INFO EDGE INDIA

Cmp-2000Rs

Started in the early days of the internet in India in 1997, Noida-based Info Edge, which runs Naukri.com, JeevanSathi.com, 99acres.com, and Shiksha.com, is one of the pioneers in the dot-com business. The company also owns Quadrangle and Naukri Gulf. Info Edge has made significant strategic investments into emerging internet companies – zomato.com (25% Holding), meritnation.com, policybazaar.com, Canvera.com, happilyunmarried.

The company was incorporated on May 1, 1995 under the Companies Act, as Info Edge (India) Private Limited and became a public limited company in 2006.

Starting with a classified recruitment online business, naukri.com, Info Edge has grown and diversified rapidly, setting benchmarks as a pioneer for others to follow. Driven by innovation, creativity, an experienced and talented leadership team and a strong culture of entrepreneurship, today, it is India’s premier online classifieds company in recruitment, matrimony, real estate, education and related services.

Info Edge has an in-depth understanding of the Indian consumer internet domain. With years of experience in the domain, strong cash flow generation and a diversified business portfolio, it one of the very few profitable pure play internet companies in the country.

Sanjeev Bikhchandani-:

Sanjeev Bikhchandani is the founder and executive vice chairman of Info Edge India as well as the co-founder of Ashoka University.

He was given the Padma Shri Award, the fourth Highest civilian award in India, in January 2020.

Educational qualifications include Bachelor of Arts degree in Economics from St. Stephen’s College, Delhi, (Delhi University) and MBA from IIMA.

After completing his PG left a job marketing Horlicks at HMM (now known as GlaxoSmithKline) in 1990 to set up two companies Indmark and Info Edge along with a partner. The first company specialized in pharmaceutical trademarks and the second produced salary surveys and reports. In 1993, he and his partner decided to go separate ways. Both partners got one company each. Sanjeev got Info Edge. In 1997, Bikhchandani set up Naukri.com, jobs portal on a server in the United States, and later Quadrangle, an offline executive search business. 

In 2005, Naukri.com was reported as being India’s largest web-based employment site.

Its business portfolio comprises:

Recruitment: Online recruitment classifieds, www.naukri.com, a clear market leader in the Indian e-recruitment space, www.naukrigulf.com, a job site focused at the Middle East market, offline executive search (www.quadranglesearch.com) and a fresher hiring site (www.firstnaukri.com). Additionally, Info Edge provides jobseekers value added services (Naukri Fast Forward) such as resume writing.

Matrimony: Online matrimony classifieds, www.jeevansathi.com, is among the top three in India’s online matrimonial space, and has offline Jeevansathi Match Points and franchisees.

Real Estate: Online real estate classifieds, www.99acres.com, is India’s largest property marketplace covering almost all the major cities and a large number of agents and developers.

Education: Online education classifieds, www.shiksha.com, is the smartest gateway for students to achieve their goals.

The company’s spirit of entrepreneurship has also been evident in the investments it has made in early stage companies/start-up ventures to tap into the growing and vibrant Indian internet market. Currently, the company has investments in 

Zomato Media Private Limited (www.zomato.com); 

Applect Learning Systems Private Limited (www.meritnation.com); 

Etechaces Marketing and Consulting Private Limited (www.policybazaar.com); 

Kinobeo Software Private Limited (www.mydala.com); 

Canvera Digital Technologies Private Limited (www.canvera.com); 

Happily Unmarried Marketing Private Limited (www.happilyunmarried.com); 

Goa-based Mint Bird Technologies Private Limited (www.vacationlabs.com); 

Mumbai based Green Leaves Consumer Services Private Limited (www.bigstylist.com); 

Rare Media Company Private Limited (bluedolph.in).

With a network of 62 offices located in 43 cities throughout India, Info Edge has 4,049 employees engaged in innovation, product development, integration with mobile and social media, technology and technology updation, research and development, quality assurance, sales, marketing and payment collection. 

It has also made forays abroad into the Gulf market with the website www.naukrigulf.com and currently has offices Dubai, Bahrain, Riyadh and Abu Dhabi.

