Task 1

Compare naukri.com and iimjobs.com in terms of their financial performance over the last
5 years. If both these subsidiaries of Info Edge were to have an IPO today, as a rational
investor, which stock would you choose and why? (you can select only one)
 Approach
Objective
To compare Naukri.com and IIMJobs.com as a rational investor, for investment purposes in case of an IPO

1 Understanding the transaction

Naukri.com acquired IIMJobs.com (Highorbit Careers Private Limited) in June, 2019 (estimated) for INR 80.82 Crore

Horizontal Acquisition at a revenue multiple of ~5 IIMJobs.com (Highorbit

Naukri.com
Careers Private Limited)

FY 2019
• Revenue of INR 16.6 Crore
• Over 23K Job Postings
• Receives 1.8 Mn Job
Applications every month

2 Comparing the two online portals basis available financial metrics

3 Comparing them basis various qualitative factors - market positioning, website engagement etc.

2
 Naukri.com – an overview

• Naukri.com, founded by Sanjeev Bikhchandani, is an Indian employment website founded in March 1997.
• Naukri.com is the market leader in online recruitment solutions. This leadership positioning is the source of its increased market
share.
• It has more than 69 Mn registered job seekers on its platform.
• It offers products such as Resume Database Access, Job Postings and Response Management Tool to its pool of more than 93K
corporate clients. It claims to have at least 475K active jobs available at its platform.

Growth in number of users and resume over years

Naukri clocks a traffic share of 90%+ throughout the year 2020

Source: Info Edge Annual Report 19-20, Inc42 3

 Naukri.com- Website Engagement (1/2)

Source: SimilarWeb 4
 Naukri.com- Financial Snapshot

1000 60%
907
56% 786 • The revenue has grown at a CAGR of 14%
55%
54% 54%
669
55%
55%
• The company runs on asset light model and
595
531 have negligible depreciation
50%
• The liabilities account for primarily deferred
revenue
45%

0 40%

Revenue PAT

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20 CAGR

Revenue 531 595 669 786 907 14%
Operating EBITDA 285 326 376 430 491 15%
Operating EBITDA % 54% 55% 56% 55% 54% -
PAT 275 311 366 420 481 15%
PAT % 52% 52% 55% 53% 53% -
Total assets 41 32 59 60 54 7%
Total liabilities 199 334 282 407 403 19%

Source: Info Edge Annual Reports 5

 IIMJobs.com – an overview

• Online employment recruitment portal iimjobs.com was founded by Tarun Matta, an IIT-IIM alumnus, in 2010
• The job portal iimjobs.com is for students who have graduated from premier institutes. It also focuses on middle and senior
management of specific skillsets.
• The portal has about 25,000 jobs and over 2.2 million job applications every month.
• IIMJobs has able to build a great brand for premium jobseekers and has managed to capture the niche and is growing rapidly.
• At iimjobs.com, job seekers can also attach their video to their resume

Growth in number of users and resume over years

Source: Info Edge Annual Report 19-20, Investor presentation Jan-21, SimilarWeb 6
 IIMJobs.com

Source: SimilarWeb 7
 IIMJobs.com – Financial snapshot

25 50%

20 • The revenue has grown at a CAGR of 24%

20 40%
17 • The company runs on asset light model and
15 14 30% have negligible depreciation
10
10 20% • The liabilities account for primarily deferred
7 revenue
5 10%

10%
0 0%

Revenue PAT

Particulars 2015-16 2016-17 2017-18 2018-19 2019-20 CAGR

Revenue 7 10 14 17 20 24%
Operating EBITDA 1 (1) (2) (1) (7) NA
Operating EBITDA % 10% NA NA NA NA -
PAT 1 (1) (3) (1) (7) NA
PAT % 7% NA NA NA NA -
Total assets 4 14 13 15 12 30%
Total liabilities 3 5 7 9 14 46%

Source: Info Edge Annual Report 19-20, Info Edge BSE announcements, Info Edge investor presentation, Financials from MCA 8
 Naukri.com vs IIMJobs.com: Website Comparison

Traffic Overview

Source: SimilarWeb 9
 Our Recommendation

IIMJobs.com Naukri.com

In case of an IPO, we would

recommend to invest in Naukri.com
owing to the reasons stated herein

Please note that Naukri.com is owned directly by Info

Edge, which is already a listed entity. This fact has been
ignored for the purpose of this answer.

