Info Edge sits on 15X gains from Zomato, Policybazaar: Why Sanjeev Bikhchandani is not selling

Sanjeev Bikhchandani, Founder of Info Edge

Although Info Edge, an early backer of foodtech major Zomato and insurance aggregator Policybazaar, is sitting on 15x gains from its investments in the two companies, it is not in a hurry to book exits from the new-age stocks.

Asked about any plans to monetise these assets, Info Edge founder and vice chairman Sanjeev Bikhchandani said in an analyst call that there could be only three reasons to sell: “First of all, we would sell if we need the money for some other purpose, or if we think that their future is not bright, or if we want to give back money to shareholders immediately.”

“It is always open to discussion at board level and we are flexible on it,” he added.

Info Edge said in an investor presentation earlier this week that its cost of investment in Zomato was Rs 147 crore while it currently holds a 15.24 percent stake in the company. As such, it is sitting on unrealised gains worth 61x of its bet on the food delivery company as its stake is worth Rs 9,077 crore at current share prices.

Similarly, the cost of investment in Policybazaar was Rs 576 crore for a 12.79 percent stake – and it is sitting on unrealised gains of 3x as its stake is worth Rs 2,258 at current share prices.

Bikhchandani also said that the number of start-ups approaching Info Edge for funding has increased as dealmaking in the sector has dried up this year. Although this has given Info Edge more choice in which start-ups to fund, it has become more cautious of making bets now like other investors.

“The pace of deployment will be slower… We are less trigger-happy now. You have to think long and hard about where the next funding round of the start-up is going to come from,” he said.

Asked about the amount earmarked for investments in start-ups from the company’s balance sheet, the Info Edge founder remarked that setting aside a particular amount may result in ‘budget entitlement’ at times which further leads to sub-par bets.

Hiring and attrition in the IT services sector is seen to be coming down as the Covid-induced bump in technology adoption abates, Info Edge chief executive officer Hitesh Oberoi told analysts on a concall.

Info Edge, the parent of job search platform Naukri, currently gets 48 percent of its recruitment solutions revenue from the IT and ITeS segments whereas the rest comes from non-IT sectors like BFSI, manufacturing, infrastructure and others.

The company itself is seeing a decrease in attrition, the Info Edge CEO said. “Employees used to go and join start-ups, but start-ups are in big trouble now,” he said. As a result of the decrease in pressure from start-ups hiring aggressively, IT companies are also seeing their hiring pipelines normalising to earlier levels.

However, Oberoi said that it was not possible to make a projection on how much IT attrition has fallen as yet and how it is going to shape up for the next few quarters.

Moneycontrol earlier reported that India's largest software exporters such as TCS, Infosys, Wipro, and HCL Tech together added 28,836 employees in the second quarter ended September, a significant drop of 45 percent compared to the 52,842 they added in the previous quarter.

“Non-IT sectors are seeing a surge in hiring. It is a function of the Indian economy as there is revenge travel, revenge shopping etc. We are seeing a massive demand in telecom, retail, and hospitality. There is more demand for sales, marketing, customer service professionals,” he said.

In the September quarter, the recruitment solutions vertical of InfoEdge saw its billings grow 41 percent year-on-year to Rs 426 crore, even as tech start-ups, e-commerce companies and IT service majors have pulled back on hiring due to fears of an economic slowdown.

Apart from job search portal Naukri, the company also owns other platforms in the segment such as iimjobs, Zwayam and Do Select.

Info Edge’s revenue rose 65 percent to Rs 601 crore in Q2 while profit before exceptional items and tax rose 113 percent to Rs 149 crore. The company had booked an exceptional gain of Rs 8,269 crore in the year-ago period as it sold a part of its holdings in Zomato’s initial public offer.