In terms of accounting standards, Info Edge has the following subsidiary companies:

• Naukri Internet Services Private Limited and Jeevansathi Internet Services Private Limited, which own internet domain names and related trademarks;
• Allcheckdeals India Private Limited which provides brokerage services in the real estate sector in India;
• Info Edge (India) Mauritius Limited primarily to make overseas investments of the company (under liquidation);
• Applect Learning Systems Private Limited which is engaged in business of kindergarten to class12 (K-12) assignment and tuitions through its online portal Meritnation.com;
• Zomato Media Private Limited, which operates an online food guide portal zomato.com; and
• MakeSense Technologies Private Limited, owner of proprietary software for semantic search which augments search capabilities for both recruiters and job seekers, principally on naukri.com.
• Additionally investments made by Info Edge in other companies may have been routed through some of these subsidiaries.

Leveraging the Data (Naukri) -:

In the last 22 years, its Naukri platform has accumulated a vast amount of data – 60 million resumes and over 75,000 customers. Now, the company is looking to capitalise on this rich data bank by using artificial intelligence (AI), machine learning (ML), and big data to present an improved user experience. It is also looking to integrate its various platforms and offer new products to provide 360-degree solutions to the customer.

Earlier, the company would outsource AI and ML jobs, but it has now started to invest in-house. “A whole bunch of doctorates in the subjects” have been brought on-board to solve the jobs matching problem and provide a faster, more efficient user experience on both sides of the spectrum. At present, there are about 100 people within the company working on ML, AI, and big data, including a dedicated data science team of 35. The product development team is 500-member strong and the total staff count for the group stands at 4,200. The company is happy to loosen its purse strings for these tech spends, based on the needs. “We are not putting a budget and are happy to back as many good ideas as is out there on the tech front,” says Hitesh.

According to the CEO, Info Edge is aggressively investing in building a high-quality recruitment management system, offering a full-stack. He adds that “around 25,000 customers are using it already but there is still some way to go as the UI (user interface) pieces need to be streamlined.” The full-stack includes career site management, referral management, a centralised database for tracking and storing resumes with a matching engine on top, along with shortlisting, screening, and onboarding processes, as well as reporting analytics to track recruiter productivity.

Info Edge maintains that it is a big believer in small acquisitions that help to branch out and spur innovation. 

The company is also working on a new offering for Naukri called Insights. As the name suggests, this will provide insights to both recruiters and job seekers on recruitment trends.

Previous Acquisitions-:

In 2012, it acquired consultancy firm Toostep, laying the foundation for its recruitment management system. A year later, the Noida firm acquired IIT Bombay startup MakeSense Tech. This was its “first attempt at improving the matching (jobs with resumes) engine.

In 2017, the company acquired hiring startup AmbitionBox, which inspired the idea to build a holistic career platform (still a work-in-progress). According to Hitesh, a platform like AmbitionBox can track one’s career path and growth, and has, in fact, more employee reviews than Glassdoor, the global platform that allows professionals to rate and review their past and current employers. 

As per the management the will be used to take Naukri  from just a jobs platform to a career platform. They will integrate AmbitionBox more and more into it.

HighOrbit Careers (iimjobs portal)

In May 2019, the company acquired Highorbit Careers, which owns iimjobs and hirist.com.  

iimjobs is connected with over 13,00,000 jobseekers already and this is just the beginning.

Recent Acquisitions/Transactions-:

MedCords Healthcare Solution

About-:

Incorporated in September 2016 MedCords connect patients, doctors and pharmacies to facilitate tele-consultations for patients in tier 2 and tier 3 cities, which has a low access of quality doctors. The company also enables on-demand availability of users’ medical records. 

Transaction Information-:

Info Edge (India) has entered into an agreement to invest about Rs 7 crore, through its wholly-owned subsidiary, in MedCords Healthcare Solutions. Info Edge (India) will acquire 2,869 Series A compulsory convertible preference shares, having a face value of Rs 100 each, at a premium of Rs 24,295.20 per share. Info Edge added that post this investment, the aggregate shareholding of Info Edge (India) in MedCords would be 16.89% on a fully-converted and diluted basis, from 11.37% stake held currently.

Univariety

About-:

Univariety, which is operated by International Educational Gateway, was incorporated in May 2019. It offers education counselling to students and related services to schools and colleges. It offers its services offline and through its website and third-party portals.

Transaction Information-:

Info Edge (India) has also agreed to invest another Rs 8 crore in an education services startup Univariety. Info Edge has agreed to acquire 3,986 Series A1 compulsory convertible preference shares having face valtie of Rs 100 each at a premium of Rs 19,970.97 per share. The aggregate shareholding of the company, post this investment, in the said entity would be 37.90% on a fully converted & diluted basis.

