Info Edge - Peter Thiel model


Surprised that there isn’t a thread for Info Edge so trying to put in whatever I know to get the conversation going. Info Edge is the company behind Naukri - India’s No.1 Job portal. They also own 99acres which is the No.1 in Real Estate classifieds, JeevanSathi (Behind Bharat Matrimony and Shaadi here) and quite a few others. They also own nearly 50% stake in Zomato and about 10% in Policy Bazaar/Paisa Bazaar and a few others like Shiksha, Merit Nation etc. Although the businesses come across to be quite diverse, the unifying theme if any, is that they are all mostly online classifieds. That’s what they consider themselves and there is indeed a method to their madness. They seem to have been around a long time (17 years). IPO was in 2006.

As a standalone entity, the revenues have grown from Rs.140 Cr in 2007 to Rs.820 Cr in 2017 (About 20% CAGR) and PAT has grown from 27 Cr. to 204 Cr. (About 22% CAGR).

This is not the whole story though, since unlike the software services companies like Infosys and TCS, the free cash has been deployed in several tech businesses. This is the sort of company that takes risks with its cash, tries to build products instead of hoarding them through the years. Their approach to me seems to be very Peter Thiel-ish, in that they have a portfolio of companies to invest in and they don’t seem to mind few of them going belly-up, as long as they end up with one or two big winners. They have also not been shy of accepting defeat in cutting out and writing-off some of their investee companies.

Standalone Companies
These are the businesses that are under the direct management of the company
This is the bread and butter of the company and its current crown jewel. All the free cash flow comes from here. FY17 Revenues were 595 Crores out of the total 820 Cr. reported by the standalone company (75% of total revenues) and EBITDA was 321 Cr. (Outstanding 54% EBITDA margin). As for traffic share, they have about 75% of the overall market when the nearest competitor doesn’t even have 10%. That’s pretty much a strong monopoly driven by a strong brand and network effect. Continuous innovation in “product, engineering, channels and services” has kept the moat safe and sound.

90% of revenue comes from recruiters and 10% from job seekers.
This is the company’s real-estate classifieds business which again has a leading position. Their traffic share is close to 60% while the nearest competitor has about 25%. This must be and seem to have given up investments so this sector will survive going ahead as a duopoly with leading is my guess. FY17 revenues were at 112 Cr, EBITDA loss was at 59.7 Cr (Down from 91 Cr in FY16). The hit seems to have come from demonetisation which hurt the RE sector in FY17.

Current revenues seem to be driven mainly by paid listings and ads placed by developers. Whenever Real-estate sector picks up and ad spend moves from offline media to online, should capitalise, considering their market share.
FY17 Revenue at 58 Cr. and EBITDA loss at 7.9 Cr. Seems to be doing well in terms of profile listings (11.8% growth) and has a 3rd position in the market behind bharatmatrimony and shaadi. Mobile penetration seems to be good and growing.
This caters to the online education classified market and is still new and growing. This could turn out to be a great business in the future as school and colleges move their ad spend from offline to online. The revenue stream (Currently) seems to come from branding and advertising for colleges and universities and also from lead generation (selling student profiles to colleges). They also seem to provide counselling services for their international university partners. FY17 revenues were at 36.5 Cr and EBITDA loss at 3.7 Cr which doesn’t seem to be too bad for a fledgling business with a very large and lucrative potential market.

Investee Companies (46% Stake)
Online restaurant discovery with presence in 23 countries, leading position in India and UAE. Revenues were at 332.3 Cr and EBITDA losses at 152 Cr. What’s interesting though is the trend – Revenues are galloping and cash burn is reducing. FY15 revenues were 96 Cr, FY16 at 184 Cr and FY17 at 332 Cr. EBITDA losses in FY15 were 136 Cr, in FY16 it was 441 Cr and in that light FY17 losses at 152 Cr shows that losses are reducing drastically. Average monthly cash burn is down from $4.2 million per month to around $1 million per month between FY16 and FY17. Food Ordering and Ad sales are both growing well too.

