May 03, 2012, 04.04 PM | Source: CNBC-TV18
Info Edge saw an extraordinary performance in Q4, overriding estimates and clocking almost a 50% rise in profits.
In an interview with CNBC-TV18, Hitesh Oberoi, CEO & MD, Info Edge said, “We are bullish on our performance because we are executing very well, we have lot of innovations lined up on the product side and we are gaining share in the real estate business. Hopefully, we will deliver well going forward too.”
In Q4FY12, Info Edge registered total profit of Rs 40 crore, in comparison to Rs 26.89 (QoQ). The net sales of the company was also up at Rs 106 crore, against Rs 81.5 crore(QoQ). Info Edge has also announced the issuance of bonus shares in the ratio of 1:1.
Below is the edited transcript of his interview with CNBC-TV18. Also watch the accompanying video
Q: Your revenue beat expectations by over Rs 10 crore and in percentage terms it is a little more than that as well profit coming in at Rs 40 crore is a 50% rise, What contributed to this kind of extraordinary performance?
A; To be honest, even we were positively surprised. The hiring market is not as good as it used to be, nor is the real estate market very strong. I think we have just executed very well. We have gained share from competition and that has really helped us to score.
Q: Would you say that there are more gains to be made in that case, the pie is not growing and you are growing your pie? Are these gains maintainable?
A: We are cautiously optimistic about next year. Our collection growth has not been as good as our revenue growth. This means the next couple of quarters may not be as good as the last couple of quarters.
However, we are bullish on our performance because we are executing very well, we have lot of innovations lined up on the product side and we are gaining share in the real estate business. Hopefully, we will deliver well going forward too.
Q: Could you break it down into segments for us, how has been the performance in naukri.com, 99acres, - with 99 acres there is expectation that it could be a growth driver in this fiscal, what are you expecting from there?
A: Both 99acres and naukri did very well last quarter. Naukri corporate sales grew at close to 30%, which was better than the previous quarters. The growth of 99 acres in the second half of the year was better than the first half. So, growth in 99 acres is accelerating.
In both these categories we are gaining share, we are confident. But the companies are not hiring as aggressively as last year. That makes us a little more cautious in terms of giving our guidance for the future.
Otherwise, we are going strong, we are hiring aggressively for our company, we are investing in brand building, we are investing in product development and technology. We want to gain share and we want to be aggressive next year.
Q:Other than you which are the industries or sectors which are hiring?
A: IT companies had a good year. We saw good growth in IT, in IT markets like Bangalore, Pune and Chennai. Sectors like telecom, insurance and construction have been a little slow as far as hiring is concerned. Other sectors have been healthy and fine.
Q: What kind of capex are you expecting? You have been generous with your reserves, giving bonus issues. Broadly, what kind of growth trends do you see since you said it is tough to maintain a 22-25% pace, what is the maintainable pace?
A: The economic situation is very uncertain and in the naukri business we are closely indexed to the economy. In 99 acres we can still grow our share, we are under-penetrated, we haven’t sold to enough customers, there is room for growth even if the economy does not grow.
But, naukri which is our largest business, we are closely indexed to the economy and therefore, it is very hard to say.
Q: What about the marriage business, that must be pretty defensive? Isn’t it giving you money yet?
A: Not really. In marriage, we are not in the same market position as in jobs and real estate. We are a number 3 player. So, we are loosing money in that business. We have not been able to grow that bsuiness aggressively.
But, going forward we would like to invest more in the marriage business as well. We are confident that we will at least be able to push up our growth rate in that business.
Q: What about margins, we have employee costs dominate the margin outlook and the expectation is that since its variable linked, the margin deterioration may not be much. Is that what you are expecting, will margins be cushioned?
A: Next year we expect our employee cost to go up substantially. We plan to invest more on the brand building side as well. If we are able to maintain growth rate between 20-25%, margins may not get impacted. But, if our revenue growth rate falls below 25% then margins could come under pressure.
Q: With regards to ad spends, this time around they have been lower than what the street was expecting, are you looking to cut down on ad spends so that margins again get stabilised?
A: Not really. We want to invest big time in brand building next year.
Axis Direct recommended hold rating on Info Edge I
Centrum is bullish on Info Edge has recommended bu
ICICI Direct recommended hold rating on Info Edge
Reacting to the results, Hitesh Oberoi of Info Edg