Financials-:

Univariety’s turnover had risen to Rs 7.66 crore in the fiscal year ended 31 March 2019 from Rs 4.4 crore in the previous financial year. It had a turnover of Rs 4.09 crore in the fiscal year 2016-17.

Other bets it has made include education-technology startup Adda247, digital logistics platform Shipsy, Happily Unmarried Marketing Pvt. Ltd, and Greytip Software Pvt. Ltd.

Zomato-:

Info Edge has invested an estimated Rs 450-Rs 500 crore in the company, according to data collated by Tracxn. Zomato has been valued at $3 billion pre-money. For the fiscal year ended March 31, 2019, Zomato posted revenue of Rs 1,397 crore on a loss of Rs 1,001 crore, according to regulatory filings. A large part of the losses was due to spending on advertising and promotions. Currently Info Edge holds about 25.13% in the Zomato.

Venture Capital Fund

The company has set up its maiden venture capital fund, Info Edge Venture Fund (IEVF). The company also stated that IEVF, which is a Sebi-registered Category-II alternative investment fund, will invest in “tech and tech-enabled entities that provide technology to create, market and distribute innovative products and services that benefit consumers at large.”

The company also stated in its filing that it had entered into a “contribution agreement” to invest about Rs 100 crore into the new fund. It is, however, yet unclear if the company will bring in external investors to back the fund along side it, or the stage in which it will invest in potential companies.

Threats to Consider

Despite a late start in India in 2009 as against Naukri’s launch in 1997, LinkedIn has made steady inroads into India over the last five years – building its second largest market by user base after the US. Over FY14-FY19, LinkedIn has expanded its customer base at 18% CAGR vs. 11% for Naukri, with user additions of 38mn (vs. 30mn) during FY14-9MFY20. At the same pace of growth, we estimate that the professional networking player will surpass Naukri’s user base over the next two years. 

Small Silver Lining

Despite this similarity, the founding premise of both platforms is radically different. Naukri was founded with the objective of organising job listings and resumes on an online platform, while LinkedIn’s vision was to build a professional social network. Thus, both players have created vastly different products for the same end-use, targeting the same category of users. 

Conclusion-:

Times are tough and might get tougher in the coming time. It is difficult for us to accurately predict the slowdown in demand and its impact on the revenue & profitability of IT companies led by Covid-19, oil price fluctuation, banking & capital market, retail segment and restriction on movement of resources. Considering there are many moving parts. Covid-19 has hit almost all the countries of which some of the major economies are hit the hardest. 

The world economy may slip into recession or some grave crisis looking at the data suggests. Hospitality and Tourism sectors will be hit the most with some of the airline companies if the crisis extends may be forced to foreclose their operations on account of liquidity crunch and Financing problems. 

But however we as investors should not resist in taking bold investments. As said “Cash combined with courage in crisis is Priceless”. 

Indian economy has moved from primary and secondary to Tertiary (Service Sector) over the past couple of years. If there happens to be severe recession in India, unemployment will rise due to large number of working population working in the service sector Industry which in itself would be a big opportunity for the Info-Edge India.

Stock market is a leading Indicator while Unemployment, Recession etc are lagging indicators and it is extremely important to understand the concepts of Leading, Lagging and Coincident indicators. We have explained the same from the scratch to in detail in our Latest Short web series EFFECTS OF COVID-19 on the world economy. Please check it from the Link Below.

Youtube-: EFFECTS OF COVID-19

People willing to find work would be more engaged in the online Job Portal platforms which will drive the traffic to this sites even higher and increasing revenue significantly for Indo-Edge india which derives it major operating income from the Naukri Portal. On the other hand Business across other segments may be hit but since InfoEdge being a debt free company has no burden of interest and with sufficient cash can grab investment opportunities which will emerge in startup space at good valuations.

Zomato is now estimated at ₹451 per share value in Info Edge’s sum-of-the-parts valuation, according to HSBC Securities.

We are not advising to go out and start buying but as it our job to bring some of the good companies to user knowledge we are presenting this idea with a view that users may keep this in their watchlist and buy if it suits.

Note-: Info Edge India was previously suggested on DARKHORSESTOCKS at the price of 1691Rs since then the stock had hit 52 week high of 3130Rs thereby delivering 85% returns before falling to current levels.

Being more of Venture Capital type company it is difficult to provide Valuation since High amount of Investment are spread across Startups which again are based on Independent Valuations making it extremely difficult to arrive at a precise figure.