The key thing to watch out for is how its battle with pans out. There were talks of a merger last year and Nomura had put the valuation for Zomato at $1.4 billion back in Nov last year. The only problem seems to be that they both can’t seem to agree on their valuations but its only been 4 months since the rumours came out. It is impossible for either of them to survive by competing with each other so a merger is inevitable and it is post this merger that Zomato could undergo serious re-rating because the food delivery business is massive. (10% Stake)
India’s online financial supermarket – Has 90% of online policy comparisons and 40% of online insurance transactions – Clear market leader emerging here. This is another business I am extremely positive on because the business model is very strong and PB fills the price gap between online and offline policies. This reminds me so much of GEICO’s business model (although they do the underwriting themselves) as the whole business is based on arbitrage. Unfortunately, Info Edge which was an early stage investor here got diluted in subsequent rounds and currently owns only 10% here. This may not be something to scoff at though, as the opportunity size is huge and if they manage to build a large enough moat and also somehow get into underwriting, they might be huge someday.

Meritnation (59% Stake)

Supplementary online learning platform (like Byjus) with assessments, tests and live classes having content from KG to K-12. Revenues have grown from 28.7 Cr to 36.2 Cr (26%) and losses have reduced from 41 Cr to 23 Cr. They seem far, far behind Byju’s. Not sure if they can carve a niche for themselves.

Main source of revenue comes from Wedding album printing, design of albums, portfolio microsites for photographers in this space, lead generation (Classifieds comes into play). Revenues down from 56 to 49. Losses down from 33 to 27.

Seems to be a couponing site. Not sure what the business model is here. I thought coupon sites were dead and buried for good.

Happily Unmarried
This seems to be a very interesting business with a great online presence (Check out their facebook page for eg.), although its an offline business. It’s a range of boutique grooming products for women and men, with some modern, smart marketing strategies. (Think Paper Boat).

Shareholding, Financials, Valuation etc.
Promoters held about 50% in 2007 and now hold about 42%. MFs hold about 15%. FPIs hold about 33%. Only about 2% is with small retail shareholders. There has been quite a few dilutions along the way – share capital was 21.84 Cr in 2006 and is now 121 Cr.

The company has zero debt and has always had zero debt in the last 11 years which is an excellent thing. The cash flow from operations (standalone) has always been positive and growing. Oh and they have about 1250 Cr cash on the balance sheet.

Negative working capital is another thing to note as well. The management seems ethical and open. Their approach to me seems very much like Peter Thiel in trying to build businesses that go from zero to one. In that respect, I really hope they merge Zomato with sooner and stop the bloodshed there.

It is not going to be easy value anything here other than since they have free cash flow and perhaps This is the sort of space where growth can be exponential or bust, and valuations have in the past taken hilarious proportions. I don’t want to venture into doing anything silly like that.

Back of the envelope calculations make me value at about 7000 Cr.
Nomura thinks Zomato was worth $1.4 billion. That’s about 9000 Cr – Info Edge’s stake could be then worth about 4000 Cr. is valued at about 1800 Cr – Jeevan Sathi could perhaps be valued at 500 Cr. was valued at $75 million (500 Cr) and its traffic share is much lesser than Let’s go with 1000 Cr here for 99acres.
The rest could amount to nothing as of now although they may raise funds at fancy valuations. The current market cap might be expensive by anywhere between 10-50% but that’s not abnormal in the tech industry.

Key Triggers/Opportunities
Near-term: Zomato – Swiggy merger, Zomato breakeven, performance post RERA/demonetisation, Policy Bazaar’s growth
Long-term: India doesn’t have an Amazon, Netflix, Google or Facebook. It has very few tech products and our services companies don’t seem intent in risk-taking and keep piling up cash until kingdom come. In that aspect, Info Edge seems to be a company which has the next-gen start-up mindset and may in fact end up with a few India-centric tech monopolies in the future. Think of Amazon in the 90s.


  1. IT/ITES seems to contribute 50% of the revenues. Any adverse impact to this sector could potentially hurt revenues
  2. Tech valuations are at most times a joke. Most tech businesses have had a significant mark-down from 2015 heydays. There is no saying where they will be 5 years from now as rates rise.
  3. With the financial deregulations, it’s easy for a SoftBank or Alibaba to pump cash and fight pretty much any tech business it fancies, even to complete destruction.

Disc: Invested


Some updates based on recent Investor Presentation + Filings. 9 month FY18 EBITDA loss is down to 12 Cr from 51.7 Cr in FY17. This is a dramatic improvement and they have even posted their first quarterly profit in Q2 for 2 Crores. has posted a 9 month FY18 EBITDA profit of 4 Cr from a loss of 3.7 Cr in FY17. has 95% market share of all online insurance comparisons and 50% of insurance transactions online (Up from 90% comparisons and 40% transactions as of FY17)

After recent dilution and stake sale to Alibaba’s Ant Financial, Info Edge’s Zomato stake is now down to about 31%.

