Info Edge eyes realty sector growth to sustain 17% margins

By exercising spending cuts — something which most companies aspire to do — Info Edge has managed to improve margins to 17-18 percent year-on-year, says Hitesh Oberoi, chief executive officer and managing director. Info Edge runs famous recruitment website, Naukri.com.

Speaking to CNBC-TV18 on its Q2 results, Oberoi says the company is likely to do well if the country continues to grow positively. “If the economy starts improving, if the market for jobs in real estate starts looking up, then our growth rate should improve from here on,” he adds.

Additionally, Oberoi is betting big on the company’s real estate-related business (99acres.com) and expects it to do well in the time to come. Below is the edited transcript of Oberoi’s interview to CNBC-TV18. Q: Rs 44 crore of EBITDA, could you tell us what was your EBITDA margin and what would have led to the beat on the margin front?
A: Our net sales grew by over 15 percent this quarter over last year and our costs were under control. We have spent a little less than what we expected to spend on advertising and people expenses. As a result of that, EBITDA margins improved marginally and our EBITDA was up about 17-18 percent year on year. Q: As a percentage your EBITDA margins have come in a little over 35 percent. Is that sustainable for the rest of the year?
A: If the business continues to grow over 15-17 percent year-on-year (YoY) the margins are sustainable, but if growth slows down it will be hard to sustain. Q: What about the revenue picture because that is pretty much flat quarter on quarter Rs 123.5 crore?
A: It makes sense to look at our revenue on a year-on-year (YoY) basis because our business is a subscription business and there are renewals which comes at certain times of the year. That's the way to look at it. Over the last quarter, we grew in revenue only by about 2 percent but a lot depends on the economy. If the economy starts improving, if the market for jobs in real estate starts looking up, then our growth rate should improve from here on.

Q: What was the revenue growth in your recruitment services and also what the collections in Naukri.com were in this quarter?
A: Our recruitment business grew by about 7 percent year-on-year. The 99acres business did fantastically well and grew at over 57 percent. While collection growth in Naukri was slightly higher than 7 percent, but it is very early to say whether the economy is recovering and whether this is going to sustain going forward. Q: What about EBITDA for the other verticals, last quarter you had EBITDA loss of Rs 9 crore, what would be the EBITDA picture for rest of your businesses apart from Naukri?
A: EBITDA losses for the other businesses were lower than last quarter this time. I cannot give the breakup right now but Naukri EBITDA margins were healthy and were maintained at close to 50 percent plus while the EBITDA losses in the other business came down substantially this quarter. Q: What is your expectation of what the revenue growth will look like for the full year FY14?
A: It is very hard to say, a lot would depend on the economy, our business index to the GDP of this country, growth of this country. If there are no jobs created, we don't grow much. So, if the economy starts looking up, if the worst is over then hopefully growth in Naukri should pickup going forward.
As far as the real estate segment is concerned, we are confident of growing even in the coming quarters because in that segment we are still a very small business and even though the real estate markets are down, there is a lot of revenue moving from offline to online media and even benefit from that movement. Q: Any plans of monetising any of your investee companies in the next few months?
A: Our investee companies are still very small and growing rapidly and most of them require more funds to grow, so there we are investors right now for the long run. Of course once in a while we do get external investors in if we cannot fund the entire amount ourselves. However, I don't see us monetising anything at this point in time, we are still looking at growing those companies aggressively and that requires more investment.