To use QIP funds to create war chest for 99Acres: Info Edge

“The market has only just begun to recover, with continued recovery Naukri will bounce back and see profits too,” Oberoi said about Naukri.com.

He says when investors look at Info Edge, they don’t see past performances but look for future potential in all the businesses it has invested into.

Below is the verbatim transcript of Hitesh Oberoi's interview with Latha Venkatsh & Sonia Shenoy on CNBC-TV18.

Sonia: Can you tell us what will these funds exactly be used for?

A: We are raising these funds to create a war chest for 99 acres, which is our real estate vertical. In addition to this of course, the funds could also be used for acquisitions for our existing ventures like in job space, in the real estate space, in the education space besides we could continue to invest in our investee company as well.

Latha: Have you got some company on your radar, since you are sounding fairly positive on it. Should we hear from you before 2014 is out or before the fiscal year is out?

A: We keep scouting the market for companies to invest and acquire. Last year we acquired two startups in the job space, of course these are very small acquisitions. We keep looking at the market, this is a very hot sector, the internet space in general; there is a lot of entrepreneurial activity. So from time to time we keep meeting companies who could be of interest to us. So we have nothing on the radar right now but we are always scouting.

Sonia: You did mention that most of these funds will go in to 99 acres. What's the prognosis as far as 99 acres business is concerned. In the quarter gone by you made an EBITDA loss of close to Rs 5 crore. How long will it take for you to become profitable in 99 acres?

A: The mandate from the board and from our shareholders is to set up the weapon in the real estate space. Of course the real estate market right now is down and not doing very well, but in general the medium-term outlook for the real estate is that this would be a big sector and lot of good companies will be built in this space. Therefore, we will do whatever it takes to maintain our leadership and to dominate this market and this means investing in few areas going forward. If it means making losses in the short-term, so be it.

Latha: Have you seen a turnaround in revenues and the use even in Naukri?

A: Naukri has actually surprised us in the last one or two quarters. There's been a recovery of some sorts; we had stagnated for a while and we were going at low single digits for about three or four quarters but the last two quarters have been good; we are going in high teens and the markets is now beginning to recover. So, as the market improves further growth in Naukri should pick up even further.

Sonia: So by the time FY15 comes to an end how much do you think the recruitment segment can grow. I am reading out of the report where one brokerage expects the FY15 recruitment segment growth at 16 percent versus 10 percent that you did last year. Do you think that\\'s what you could deliver?

A: What we are seeing right now is sectoral recovery. So it\\'s not as if the market as a whole has started to recover, but certain sector like IT and IT enables services have started doing well. This has been trend for last two or three quarters. In general there is buoyancy, what we hear from the market is that people sort of want to revisit their plans, the hiring plans they have for the year. We also read in papers that sectors like auto have also started to recover. So chances are that things will keep getting better and better from hereon and by year end one is hopeful that Naukri would be growing really well.

Latha: The rally in your stock is breathtaking. Over the past year Rs 350 has become Rs 891, almost threefold. Your last historical earnings are Rs 12. How much you can deliver Compound Annual Growth Rate (CAGR), profit, any matrix you want to speak about?

A: Naukri is doing really well. It\\'s a healthy business with a higher EBITDA margin and EBITDA margin above 50 percent plus. Naukri has been slow for the last four or five quarters but if Naukri starts to grow at 25-30 percent per annum and this is pretty doable if the economy recovers, then margins in Naukri could improve further and profitability in Naukri could go to the next level. This is of courses one part of the story. Besides Naukri, we have 99 acres; we are investing substantially in 99 acres. This is a big opportunity for the company. Worldwide, what\\'s being seeing till now is real estate sites are much bigger than job world. So the potential to create value in this business remains. Of course we are not dominants like we are in Naukri, we don\\'t have 70 percent traffic share but we are leader this category and there is a huge opportunity. Besides this some of our investee companies Zomato and some of the other companies we have invested in are also showing good reactions. So when investors look at Info Edge they just don't look at our price to earnings (PE) multiple and at our earnings of last year. They look at what is possible going forward given the sort of option value in all the businesses we have invested in.

Latha: Would you also look to sell, you spoke about your smaller properties and there are people hungry for properties in the digital space. Are you open to selling any?

A: No, so far we have not sold anything. People have been talking about Jeevansathi.com for a long time and saying that Info Edge is going to exist Jeevansathi. We still believe there is an opportunity in that space and we continue to invest in the Jeevansathi business as well. As far as our startup investment go, from time to time depending on the business, depending on the capital requirements of that company and depending on the risk profiles of that company we have let other investors in. So in some of the investee companies where we were the sole investors, we have other investors right now but we haven't exist anything which is doing well.

Sonia: Can you just tell us little more about what this Mydala investee company is. I haven't heard of it. And what does it really contribute to in terms of the overall business?

A: Mydala started live as a discounts and deal site. They were sort of Groupon type of model to start with. Somewhere in the middle they mocked into a mobile play as well. So they have tie-ups with some of the operators and they power their deal platforms. So, it's a very small investment right now and it's a small company, but it's showing good signs and doing well.