The market valuation of Info Edge (India) Ltd, the publicly listed holding company of consumer Internet companies such as Naukri, 99acres and Jeevansathi, crossed $2 billion this week as its stock price touched an all-time high.
The company’s shares surged as much as 12% intraday on Friday to Rs 1,238 apiece before paring some gains to end at Rs 1,186.60 on the BSE, giving it a market value of Rs 14,401 crore ($2.25 billion).
Overall, the stock surged 21.5% this week. Analysts tracking Info Edge attributed the surge primarily to the ripple effect of the successful initial public offering of Jeevansathi rival BharatMatrimony and Chinese e-commerce giant Alibaba’s likely investment in food-tech firm Zomato. Info Edge owns almost 47% of Zomato.
Media reports said last week that Zomato might receive as much as $200 million (Rs 1,283 crore) from Alibaba. And on Friday, brokerage Nomura valued Zomato at $1.4 billion, according to a Mint report. This is higher than the $800 million to $1 billion estimated valuation for Zomato reported in local media last week.
“There is a direct correlation with the news of Alibaba’s reported investment in Zomato and Info Edge’s stock movement,” said Ashish Chopra, an analyst with brokerage firm Motilal Oswal. “Alibaba’s entry would offer Info Edge an opportunity to exit Zomato with good realisation of its investment. Also, Alibaba’s backing would push Zomato’s valuation higher.”
Hitesh Oberoi, Info Edge's managing director and chief executive, declined to comment on the company’s performance. “We will continue to focus on our businesses, and are confident of doing well in all verticals. At the same time, our investment portfolio is also doing well, and we are confident of their future,” he said.
According to another analyst who does not wish to be named, the successful IPO of BharatMatrimony created positive sentiment around the consumer Internet segment.
To be sure, only a handful of Indian consumer Internet companies have made it big in terms of market valuation. The Nasdaq-listed MakeMyTrip has a market capitalisation of $3.1 billion and BSE-listed Infibeam is valued at $1.24 billion.
Still, Info Edge crossing $2 billion in market value need not be seen as a significant event given the vagaries of stock market movements.
Just Dial Ltd, another Indian Internet company, is a case in point. The market value of the digital yellow page provider had shot up to $1.8 billion shortly after its public market debut in 2014. But the company is now languishing around $400 million. In fact, Nomura was previously also bullish on Just Dial, before the company started losing its mojo.
Zomato had become one of the few so-called unicorns in India when it raised $60 million in fresh funding from Singapore state investment company Temasek and existing investor Vy Capital in September 2015.
However, in May last year, the brokerage arm of HSBC cut Zomato’s valuation by half to $500 million. Zomato, however, dismissed the HSBC report.
The same month, Info Edge posted a consolidated net loss of Rs 251.79 crore for 2015-16 compared with a net profit of Rs 24.1 crore the year before, mainly because of the four-fold rise in losses of Zomato.
Since then, Zomato has been working to reduce its cash burn and losses, and also taking measures to enhance the efficiency of the ad sales team as part of its efforts to accelerate growth.
Info Edge reported a net profit of Rs 64.2 crore for the quarter ended June 2017, up 45% from Rs 44.4 crore in the same quarter last year. Net sales stood at Rs 222 crore, up 12.6% over Rs 197.6 crore in the same period last year.
The company is also an investor in coupons site Mydala, online insurance policy aggregator PolicyBazaar, e-learning firm Meritnation and online photography startup Canvera Digital Technologies.