Opinion
What Info Edge’s financials say about the quality of India’s economic recovery
Summary
- There’s reason for cheer across sectors, except, maybe, for IT. But it’s too early to say if that will translate to a broad pickup in hiring
Info Edge (India) Ltd’s latest quarterly numbers provide some crucial insights into the state of India’s economy, given the wide spread of its businesses.
Based on the financials of the company’s recruitment platform, Naukri, the slow hiring in India’s information technology sector is likely to persist for a few more quarters. Salaries in the sector, however, have improved by about 15%. But IT apart, hiring numbers are more encouraging in certain sections of the economy, with sectors including healthcare, hospitality, infrastructure, transport and real estate registering double-digit growth.
Naukri, which had 94 million resumes on its books as at the end of September and caters to more than 75,000 corporate clients, saw its revenue improve 9.1% during the quarter to ₹456 crore. It’s now expanding beyond the big cities and opening physical branches in smaller towns to cater to less net-savvy job-seekers.
On the real estate front, Info Edge’s online classifieds platform, 99acres, saw revenue surge 25.2% to ₹87. 3 crore. Broadly, the real estate sector is witnessing a sustained improvement as property prices increase, leading to higher traffic, and a rise in broker, project and live listings on the platform. User activity on 99acres is up 24% YoY. The platform is also deploying machine learning algorithms to improve user experience and reduce spam.
Overall, Info Edge recorded an 11.5% improvement in operating revenue to ₹593 crore, with earnings before interest, taxes, depreciation, and amortisation, or Ebitda, a measure of operating efficiency, jumping 31% YoY to ₹241 crore. Profit after tax improved 24.1% to ₹208 crore. Operating margin stood at an impressive 40%.
Contributing to these numbers were a 15.9% revenue growth in Info Edge’s education business, Shiksha, and a 16.7% jump at its matrimonial business, Jeevansathi, to ₹19.7 crore. Jeevansathi’s operating loss narrowed to ₹17.5 crore from a loss of ₹27.6 crore a year prior chiefly as it reduced spending on advertising and marketing by 39%. The business model has been changed to freemium, drawing in higher traffic.
Overall, while Info Edge’s latest numbers signal continuing muted growth for the IT sector, in sync with industry projections, it does point to increased activity across infrastructure, healthcare, hospitality and transportation, and more promise for real estate.
In terms of broader economic recovery, though, it would do well to temper the optimism with some degree of caution.
While the improved hiring in select sectors is heartening, it is still not clear if the trend truly applies to the wider economy. That Naukri is entering new territories, especially non-metros and smaller towns, is good, although it’s a bit odd for a chiefly digital business to have to set up physical offices to reach those job-seekers. Still, it would help generate more data from these job markets, which would help conclude whether growth and job opportunities are indeed spreading deeper across India.
