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Last Updated : | Source: CNBC-TV18

To invest further in 99acres despite low nos: Info Edge

In an interview with CNBC-TV18, Chintan Thakkar, CFO of Info Edge said the company will continue to invest in 99acres despite the slow revenue growth in the June quarter.

Sluggish real estate demand and other investments led to low earning numbers in 99acres for the June quarter, CFO of Info Edge Chintan Thakkar said.

99acres revenue grew at 12 percent and the earnings before interest, tax, depreciation and amortization (EBITDA) loss came at Rs 35 crore for this quarter.

Thakkar said weak demand in north India and other cities halted revenue growth. The company spent Rs 30 crore of its initial investment of Rs 750 crore in the first quarter on operations and marketing of 99acres.

Despite slow growth, Infoedge will continue to invest in 99acres, Thakkar said.  

The other divisions of the company like reported revenue growth of 20 percent and EBITDA of 35 percent.

Below is the transcript of Chintan Thakkar's interview with Reema Tendulkar & Mangalam Maloo on CNBC-TV18.

Mangalam: The EBITDA has come lower as compared to previous quarter and previous year as well when the major culprit of that has been 99acres and that continues to bleed money in fact this quarter itself it has bled about Rs 36 crore in profit before tax (PBT). What is your plan going forward as far as InfoEdge is concerned and where do you see this getting better?

A: The right way of looking at InfoEdge is that you need to look at all the verticals separately and that is why this quarter we have given the results separating it out, what is the investment that is happening in 99 acres, what is the kind of investment happening in recruitment business.

So if you look at recruitment, we are cruising along very well. We are growing at about 20 percent and we are continuing to keep a healthy margin of more than 50 percent. In fact in our segment reporting, we have reported 53 percent as the segment profit so that has been great for us and it continues to be in the same way.

99acres -- it is not appropriate to say that is bleeding from the perspective that the amount that we are spending is an investment, we being an international company so we need to understand and appreciate that piece. So if you take that into account, that is fine.

We raise Rs 750 crore last year around September to say that we are going to invest in 99acres and this is as per the plan that we have continued to invest in our product, in our operation, in marketing. So there is nothing which is unexpected here.

Reema: Naukri has seen a growth of 20 percent and EBITDA margins of 53 percent. For 99acres, could you give us the numbers what has been the revenue growth as well as the EBITDA loss?

A: Revenue has grown at about 12 percent in 99acres and we have EBITDA loss in 99acres as a segment which is about Rs 35 crore.

Reema: Revenue growth has slowed down in 99acres. It used to grow at a much faster clip even last quarter it was at 33 percent. Is this 12 percent growth in 99acres in the topline a one of and even on the EBITDA margins, it has widened the loss, if you compare it on a year-on-year (Y-o-Y) basis or even on a quarter-on-quarter (Q-o-Q) basis. Should we expect that the EBITDA losses could even go up from these levels?

A: There are two separate pieces. One is that the cost is growing which is a function of how much investment that we are making in terms of marketing, in our operation which in some ways is also led by how the competitive situation is. So that piece is a bit separate and now let us look at where our revenue is.

From revenues perspective, I do agree that 12 percent is not as high as what result we produced in the last quarter but you also need to take into account that this real estate business per se is not doing very well overall in India.

Particularly if you look at north, if you look at Delhi NCR, the results in that region are not great because the real estate overall market is not going very well in Delhi NCR. Same is true for many other cities as well.

Mangalam: How much did you invest in 99acres this quarter itself and while the competition intensifies while you continue to invest in 99acres, the results are not shown on the topline with the revenue growth being sluggish, when do you expect that to turnaround as well?

A: I think a lot of things are linked to how the real estate market is going to grow. Right now it looks like that it is sluggish and it may not come up in next few quarters, so it all depends on how the revenue will grow which is a function of how the market is overall.

In terms off investment, I think we are spending more on branding piece, which will continue, which we think is a capital asset, which will give us enduring results.

Reema: Any numbers of your total investments for 99acres?

A: We have created a war chest of Rs 750 crore. We have just begun to spend some money of that. It will all get decided by how the overall real estate market is, how the competition is and how we are growing in terms of our products and ambition and where our operation is.

Mangalam: How much did you spend in this quarter then?

A: Rs 30 crore is what we incrementally spent in this quarter, which is behind marketing, operation.

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First Published on Jul 27, 2015 02:16 pm
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