Info Edge to come out with IPO of about 53 lakh shares

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS Info Edge (India) Ltd plans public issue Info Edge to launch IPO for funding expansion Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

Brands like naukri.com, jeevansathi.com and 99acres.com belong to a company called Info Edge and they are coming out with an IPO of about 53 lakh shares.

MD & CEO of Info Edge, Sanjeev Bhikchandani says that they have outlined three to five potential uses for the money from the IPO in the Red Herring Prospectus.

Excerpts from CNBC-TV18's exclusive interview with Sanjeev Bhikchandani:

Q: You are looking to raise anywhere between Rs 155-Rs 170 crore, I am guessing on the price band that you have outlined, what would you be using this money for?

A: In the Red Herring Prospectus we have outlined three to five potential uses. One is we are looking at possible acquisitions, second is expansions into new markets for diversification of new businesses. Third is a campus, four is technology and product innovation in alternate delivery model and so on. So we have roughly more or less equally split about across four to five uses.

Q: Would acquisitions be a part of your internet expansion or would it be part of your diversification process?

A: Even our diversification would be in the newer internet business. We regard ourselves as an internet company. So whether it is acquisitions or an expansion or diversification, almost all of it ought to be in the internet business.

Q: You have done about Rs 27 crore on sales in the first quarter and the profits stood at just about Rs 5.3 crore, would it be fair to assume that you would close the year at Rs 20- Rs 25 crore on the bottomline and Rs 80 crore on the topline?

A: I am not allowed to make a forward-looking statement, so I will refrain from giving a comment on that. But typically, we grew quarter on quarter as well. When extrapolating our first quarter results and to guess the annual results, one should take that into account.

Q: Your operating profit margins have jumped considerably, they have almost more than doubled on a year on year basis. What are the kinds of margins you see for a business like yours and the sustainability of the same?

A: The internet business has a very high operating leverage, which means a lot of the cost is either fixed or there are overheads. When the revenue comes in, if the revenue is more than the cost, then every incremental bit of revenue goes to the bottomline as long as there is no cost incurred in acquiring that revenue.

At the same time if the revenue comes in less than targeted or budgeted, then almost all of it goes away from the bottomline.