Consumer Internet Cos: Time to Buy Info Edge, Matrimony, Just Dial? | CORPORATE ETHOS

Consumer Internet Cos: Time to Buy Info Edge, Matrimony, Just Dial?

By: | March 27, 2018
Consumer Internet

The internet boom has led to a large number of start ups and established players trying to gain more business with expanded offerings in India. Most of them have become household names such as Google India, Flipkart, Amazon India, YouTube, Ola, Uber, Saavn, Bharat Matrimony, Quikr, Shaadi.com, Facebook and so on.  Thousands of start ups are emerging across the country thanks to angel funding catering to certain niche segments such as ExTravelMoney.com, a forex and money changer aggregator.

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The consumer internet landscape is resplendent across categories but most of the stars are still not yet ready to tap the equity market with their offerings.

Amidst the alternating phase of volatility, bear and bull run in equities, here is a look at the prospects of listed players in consumer internet domain.

#Info Edge India Ltd (BSE: 532777, NSE: NAUKRI) Category: Large Cap
Info Edge India Ltd was established in May 1995 and became public limited company in 2006. Innovation and creativity have helped the company grow  from an online recruitment company to offer different services such as matrimony (jeevansathi.com), Real Estate (www.99acres.com) and education (www.shiksha .com). The company has investments in several start up companies in the consumer internet domain such as Zomato, Meritnation, Policybazaar among others.

The company is led by Sanjeev Bikhchandani, Founder and Executive Vice Chairman and Hitesh Oberoi, Managing Director and Chief Executive Officer. The company grew at a compound annual growth rate of 19.4% with a revenue of Rs 139.5 cr in FY2007 to Rs 820.9  cr in FY2017. It had a cash balance of Rs 1289 cr and had invested 734.8 cr in investee companies at the end of FY17.

Naukri.com continues to be their mainstay while 99acres.com was impacted by demonetisation in last financial year while business grew for other verticals such as Jeevansathi.com and Shiksha.com. The company now gains considerable traffic on the mobile platform and is constantly innovating in tune with the market trends.

In FY2017, net sales rose 17.2% to Rs 820.9 cr while net profit rose 27% to Rs 266.1 cr. In Q3FY18, net profit rose 13.23% to Rs 53.35 cr while sales rose 22.07% to s 227.16 cr. The company is valued higher in markets with a Price Earnings Ratio (PE) of 63.62. On a half yearly basis, it has given a return of 15.91%, above industry average and annual returns of 45.57%.

It has not performed well in return on equity at -1.48%, and return on assets at -1.56% and net profit margin of -2.66%. Cash flow and liquidty parameters are also not encouraging. On technical charts, RSI of 41.23 is bearish while ADX of 18.30 suggests range bound trading and MACD has witnessed a bearish crossover suggesting sell.
Target: 1250 Duration: 4 weeks.

#Matrimony.com Ltd (BSE: 540704, NSE: MATRIMONY) Category: Small Cap

Matrimony.com was established in April 1997 by a young programmer named Murugavel Janakiraman based in New Jersey, USA as a community portal. He met his life partner Deepa through BharatMatrimony, his own site in 1999 and within a short time the match making site became a huge hit. Soon offices were set up in Chennai, Bangalore, Mumbai, Hyderabad and other cities. In 2006, Bharat Matrimony found a place in the Limca Book of World Records for record number of documented marriages online. The company went public in 2015.
The company reported total income of Rs 292.9 cr in 2016-17 up from Rs 255.4 cr the previous year while net profit was Rs 43.7 cr up from loss of Rs 75 cr the previous year. Earnings per share rose to Rs 23.13.

In Q3FY 17, net profit rose 75.06% to Rs 23 cr and sales rose 15.37% to Rs 83.66 cr. On a returns perspective, it was negative on quarterly, half yearly annual basis and below industry average. It hasn’t fared well on return on equity at 1% but has better return on assets at 36.67%. Net profit margin of 14.95% has been quite attractive. It doesn’t fare well on liquidity and cash flow ratios. It is trading at a PE of 42.69%.

On technical charts, RSI of 27.22 is bearish, while ADX of 35 indicates uptrend while MACD line has witnessed a bearish cross indicating selling opportunity.
Target: Nil

#Just Dial Ltd (BSE: 535648 NSE: JUSTDIAL) Category: Small Cap
Just Dial Ltd was launched in 1996 by Venkatachalam Sthanu Subramani Mani (VSS Mani) as a local search services on internet providing listing of various services on a city wise basis across India available on phone (Voice), messaging (SMS) , mobile phone and internet. It was conceived by the company with 6 employees, some rented computers and borrowed furniture.

The official website www.justdial.com was launched in 2007. Just dial apps are available on Android, iOS, Windows and Blackberry platforms. Major investors are SAIF Partners, Sequoia Capital, Tiger Global, EGCS and SAP Ventures.

The company reported an operating revenue rose 7.6% in FY ‘17 to Rs 718.6 cr while net profit was Rs 121.3 cr as compared to Rs 142.7 cr the previous year while net profit margin was 15%.

As of March 31, 2017, Just Dial was conducting approximately 4,35,360 campaigns for its paid advertisers as compared to 3,68,800 campaigns as of March 31, 2016, representing a Y-o-Y growth of 18%

As of March 31, 2017, their  consisted of approximately 17.9 million listings as compared to 16.3 million listings as of March 31, 2016, representing a Y-o-Y growth of 9.5%. The total employees exceed 11,000.

In Q3 FY18, net profit rose 4.23% to Rs 28.60 cr while sales rose 9.16% to Rs 196.79 cr. On a returns perspective the company has given half yearly returns of 24.97% and yearly below industry average. It is quite strong on return on equity at 13.40%, on assets at 40.29% and net profit margin of 16.88%.

It is trading at a PE of 23.94 indicating modest valuation by market. On technical charts, RSI of 53.44 indicates bearishness, while ADX iof 22.19 indicates range bound trading and MACD has witnessed a bullish crossover.
Target : 500 Duration : 4 weeks.

Summary
There are indeed some good success stories in consumer internet domain in India basically because they cater to the needs of their target audience using a user- friendly interface and a robust technology backend. Several others not profiled in this review may be waiting to spread their wings and fly higher while several other promising start-ups are vying for venture funds or private equity to take them forward. It may be a while before more public offerings may pour in. Investors can gain through selective exposure to listed companies in this domain.