And addition of a new Investee Company - Gramaphone which is an Agri-Tech company. Info Edge owns 25% stake.

(Dinesh Sairam) #3

I went through Info Edge’s Annual Reports at a glance here and here. The first thing that caught my eye was how much the company was earning via Other Income. So I dug in a bit more:

Why does Other Income constitute >30-50% of Net Income?

FY15: Other Income is 764.01, where Net Profit is 1938.59, which is almost 40%

FY16: Other Income is 828.10, where Net Profit is 1415.80, which is 58%

FY17: Other Income is 828.45, but there’s a Net Loss of (1895.56), which they say is a Net Loss from their JV holdings. They’ve actually retrospectively adjusted these losses. The PL statement of FY16 is not consistent in the FY16 Annual Report and the FY17 Annual Report because of this. In the FY17 PL statement, FY16’s Other Income has been increased to 4406.55 and again, a Net Loss from JV holdings of (3015.07) has been deducted. I don’t even understand if this is legal. Maybe an Accountant can help me out.

What bothers me the most is why didn’t they adjust for the losses in FY16 itself? The FY16 Annual report makes no note of this.

On an interesting note, Info Edge holds shares in Zomato from many countries. FY16 Annual Report shows that it owned 100% of Zomato Media (Yes, that Zomato), but it’s been reduced in 2017:

What does ‘Other Income’ constitute?

Let’s get back on track.

I didn’t want to get judgmental. I thought ‘Other Income’ could be from their investments in some subsidiary which runs their major businesses (Websites). Boy, was I surprised. This is from the Notes to Financial Statements:

A majority of Other Income is Dividend/Sale from Current Investments and Interest from Bank FD (Seriously?). ‘Current Investments’ are a bunch of Mutual Funds. Again, reading between the print, it was true unfortunately that they earn a bulk of their income from Bank FD Interest:

This shows that the company has somehow generated cash flows in the past which they have invested in Bank FD and Mutual Funds. But why is it that their core business is so flimsy that the Net Income figure is 50% made up of income from their passive investments? Are they unable to reinvest the cash in their core business? Earning Interest and MF Dividends/Gains on some past profits while the core business takes a back seat isn’t a Business Model at all. If investors wanted to invest in Mutual Funds and Bank FD, the company could pay out massive dividends and the investor could choose which FD or MF they want to invest in.



Other Income - This is the nature of its business. They are more an “investment” company than a “recruitment classifieds” company. They have invested less than 500 Cr. in Zomato and that stake was valued at 5000 Cr last year. They have sold little stake in Zomato in Feb for eg. for $50 million. Their business model is to keep a cash reserve so they can compete in their primary businesses when they need to - For eg. funding in Housing and Commonfloor has dried up but they claim to be maintaining a war chest (about 1500 Cr as of 2018) to compete when required by investing in 99acres and to invest in new businesses as they find opportunities. So they do earn a fair bit of interest income. And they do sell small stake in their successful investments in subsequent rounds which contributes to their Other Income. You can find all their investment activity on crunchbase. Its pretty well documented.

Not in the past, they continue to generate very healthy cash flows from naukri. FY17 OCF is 228 Cr and it does match closely to Net Profit. They continue to generate very healthy cash flows in this business and recent quarter OPM is as high as 58% here. So their core business is anything but flimsy. Even in their segment-wise reporting, you can see that they made 321 Cr EBITDA from 595 Cr sales from

Also they have mentioned in the AR that FY16 numbers are adjusted for IND-AS and so are not comparable with previous years. This has happened to a lot of companies due to shifting to IND-AS.

(Dinesh Sairam) #5

You say they are an investment company, but at the end, also call Nakuri their core business. This is the same disconnect I have with the company. Even assuming what you say is correct, that their core business is Investing, I have a hard time believing that a company can be good at both Investing (Core Business) and Online Media (Their Websites). I understand that Zomato was a good investment for them, but what is the state of their other investments? Can you please provide a link of their Investments/Acquisitions at cost and at current value? I tried searching in Crunchbase, but I couldn’t get it.