*Views are personal

10
Task 2
As discussed earlier, Info Edge had acquired 100% ownership of Highorbit Careers Pvt Ltd
(iimjobs.com and hirist.com) on a fully diluted basis for a cash consideration of INR 808.25
million in 2019. According to you, was this acquisition undervalued, overvalued, or fairly
valued? Why?
 Approach
Objective
To assess whether the acquisition price for IIMJobs.com was undervalued, overvalued, or fairly valued?

Assessing enterprise value of IIMJobs.com using trading/transaction comparables and discounted

1
cashflows (DCF)

• IIMJobs major market is in India

• Considering Info Edge to be the only Indian listed entity engaged in online recruitment solutions, trading comparables
taken for Info Edge only

• Other relevant assumptions taken considering paucity of data available in public domain

2 Computing fair value of IIMJobs.com by taking average of Trading comparable and DCF method

3 Analyzing whether the price of INR 80.8 crores was overvalue, undervalue or fair value

12
 Trading comparable
INR crores

Particulars INR crores

Info Edge
• The enterprise value-to-revenue multiple
(EV/R) is a measure of the value of a stock that Market cap as on 24 May 2019 24,020
compares a company's enterprise value to its Debt (as on 31 March 2019) -
revenue Cash (as on 31 March 2019) 425
• Since, IIMJobs was not earning the company Enterprise Value (EV) 23,595
is not earning any profits, this method can be Revenue (as on 31 March 2019) 1,098
used to value a company
Revenue multiple (EV/Revenue) 21.5
Multiple discount (start-up company) 5.0
Trading Comparable – Revenue Multiple Revised revenue multiple 16.5
Highorbit Careers
Revenue (as on 31 March 2019) 17
Fair value basis Revenue Multiple 274

*Info Edge announced to acquire IIMJobs.com on 24 May 2019

Source: Info Edge Annual Report 19-20, BSE 13

 Transaction comparable

Indicative list of transactions happened in online recruitment space –

Date Transactions
Jan 2015 Aasaan Jobs raised $1.5 Mn from IDG Ventures
June 2015 Aasaan Jobs acquires mHire
Feb 2016 Aasaan Jobs raises $5Mn from Aspada
June 2017 Quickr acquired BabaJob.com
Jan 2019 OLX acquired Aasaan Jobs
Mar 2020 Apnatime raises $12 Mn from Sequoia Capital

Since appropriate date for transaction comparables was not available in public domain, the same has not been analyzed for
the purposes of our calculations

Source: Desktop search 14

 Discounted Cashflows
INR crores

Particulars 2020-21 2021-22 2022-23 2023-24 2024-25 Terminal

Revenue 20 22 25 29 33 35
PAT (53% of Revenue) 10 12 14 15 18 19
Terminal capitalised value 305
PV @ Ke 11% 9.3 9.6 9.9 10.2 10.4 180.6
Fair value 230

Cost of Equity for Info Edge

• Revenue is assumed to grow at 14% annually – basis 5 year Beta (as per 3 year regression with Sensex) 0.77
CAGR of Naukri.com Market Return (10 year CAGR of Sensex) 9.9%
• PAT as a % of sales is assumed to be 53% - basis 5 year Risk free return (10 year Government Bond) 6.2%
average of Naukri.com
CAPM 9.1%
• Horizon period taken is 5 years – starting from 1st April 2019
Liquidity risk premium (start-up) 2.0%
• Terminal growth is assumed to be 5%
Cost of Equity 11.1%
• Info Edge is debt free, hence debt calculations have been
ignored
• The companies are engaged in service industry, hence capex
and depreciation costs have been ignored
Assumptions

Source: Info Edge Annual Reports, BSE 15

 Our response

Fair value of Highorbit Careers – as per our analysis

Trading
INR 274 crores
Comparable
INR 252 crores
(average price)
DCF INR 230 crores

Whether Info Edge acquired Highorbit Careers at overvalue, undervalue or fairly valued consideration?

