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SYNOPSIS

Info Edge (India) is a leading

provider of various portals related to

online recruitment, matrimonial, real

estate and education classifieds and

related services in India.

Company has invested an additional

amount of Rs. 180 million through

optionally convertible cumulative

redeemable preference shares in

Kinobeo Software.

Net Sales and PAT of the company

are expected to grow at a CAGR of

22% and 32% over 2010 to 2013E

respectively.

During the quarter recruitment

solutions grew at 20.4% while the

real estate vertical grew by 50%.

The operating environment is

uncertain, revenues and profits

continue to be healthy which reflects

to the robust position in their major

businesses.

Years Net sales EBITDA Net Profit EPS P/E

FY 11 2940.12 1311.47 839.71 15.38 44.86

FY 12E 3680.93 1699.02 1135.25 20.80 33.18

FY 13E 4269.87 1961.75 1316.42 24.11 28.61

Stock Data:

Sector: IT Enabled Services

Face Value Rs. 10.00

52 wk. High/Low (Rs.) 772.00/548.10

Volume (2 wk. Avg.) 1251

BSE Code 532777

Market Cap (Rs.In mn) 37667.79

Share Holding Pattern

1 Year Comparative Graph

Info Edge BSE SENSEX

C.M.P: Rs. 690.00 Target Price: Rs. 794.00 Date: Mar 23rd, 2012 BUY

Info Edge (India) Ltd Result Update: Q3 FY 12

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Peer Group Comparison

Name of the company CMP(Rs.) Market

Cap.(Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

Info Edge 690.00 37667.79 20.08 34.36 8.19 7.50

Subex 26.30 1826.30 1.82 14.45 0.60 0.00

Core Education 285.10 32139.20 16.01 17.81 3.30 30.00

Rolta India 91.65 14761.60 22.96 3.99 0.64 35.00

Investment Highlights

� Q3 FY12 Results Update

Info Edge (India) has posted a net profit of Rs 288.54 million for the quarter ended

December 31, 2011 as compared to Rs 219.24 million for the quarter ended

December 31, 2010, representing an increase of 31.61%. Net Sales has increased

from Rs 750.77 million for the quarter ended December 31, 2010 to Rs 919.94

million for the quarter ended December 31, 2011, representing an increase

of 22.53%. The EPS of the company is stood at Rs.5.29 per share for the quarter

ended December 2011.

Quarterly Results - Standalone (Rs in mn)

As At Dec-11 Dec -10 %change

Net sales 919.94 750.77 22.53

PAT 288.54 219.24 31.61

Basic EPS 5.29 4.02 31.61

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� Break up of Expenditure

� Investment in Kinobeo Software Pvt. Ltd.

Info Edge (India) Ltd has proposed to invest an additional amount of Rs. 180

million through optionally convertible cumulative redeemable preference shares in

Kinobeo Software Private Limited, engaged in the business of providing online

group deals through their website www.mydala.com.

The Company had committed Rs. 90 million in the first round of funding in the

aforesaid Company, April 2011.

Company Profile

Info Edge (India) incorporated in 1995, owns one of the leading job portals naukri.com.

The company is a leading provider of various portals related to online recruitment,

matrimonial, real estate and education classifieds and related services in India.

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Company has a network of 67 offices spread across in 41 cities in India. Company also

operates internationally through 2 offices in Dubai, 1 in Bahrain and 1 in Riyadh.

These international offices are engaged in business of sales, marketing and payment

collection activities of company’s business division.

The company has employee strength of 1,798 people. Info Edge (India) owns four

subsidiaries namely Naukri Internet Services, Jeevansathi Internet Services, Info Edge

(India) Mauritius and Allcheckdeals India.

Business Recruitment

This division of company is involved in providing recruitment through portals namely

naukri.com, firstnaukri.com, naukrigulf.com, brijj.com and Quadrangle-an executive

search agency. AS on FY 2007-08, more than 10,000 resumes were added daily on

Naukri.com, with a client base of 32,500 corporate clients and 87,000 job listings and

an extensive database of over 13 million resumes.

