Strains in IT sector, Gulf market may affect co: Info Edge

Online classifieds company Info Edge (India) has reported over two-fold jump in its net profit at Rs 80.07 crore for the quarter ended September 30 as compared to Rs 30.81 crore for the same quarter in the previous year.Talking about the strains in the information technology (IT) sector, Hitesh Oberoi CEO & MD, Info Edge in an interview to CNBC-TV18 said a slight slowdown is seen in the IT sector but that has been compensated by the pickup in some of the non-IT sectors. The company will do better in the second half of this fiscal if the market conditions are better, he said. 99 acres, whose parent company is Info Edge, had a resonably good quarter. He also said that it is getting better at execution and the competitive intensity in the space has gone down.  The gulf market is facing difficult times and Oberoi says that the market continues to be under stress because of low oil prices and he doesn't see recovery in the next one or two quarters. On the performance of Naukri.com he said, "We are seeing customer growth in Naukri which is higher than last year. Some of the new products that we rolled out in the market are being received well."Sales of Zomato are growing at a very healthy rate and the company is investing on delivery.Watch video for more...Below is the verbatim transcript of Hitesh Oberoi’s interview to Latha Venkatesh and Surabhi Upadhyay on CNBC-TV18.Latha: Revenue up 20 percent, you can\\'t complain about 21 percent rise in topline and a profit that is super if you add the tax reversal as well. The numbers are good but what can you tell us about the trend. We know that IT jobs are not doing well and they form a substantial part of your revenues. Can you continue with this kind of a topline growth, are you seeing strains in IT jobs?A: Yes, you are right. We are seeing a slight slowdown in IT. Thankfully for us that has been compensated for by a pickup in some of the non IT sectors like financial services, insurance, IT enabled services. So, we are still okay on revenue but yes, if you are showing X percent revenue growth this quarter IT is below X and non IT is above X. Now we are hoping that we will be able to maintain this growth rate if IT does not slow down further.Latha: So, will it be X in the second half as well or in the next 12 months or will it be below X, your rate of growth?A: If the market continues to be good we should be able to of course do better in the second half but if the IT market slows down further then who knows.Surabhi: Can you break this down for us in terms of the different businesses? Individually how has Naukri.com done and what has happened with 99acres.com etc?A: Yes, so 99acres had a recently good quarter as well after a while. We were growing at 10-11 percent for the last 3-4 quarters. But this quarter our collections grew at about 23 percent and in revenue terms we grew at about 16 percent because we don\\'t recognise all the revenue upfront and it gets deferred over a period of time. And of course earnings before interest, taxes, depreciation and amortisation (EBITDA) losses in 99acres we were able to half. So, EBITDA loss in 99acres is down to about Rs 10-11 crore a quarter down from Rs 20 crore last year same time.Surabhi: You see that turning into profit perhaps in the current financial year what is the trend on the EBITDA front for 99acres?A: We are getting better at execution and of course the competitive intensity in the space has gone down overtime and if the market continues to improve we saw a slight improvement, very slight improvement in the real estate market last quarter and if that continues and if that results in us growing our revenues faster and competition stays as it is yes, we could look at EBITDA breakeven in a couple of quarters but it all depends on how the market plays.Latha: What about the gulf market, it was about 7-8 percent. How was that doing because there also there are strains?A: Yes, the gulf was a difficult market for us and it has been difficult for the last few quarters, except for Dubai where we were able to sort of barely grow at 3-4 percent, we actually declined in some other geographies. So that market continues to be under stress because of low oil prices and we don\\'t see a recovery in the next one or two quarters but in Dubai we are still okay because Dubai is a little more than oil, Dubai and UAE is a little more than oil.Surabhi: So, maybe if you could leave us with a sense of growth for Naukri itself, given the fact that there are these IT headwinds and gulf headwinds what are you expecting in the second half of the year?A: We are happy with the way we are executing in Naukri. We are seeing customer growth in Naukri which is higher than last year. So, we are adding more customers and we added at the same time last year. We have been able to cut discounts a little bit as well. So, we are getting pricing power in the market which is helping. We are seeing a slowdown in IT but we are also seeing non-IT sector pick up. Some of the new products which we rolled out a year back are being received well in the market. They are of course very small right now but they are adding a percent or two.Latha: Zomato when do you break even?A: The management is confident that they continue to execute well, they have brought down their burn substantially over the last few months, their burn is down less than a USD 1.5 per month from a peak of USD 7-8 a month. Sales are growing at a very healthy rate. But of course we are now investing behind delivery aggressively. So, it is a new business they have entered and that business is growing handsomely. So, I am not sure, maybe six months or more but they are on track.Latha: What is the burn rate for 99acres? Is that completely down, are your EBITDA losses much lower? Any comparisons?A: Yes, 99acres burn rate has come down substantially. In the first half of last year we lost around close to Rs 60 crore at the EBITDA level. In the first half of this year we have lost about Rs 25-27 crore at the EBITDA level. So, the burn is down by 50 percent or more and in this quarter it is about Rs 10-11 crore. So, burn has come down substantially even in 99acres.