In an interview to CNBC-TV18 Hitesh Oberoi, CEO & MD, Info Edge spoke about the financial performance of the company in Q1FY15 and the road ahead.
Info Edge is an on-line classifieds company in recruitment, matrimony, real estate and education. It owns portals like Naukri.com and 99acres.com. The company's profit in Q1FY15 increased 35.4 percent to Rs 398 crore versus Rs 294 crore reported in the same quarter a year ago.
Oberoi said that the company is seeing improvement in services space at the moment. As far as Naukri.com is concerned, EBITDA margin continue to be very high and more increase possible, he said. Also, the realty portal, 99Acres business is growing at a healthy pace and the long term trend continues to be positive, he added.
Also Read: Info Edge plans a QIP of Rs 750 cr to invest in 99Acres
Below is the verbatim transcript of Hitesh Oberoi's interview with CNBC-TV18's Sonia Shenoy
Q: The quarter gone by saw a good performance from your end. Your profits were up about 35 percent year-on-year, the revenues were up about 5 percent or so. Since more than 70 percent of your business comes from the recruitment services division, tell us how are things progressing? We have heard of an economic revival, GDP revival, growth revival etc but what about the job situation, are things picking up?
A: Yes definitely the job market has been improving for the last two-three quarters now. The early improvement was mostly in the IT space, so we saw the IT companies picking up and doing well. Hiring specially in markets like Bangalore, Chennai, Hyderabad picked up as a result. Slowly and steadily we are seeing an improvement in the non IT space as well. The non IT market is actually more index to the domestic economy than the IT market which is actually more index to the global economy. But of late we have been seeing an improvement in the services space as well.
Q: How much could your recruitment services revenues grow in the second half of the year? First half you had almost 12-15 percent growth but that is overall by the end of FY14 but what about in FY15, what could the growth look like?
A: A lot would depend on what happens to GDP growth. We are much indexed to now the Indian economy. So if the Indian economy starts to pick up from here on and the GDP starts growing at 5.5-6 percent per annum, up from 4.5 percent last year then we expect to grow in the high teens but it depends on the economy.
Q: What about the margin picture because even in the quarter gone by your margins had improved to about 34 percent versus 30 percent earlier, what are the margins that you enjoy in the recruitment services business itself and how much can the blended margins go up because of the pickup that you are seeing?
A: I would not read too much into the margin improvement in Q1 of this year that is partly because we spent a little less in advertising than we normally do. So as advertising picks up way forward the blended margins will come down a little bit. But for Naukri as a business our EBITDA margins are very high. The Naukri EBITDA margin is as high as 50 percent and in good years we have hit 55-57 percent as well. Chances are that if the economy picks up and the job markets improve from here on. If we end up growing in the high teens then the Naukri EBITDA margins could improve from here.
Q: What is happening with 99acres because I was reading a report which suggested that 99acres could become the next Naukri for you in terms of generating revenues? Since we have seen things pickup on the ground in the real estate market, specifically in places like Mumbai, how is that business shaping up?
A: 99acres business is growing well for us, we grew 50 percent last year, we grew at 50 percent the year before that, we grew 40 percent in the first quarter of this year. So we have been rowing at a very healthy rate in the 99acres business. However, the space is very competitive but yes the long-term trend is positive.
The truth is that a lot of the offline spend will move online over the next few years. We are a leader in this space, we may not be as dominant as we are in the Naukri business, but we are a leader in this category. Chances are that we will invest a lot more in this category going forward. It will be a while before we start making money in this category. We are bullish that in the long run this business will be as big as Naukri.
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