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Real Estate

Under this company operates 99acres.com. The company has pan India listing of

properties for sale, purchase and rent spanning across more than 25 cities. This portal

offers an online medium to connect brokers, dealers and interested buyers or sellers.

Matrimonial

Company operates jeevansathi.com which is amongst leading matrimonial websites in

the country. As on FY 2007-08 more than 2.36 million profiles registered on the

website.

Education

Company operates Shiksha.com that offers information for over 70,000 colleges,

courses, scholarships and admission notifications.

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Financial Results

12 Months Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) FY10 FY11 FY12E FY13E

Description 12m 12m 12m 12m

Net Sales 2336.71 2940.12 3680.93 4269.87

Other Income 305.66 278.82 327.77 360.54

Total Income 2642.37 3218.94 4008.69 4630.42

Expenditure -1694.00 -1907.47 -2309.67 -2668.67

Operating Profit 948.37 1311.47 1699.02 1961.75

Interest -0.54 -0.77 -0.70 -0.78

Gross profit 947.83 1310.70 1698.32 1960.97

Deprecation -61.07 -71.15 -77.23 -85.73

Profit Before Tax 886.76 1239.55 1621.09 1875.24

Tax -317.49 -399.84 -485.84 -558.82

Profit After Tax 569.27 839.71 1135.25 1316.42

Equity capital 272.95 545.91 545.91 545.91

Reserves 3520.71 4053.30 5188.55 6504.97

Face value 10.00 10.00 10.00 10.00

EPS 20.86 15.38 20.80 24.11

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Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12E

Description 3m 3m 3m 3m

Net sales 866.59 919.26 919.94 975.14

Other income 78.63 83.78 80.27 85.09

Total Income 945.22 1003.04 1000.21 1060.22

Expenditure -550.38 -588.53 -571.05 -599.71

Operating profit 394.84 414.51 429.16 460.51

Interest -0.14 -0.19 -0.18 -0.19

Gross profit 394.70 414.32 428.98 460.32

Depreciation -20.71 -17.98 -18.53 -20.01

Profit Before Tax 373.99 396.34 410.45 440.31

Tax -117.87 -113.97 -121.91 -132.09

Profit After Tax 256.12 282.37 288.54 308.22

Equity capital 545.91 545.91 545.91 545.91

Face value 10.00 10.00 10.00 10.00

EPS 4.69 5.17 5.29 5.65

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Key Ratios

Particulars FY10 FY11 FY12E FY13E

No. of Shares(In Million) 27.30 54.59 54.59 54.591

EBITDA Margin (%) 40.59% 44.61% 46.16% 45.94%

PBT Margin (%) 37.95% 42.16% 44.04% 43.92%

PAT Margin (%) 24.36% 28.56% 30.84% 30.83%

P/E Ratio (x) 33.08 44.86 33.18 28.61

ROE (%) 15.01% 18.26% 19.80% 18.67%

ROCE (%) 26.57% 30.02% 30.94% 29.01%

Debt Equity Ratio 0.00 0.00 0.00 0.00

EV/EBITDA (x) 19.86 28.72 22.17 19.20

Book Value (Rs.) 138.99 84.25 105.04 129.16

P/BV 4.96 8.19 6.57 5.34

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Charts:

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Outlook and Conclusion

At the current market price of Rs.690.00 the stock is trading at 33.18 x FY12E

and 28.61 x FY13E respectively.

Earning per share (EPS) of the company for the earnings for FY12E and FY13E

is seen at Rs.20.80 and Rs.24.11 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 22% and

32% over 2010 to 2013E respectively.

On the basis of EV/EBITDA, the stock trades at 22.17 x for FY12E and 19.20 x

for FY13E.

Price to Book Value of the stock is expected to be at 6.57 x and 5.34 x

respectively for FY12E and FY13E.

We expect that the company will keep its growth story in the coming quarters

also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.793.00 for Medium to Long term investment. .

