Info Edge: Not much of a pick-up in hiring

Online recruiter Info Edge posted a year-on-year fall in revenues in the March 2009 quarter of just over 11 per cent and a similar fall in the net profits with recruitment revenues coming off by over 14 per cent. However, the company managed to keep a check on costs—-both employees, ad spends and overheads—and was therefore able to show a sequential expansion in its operating margins.

While recruitment revenues could continue to be under pressure and may even see a fall in the current year, the worst of the downturn is probably over now and the job market should start looking up sometime in the second half of the current year. The firm’s recruitment portal, naukri.com’s franchise appears to be intact—ComScore says it commands a market share of over 50 per cent. This should stand Info Edge in good stead as and when companies start hiring again and people are more confident of changing their jobs—-it also has a strong balance sheet with a fair amount of cash.

However, the firm’s other portals 99acres.com and jeevansathi.com continue to bleed posting combined operating losses of just over Rs 14 crore during 2008-09. Both portals however, showed a reasonably good top line growth and jeevansathi.com is expected to break even in the current year. At Rs 533, the stock trades at 24 times 2009-10 estimated earnings, which appears to be somewhat expensive given that the clouds over the job market haven’t quite lifted. Besides, the IT sector remains a key revenue earner for firm with a contribution of around 26 per cent.