The success of Info Edge India (JElL) IPO was a combination of a unique concept of a hugely successful online job portal and the brand image this company commanded through its name of Naukri.com. Infact this is one of those companies, which took full advantage of the increasing internet penetration in India and took the first mover advantage to launch a concept, which the Indian stock market witnessed for the first time. Infact considering the online portals from other companies that have followed, we can safely assume JElL has been more a trend setter, while other players except Monster would be followers of the company.
Naukri.com has been the bread winner for the company with 80 per cent of the total revenues. We expect this trend to continue in the coming years as well. The company is clearly a leader on the
job portal with a market share of 50 per cent, which is then followed by Monster India with 30 per cent share, times jobs with 15 per cent and rest distributes amongst other players. The gap in market share of IEIL and Monster India indicates how well established Naukri. corn has been, despite the fact that Monster too is a much big player globally. IEIL’s revenue model is such that 90 per cent of Naukri.com comes from corporate and placement agencies, while 10 per cent comes from other allied services. Of this 90 per cent, 60 per cent revenues come from resume databases and 40 per cent from job posting and branding solutions. The company follows a subscription model where it collects 90 per cent of this fee in advance from its clients. Besides, in a bid to push its revenue further, the company is now focussing on business from non IT sector, which is growing at a brisk tate of more than 60 per cent.
IEIL is also focussing on strengthening its other two segments namely 99acres. corn and Jeevansathi.com, which are still in the nascent stage as far as their revenue contribution go. Though these two segments are yet to break-even, the management seemed quite optimistic about the prospects in the next one to two years and would also investment in these segments if the need be. Besides, tElL is focussing more on its strengths and hence in the Jeevansathi segment it is focussing mote on the hindi speaking belt in north India and some parts of Maharashtra, where it is much popular compared to its peers. Infact JElL is also coming out with an offline model of Jeevansathi and would be opening around 20-25 outlets as pilot to test the model.
On 99acres also IEIL would be focussing more on user experience and brand building. The company has also recently launched full fledged education related information website called Shiksha.com, but we expect its revenues to be negligible in FY09. As a strategy the company would also be look at investing in start up internet companies rather than doing it themselves.
The management feels that the company could grow roughly 40 per cent both in the topline as well as bottomline for FY09. Thus we can expect JElL to post topline of P.s 306 crore and bottomline of Rs 77.68 ctorc, at which it gives an EPS of Rs 28.45, thereby resulting in PE of 35x for FY09. At these valuations it still looks a grab for gives further room for upside.
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