Industry Overview

India's Information technology (IT) and information technology enabled services (ITeS)

segments are aligned in a way that the growth in one avenue has ripple effects on

another. The IT & ITeS industry, as a whole, is the mainstay of Indian technology

sector as it has driven growth of the economy in terms of employment, revenue

generation, standards of living etc and has played a major part in placing the country

on the global canvas.

National Association of Software and Services Companies (Nasscom) president Som

Mittal believes that software exports would be in tune with the estimates and are

projected to grow 15-17 per cent to generate about US$ 70 billion in 2011-12 as

against US$ 59 billion in 2010-11.

Furthermore, Internet and Mobile Association of India (IAMAI) has stated that internet

users in the country have crossed the 100-million mark (owing to increasing internet

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penetration and affordability for personal computers (PCs), of which 17 million are

online shoppers. It estimates that the number of Internet users in India will triple by

2015.

Rural India Calling

Rural business process outsourcing (BPO) units account for over US$ 10 million

towards India's IT-BPO revenues. Many big IT-BPO companies in India are getting

attracted towards hinterlands due to availability of immense untapped talent and

lower costs. Attrition rates in rural areas are just about 3-5 per cent as against a high

of 50 per cent in urban BPOs. Employee costs in rural BPOs is almost half as against

that of urban BPOs which bring overall operational costs down by almost 30-40 per

cent for IT companies. Nasscom has further stated that employee base in these areas

would expand by over 10 times by 2013-14 from 5000 in 2009-10.

Wipro BPO, the BPO arm of Wipro Technologies had launched its first rural BPO

centre at Manjakkudi Village in Tamil Nadu in August 2011. In October 2011, Infosys

BPO had inked an agreement with the Government of Andhra Pradesh to open rural

BPO centres in 22 districts. Rural Shores is another firm that had opened a BPO

centre in Bagepalli district of Karnataka and serves over 20 clients including HDFC,

Infosys, Wipro Technologies and Genpact. It aims to recruit more than 10, 000 youth

by 2014.

IT & ITeS - Key Developments and Investments

Between April 2000 and November 2011, the computer software and hardware sector

received cumulative foreign direct investment (FDI) of US$ 10.93 billion, according to

the Department of Industrial Policy and Promotion (DIPP).

• Network equipment maker Cisco Systems Inc.'s Indian unit is vying for a bigger

share of the IT spending by small and medium enterprises (SMEs) in 14 non-

metro markets. The company is planning to increase the amount of investments

on its distribution network in the smaller cities in 2012. It has also intensified

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its research activities in order to develop India-specific products that in some

cases may cost just 20 per cent of the global product.

• California-based IT services company UST Global is expanding its footprints in

India's IT capital Bengaluru. The company already operates in

Thiruvananthapuram and Kochi in Kerala. In Thiruvananthapuram also, the

company is building a 3 million sq ft campus which would be a major hub for

offshore IT services offered by the company.

Online Retailing on a High

Emergence of internet retailing and e-commerce as a completely new space is driving

the growth of number of online shoppers. As a result, the internet retailing companies

are getting attracted towards Indian markets which are poised to grow leaps-and-

bounds in the years to come. There are about 17 million online shoppers in India and

the number is projected to grow over three times in the years to come.

• Seattle-based world's largest internet retailer Amazon.com has recently

launched its website Junglee.com with a view to harness burgeoning online

shopping market in India which is expected to triple in size by 2015.

Junglee.com has partnered with several Indian online and offline retailers like

HomeShop18, Hidesign, Dabur Uveda, the Bombay Store and others. It has also

formed alliances with online players like Snapdeal, Univercell, Saholic (a Spice

Group firm) and Fommy.co.in.

• India's largest and most-funded e-commerce company Flipkart Online Services

Pvt. Ltd has acquired Letsbuy.com, the country's second-largest online

electronics retailer, for an undisclosed amount. The move reflects Flipkart's

strategy of becoming a major player through acquisitions and eventually

grabbing a substantial pie of ever- increasing Indian online retailing space.

Cloud Computing – The Emerging Technology

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Cloud computing is a set of services that provide infrastructure resources using

internet media and data storage on a third party server, that is, the subscriber (of

cloud service) does not need to own the infrastructure, which saves him from entailing

any capital expenditure and he pays to the service provider as per his usage.

