despite being the price-master
INFOE does not see a problem in attaining a 5-7% pricing increase in its Naukri
solutions. While the company has a wide array of pricing, based on a mix of services
on a like-to-like basis, Naukri would command a higher price than peers.
Naukri's virtuous cycle of self-sustenance also plays a part in facilitating this,
compounded by the fact that talent will be in hot demand if the growth story holds
out, directly benefiting its business.
Seeing a dip in IT hiring, vo lume dip in real estate could hurt 99acres
INFOE cited a decline in IT hiring trend in the past month, going by hiring data at
Naukri. However, this is not alarming because Naukri caters largely to lateral additions
in the IT space. Compared with freshers, lateral additions are seasonally high in the
AMJ quarter, before freshers start joining in large numbers.
99acres.com, INFOE's other portal, has been on a high growth trajectory, albeit on
a lower base. However, rising interest rates and relatively firm realty prices, especially
in regions like Noida, may impact volumes, which are expected to have a direct
bearing on the portal's performance.
Spending on ad vertising to pick up to increase visibility across new ventures
INFOE has had a reactionary stance in advertising spends in its fiercely contested
spaces, Naukri, Jeevansaathi and 99acres. However, the advertisement spends are
likely to be higher given that INFOE announced a promotion roll out for Shiksha.com
and will also need to increase visibility in some of its acquired ventures.
We would prefer INFOE to take a more proactive stance towards these spends and
try to aggressively win traffic share, especially given several new online ventures,
such as Zomato.com, Shiksha.com, Brijj.com and Meritnation.com, are still in the
early phase of development,.
Fundamentals strong, valuations look rich
While fundamentals are strong, current valuations do not provide a margin of safety.
INFOE has high sensitivity to macroeconomic outlook, which is mired in uncertainty.
We expect INFOE to post revenue CAGR of 25.3% and EPS CAGR of 23.7% over
FY11-13. Not Rated.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Scalability in unique user additions not an issue, Info Edge sees no competition
affecting it yet
Info Edge (INFOE) does not see a problem in scaling up its number of unique
customers, which totaled over 42,000 in FY11. A healthy growth environment will
see organizations scale up, which should facilitate the additions of new customers.
LinkedIn has established an active sales team in India, and INFOE will watch the
space for effects on its Naukri business. The company does not anticipate a significant
impact from this as they operate in different segments. LinkedIn offers a passive
environment vis-à-vis the active job-seeking environment at Naukri.com. However,
the fact remains that it would be able to tap resources, especially at the senior
level, which would be out of Naukri's reach.
Positive on getting price increases despite being the price-master
INFOE does not see a problem in attaining a 5-7% pricing increase in its Naukri
solutions. While the company has a wide array of pricing, based on a mix of services
on a like-to-like basis, Naukri would command a higher price than peers.
Naukri's virtuous cycle of self-sustenance also plays a part in facilitating this,
compounded by the fact that talent will be in hot demand if the growth story holds
out, directly benefiting its business.
Seeing a dip in IT hiring, vo lume dip in real estate could hurt 99acres
INFOE cited a decline in IT hiring trend in the past month, going by hiring data at
Naukri. However, this is not alarming because Naukri caters largely to lateral additions
in the IT space. Compared with freshers, lateral additions are seasonally high in the
AMJ quarter, before freshers start joining in large numbers.
99acres.com, INFOE's other portal, has been on a high growth trajectory, albeit on
a lower base. However, rising interest rates and relatively firm realty prices, especially
in regions like Noida, may impact volumes, which are expected to have a direct
bearing on the portal's performance.
Spending on ad vertising to pick up to increase visibility across new ventures
INFOE has had a reactionary stance in advertising spends in its fiercely contested
spaces, Naukri, Jeevansaathi and 99acres. However, the advertisement spends are
likely to be higher given that INFOE announced a promotion roll out for Shiksha.com
and will also need to increase visibility in some of its acquired ventures.
We would prefer INFOE to take a more proactive stance towards these spends and
try to aggressively win traffic share, especially given several new online ventures,
such as Zomato.com, Shiksha.com, Brijj.com and Meritnation.com, are still in the
early phase of development,.
Fundamentals strong, valuations look rich
While fundamentals are strong, current valuations do not provide a margin of safety.
INFOE has high sensitivity to macroeconomic outlook, which is mired in uncertainty.
We expect INFOE to post revenue CAGR of 25.3% and EPS CAGR of 23.7% over
FY11-13. Not Rated.
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