Undervalue acquisition

*Views are personal

16
Task 3
During times of uncertainty and undue stress, transparency and honesty are critical. This is
the responsibility of all businesses today. Having a wide range of competitors in the same
domain, how should Nexus focus on building brand value and customer trust? Draw a Go-
To-Market (GTM) strategy for the upcoming launch of Nexus. Additionally, what kind of
risks do you think the new venture could expose GrowthBiz to?
 Contents of GTM strategy
Objective
To design a Go-to market strategy for Nexus

1 Executive summary

2 Product Market Fit - Need Gap Analysis

3 Target Audience/ Customers/ Clients

4 Competitors

5 Distribution/ Marketing

6 Risks associated with Nexus

18
 Executive Summary

About the Company

• GrowthBiz Ltd (GB), based out of Pune, Maharashtra.

• Incorporated in 2015, it provides Learning Management System (LMS) products in the e-learning segment along with training
and professional development modules for corporates pan-India and abroad.
• It has created a diverse range of products catering to the youth (between the ages 18 and 45 years)

Product- NEXUS

• GBS launched new product – Nexus, another LMS product, to bridge the gap between recruiters and workforce
• Nexus focuses on connecting the budding young force and recruiters from finance-specific industries like financial consulting,
financial services, investment banking, trading, private equity, risk management, FinTech, etc.
• Key USPs
o Offers an automated screening process
o It offers bias free recruitment process
o Helps in assessing workforce requirement

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 Product Market Fit - Employer’s Perspective

Need Solution offered by Nexus

Workforce Planning  Nexus helps in assessing future workforce requirement based on the historical data

Ensuring diversity and inclusivity  Nexus screens candidates based on present employee mix

 Nexus conducts preliminary intelligent automated screening on predictive

Finding, attracting and retaining talent
characteristic for job profile

 Nexus uses technology to assess and rank candidatures, to screen out ideal
High employee attrition
candidates- which will keep check on attrition rate

Improving Employee Onboarding  Nexus offers required comfort to the candidates and offers bias free recruitment
experience process

20
 Product Market Fit - Employee’s Perspective

Need Solution offered by Nexus

 Nexus screens the target jobs/ companies on the basis of-

o Ratings given by various candidates over period
Finding right job w.r.t Work Culture,
o Popularity among job seekers
Security, Compensation, etc.
o Employee attrition
o Any other factor
 Nexus offers an easy one click application process for job seekers- offering a hassle
Hassle Free Recruitment Process
free experience

21
Distribution/ Marketing

Giveaways
Pay-per-click Company will offer its
premium services on a
advertising trial basis to the
To drive instantaneous recruiters and job seekers
users on the website to win their trust and
Articles or News create interest in the
Search Engine Stories services of the company.
Optimization Hire a PR professional to
To ensure that Nexus get business into articles
website can be easily and news stories to help
found by potential users. establish and introduce
Social Media Profiles the business to larger
group of people.
To engage with potential
users on social media
platforms. AI to capture
customers’ sentiments,
and adjust marketing
strategy accordingly

22
 Target Audience/ Customers/ Clients
Job Recruiters /Seeker

Financial Financial
Consulting Services

Investment
FinTech
Banking

Risk
Private Equity
Management

23
Competitors

Website ranking
Company No. of users
(Category- Jobs & Career)

1 69 Mn +

11 8 Mn +

65 Mn +
13
(APAC region)

25 2 Mn +

45 1 Mn +

24
 Risks associated with Nexus

1 Information (data security) risk - Risk of unauthorized access to data. Poor access controls both at the network
level and application level give rise to this risk. While information has long been appreciated as a valuable and
important asset, the rise of the knowledge economy and the Digital Revolution has led to organizations becoming
increasingly dependent on information, information processing and especially IT.

2
Technology risk - Risk of not keeping pace with the fast changing technologies for business operations. Usage of
outdated technologies could impact the business operations adversely thereby resulting in loss of reputation,
market share, customers, etc.

3
Process risk - Inability of the management to meet its process related objectives on account of failed activities in
a business process. It is a risk of loss resulting from failure of internal processes, people and systems or from
external events.

4 Legal risk – Arises from the uncertainty due to legal actions or uncertainty in the application, interpretation of
contracts, laws and regulations. Legal risk is the risk arising from failure to comply with statutory or legal
requirements

5 Reputation risk - Adverse publicity regarding an entity’s practices lead to a loss of revenue or litigation. Any event
which affects the name or brand image of the entity is Reputational risk. Any adverse publicity, news coverage,
comments etc. has the ability to dent the trust created by the entity and becomes detrimental to the business of
the entity

25
Thank you