The concept is on a high rage in India these days. The cloud solutions industry in

India is around US$ 400 million currently and by 2015 it is poised to grow 10 times to

US$ 4-4.5 billion. This further enhances the fact that Indian market is the most

mature when it comes to adoption of cloud technologies and has the highest usage

levels of converged systems.

• The state of Gujarat has over 10 per cent of 3 million small and medium

enterprises (SMEs) present in India. Hitachi Data Systems is ready to launch its

cloud services for the SMEs in Gujarat as they are searching for data backup

and email management services along with data and business analysis by cloud

solutions providers.

• Videocon and AEC Partners will jointly invest US$ 21 million in a cloud-

computing start-up called Nivio. The US$ 100 million-cloud computing

company will use these funds to expand its engineering centre in Palo Alto,

California and recruit fresh talent. AEC Partners is a US-based private equity

(PE) firm that holds expertise in technology investments.

Government Initiatives

Industry experts believe that increase in Government spends over e-governance

projects would be a major driver of growth for Indian IT/ITeS space. Nasscom has

stated that infrastructure for spends is ready and now is time when National e-

Governance Plan (NeGP) should be executed in full force. NeGP aims to create the right

governance and institutional mechanisms, set up the core infrastructure and policies

and implement various Mission Mode Projects across the Centre, state and integrated

service levels to create a citizen-oriented and business-centric environment for

governance.

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Meanwhile, the Government has recently announced that it would buy some 100,000

low-cost Aakash tablets from Datawind (the Canadian company that has developed

this device) and would distribute them to students in schools and colleges for free. The

move comes as an effort to facilitate e-learning.

In another similar effort, IT major Intel India had joined hands with the Karnataka

Government's Sarva Shiksha Abhiyan in 2011 and had launched ‘Computers on

Wheels'. It was a pilot e-learning program that entailed digital instruction materials

from reputed education solutions provider 'Educomp'. The program focussed to equip

teachers with learning techniques and tools and deliver diverse learning styles and

abilities to students, making education more participative rather than passive.

The Government of India has also undertaken a project that aims to provide high

quality broadband access to village Panchayats through National Optical fibre network

by 2014. The process is in progress and is projected to be very beneficial, especially for

the SMEs.

Software giant Infosys is planning to expand its footprint in India with focus on Tier-II

cities. The company has recently inked an agreement with Government of Madhya

Pradesh for setting up a development centre in Indore and is awaiting response from

Government of West Bengal for setting up a centre in Kolkata as well.

All such developments and initiatives on part of the Government of India reflect the

fact that the supreme administration is making all the possible efforts to boost the

country's IT and ITeS industries.

IT & ITeS in India - Road Ahead

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There are many predictions and forecasts pertaining to IT & ITeS in India across

various segments.

For instance, a study by management advisory firm Zinnov states that IT adoption in

Indian SME segment is growing at a rate of 15 per cent and would touch US$ 15

billion by 2015. The study noted that as of now, only 20 per cent of the total 50 million

SMEs in India are technology-ready today which poses an immense scope for further

growth.

Another study by consulting and advisory services firm CyberMedia Research suggests

that the PC market in India would have witnessed sales of 11.15 million units in the

2011 calendar year which would further accelerate by 14 per cent to 12.71 million

units in 2012.

Internet retailing is also emerging as an entirely new avenue to be explored. According

to estimates made by an industrial body, India's online retail industry is anticipated to

surge to Rs 70 billion (US$ 1.43 billion) by 2015 from Rs 20 billion (US$ 405.93

million) as broadband is becoming increasingly accessible and internet penetration is

increasing. Another report by Avendus Capital Pvt. Ltd states that e-tailing would

become a Rs 53,000 crore (US$ 10.76 billion) market by 2015 from the current Rs

3,600 crore (US$ 731 million).

________________ ____ _________________________ Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation

for the purchase or sale of any financial instrument or as an official confirmation of any

transaction. The information contained herein is from publicly available data or other

sources believed to be reliable but do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

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