IPO Details of Info Edge India:

Our Simple Verdict :Investor with long term perspective can apply long term keeping faith in the managment and India growth story.Look below for complete review

Info Edge (India) Ltd.
A-6, Swasthya Vihar , New Delhi , Delhi - 110092

Public Issue of 479146 Equity Shares of Rs 10 each for Cash at a Premium of Rs 310 per share.

Issue Open Date Issue Closing Date Application Money Allotment Money
30/10/2006 02/11/2006 320 -

Lead Managers : CITIGROUP GLOBAL MARKETS INDIA PVT LTDICICI SECURITIES LTD
Registrar : INTIME SPECTRUM REGISTERY LTDC-13, PANNALAL SILK MILLS COMPOUND , LBS MARG. KANTILAL MAGANLAL INDUSTRIAL ESTATE , BHANDUP (W) , Mumbai , Maharashtra - 400078 Phone: 55555454 Fax: 55555353
Listed at:BSE, NSE

Object of the issue:
The Objects of the issue are to raise capital for developing and expanding our business and also to achieve the benefits of listing on the stock exchanges. We believe that listing will enhance our brand name and provide liquidity to our shareholders.
The main objects clause and the objects incidental or ancillary to the main objects clause of the Memorandum of Association enable us to undertake our existing activities and the activities for which funds are being raised by us in the Issue.
The net proceeds of the Issue after deducting all Issue related expenses are approximately Rs.(*) million. We intend to use the net proceeds of the Issue to

1. Expand into new markets, to diversify into other businesses,

2. To develop alternate delivery models for our products,

3. To purchase/lease real estate for our offices,

4. To acquire other companies or businesses and

5. for general corporate purposes.

Promoted by:
Mr. Sanjeev Bikhchandani, 42, an Indian national, is our Chief Executive Officer and Director. Mr. Bikhchandani obtained a Bachelor of Arts degree in Economics from St. Stephen College, Delhi University in 1984 and a Post Graduate Diploma in Management from the IIM Ahmedabad in 1989. Mr. Bikhchandani is one of our founders. His work experience includes an advertising position at Lintas India Ltd., a marketing position at HMM Ltd., (now known as Glaxo SmithKline, and a senior management position at CMYK Printech Private Ltd., (Owner of the Pioneer newspaper) Mr. Bikhchandani was selected as a finalist for "Ernst & Yound Entrepreneur of the Year" award in 2005. His gross Compensation in Fiscal 2006 was Rs. 5.53 million.

Now let us Review this IPO:

Background :
Info Edge (India) Ltd (IEIL) is a leading provider of online recruitment and matrimonial classifieds and related services in India. The business is managed through four divisions, which comprise of online recruitment classified division (naukri.com – launched in March 1997), online matrimonial classified division (jeevansathi.com – acquired in September 2004), online real estate classified division (99acres.com – launched in September 2005), and an offline executive search division (Quadrangle – acquired in November 2000). The company currently maintains a network of 45 offices located in 30 cities throughout India, which are mainly engaged in sales, marketing and payment collecting activities for all business divisions. It also has an overseas office in Dubai. IEIL has two subsidies, Naukri Internet Services Ltd and Jeevensathi Internet Services Ltd, which own Internet domain names and related trademarks used in the business.

Key Concerns :
Intensifying competition The on-line classified industry is highly competitive and we expect that the competition will continue to increase. Key competitors for naukri.com and Quadrangle are monsterindia.com, timesjobs.com and jobsahead.com. Similarly in case of jeevansathi.com, competitors are shaadi.com and bharatmatrimony.com. 99acres.com faces competition from print media and small Internet-based portals. The entry barriers for internet-related businesses are relatively low. Traditional players of classified and other new entrants could enter the online industry and increase competition and reduce market share and hence profitability.
High dependence on recruitment related services Recruitment related services generated 95.9%, 98.2%, 98.4%, 96.8% and 92.7% of the total income for FY02, FY03, FY04, FY05 and FY06 respectively. As substantial portion of the revenues are currently dependant on recruitment services, any downturn in the Indian employment market may adversely affect the financial condition of the company.

Financials :
The company posted a top line of Rs 84.09 crore for FY06 and Rs 29.3 crore for Q1FY07, while bottom line was Rs 13.2 crore and Rs 5.22 crore during the same period respectively. Recruitment business generated more than 89% and 92.7% of the business in Q1FY07 and FY06 respectively. Operating margins for the company are 30.3% and 28.8% for Q1FY07 and FY06 respectively while net margins are in the range of 17.8% and 15.8% respectively for the same period. Employee cost accounted for more than 28% of the top line, while advertising cost accounted for nearly 20% of the same. However most of the expenses are fixed in nature and hence any increase in the top line will directly add to the bottom line and further increase the margins. The company has paid dividend for the last 3 years.

Valuations :
At the price band of Rs 290-320, the issue is valued at 60x -64x its FY06 EPS of Rs 4.84 on diluted equity. Even at Q1FY07 annualized EPS of Rs 7.66, the issue is price at 40.5x the upper price band. Comparing with globally listed companies like Monster Worldwide and Rediff.com the valuations look reasonable. Also considering the growth potential of naukri.com coupled with strong management and brand recall value and its dominance in the recruitment market, one can consider to invest in the issue from long term prospective.