My other question is ‘Other Income’ is made up of largely FD Interest + Mutual Funds Dividend/Appreciation. If this generates 30-50% (Consistently) of their Consolidate Net Profits, that’s disappointing. This just shows that they are not able to reinvest properly, even after excluding their investments in JVs/Subsidiaries.

And accounting retrospectively for loss on JV companies sounds dubious. If a JV company made loss on FY16, why are they adjusting retrospectively on FY17?

Finally, yes, Nakuri is a good business. But as mentioned above, it generates lesser cash than their Other Income. This calls scalability into question.


There is a reason I put “Peter Thiel” model in the title because that is crucial to understanding what this company is about. They are running this company as if it were a VC Fund. VC Funds make money when a company in their portfolio becomes large enough to get acquired by someone else or when they go public. But the brutal truth is that MOST FAIL! The break-even period could be as long as 7 years. When a successful portfolio company gets into exponential growth, that’s where the fund becomes extremely profitable. This is a non-linear relationship and follows the power law. VC returns don’t follow normal distribution - so asking what the current companies are worth is a useless question. That’s why I didn’t venture into what meritnation or happily unmarried are worth. Its a zero or one question. No one knows. I suggest you look up the J-Curve of a successful VC Fund. Out of 10, you could expect 1 or 2 top companies to contribute to 80-90% of the returns. A couple may breakeven or post marginal profits, rest will fail.

With all that said - the real questions one should be asking is - Is Info Edge a successful VC Fund? Do they have the chutzpah required to identify early-stage startups? Do they know when to cut losses in failed startups? Do they manage cash well? and so on.

Info Edge is well past the breakeven point as a VC Fund.

This could either be due to Ind-AS or because Zomato was part of their consolidated financials earlier but was moved to joint-ventures. They may have redone the FY16 financials in AR so that numbers were comparable. A lot of companies have done this for Ind-AS. I am not quite certain though.

(iamket) #7

I am an investor in both a private equity fund and Info Edge. I invested in the PE fund in 2011 and so far the returns have been about 15% CAGR, including the value of the residual investments. Info Edge shares bough in in 2011 @300/- have given a CAGR of 23% at current price of 1260/-, that is excluding the dividends of about Rs 20/- received in the interim. This is also when it has yet to fully realise the value of its investments in Zomato and PolicyBazaar. I believe that both these exits will happen over the next 12 months.

To add to the earlier discussion, I treat my investment in Info Edge as a proxy for a PE fund. Barring Naukri, the management treats all its investments as a venture investment, whether originated internally or externally. Also the profits generated from Naukri are like the float available in an insurance business, waiting to be invested till the next profitable/ exciting opportunity comes along. The other income is co-incidental to this entire business model and happens to be very high.

In terms of management integirty and transparency I consider Info Edge to be right up there with the best companies and consider all their policies and disclosures to be the most shareholder friendly I have seen.


@iamket - Bang on. I am also invested for the exact same reasons, although I would prefer them holding on to their Zomato stake longer to see the sparring in food delivery with Swiggy through to completion. I feel there is a lot of value there if they could just merge with Swiggy. I feel Policy Bazaar as well is a stellar business and they shouldn’t be in a hurry to sell their stake there. I am treating my investment in Info Edge as a proxy for a PE fund as well and hopeful of them unearthing at least a couple of stellar businesses every 5 years or so.

(Dinesh Sairam) #9

So how do you find the Instrinsic Value of Info Edge? The only logical way to me, seems like to value all of their VC investments first, which is too many moving parts, especially since they’re all Online Media companies. Not so easy to value. How does an investor know if Info Edge is over or under valued?

My other important question was, again, Other Income does not consist of VC Investments. It consists of Bank FD and a buttload of Mutual Funds. It would make sense to ignore this if this was their standby money-- something they build up periodically and then dispose of it for investments. It’s not the case. Income from Bank FD and Mutual Fund Dividends has been consistently 30-50% of their Net Income. Why is this the case?

(2015 ignored because Other Income is almost 400% of Net Profit)

Insurance float comes at very little cost or no cost at all. Cash generated from Operations comes with the Cost of Capital. They’re not nearly comparable.


You don’t, unless you want to make a fool of yourself. I tried a rough SOTP and came to the conclusion that its anywhere from 10-50% overvalued. This is why people like Buffett have smartly kept out of businesses like these, because its not their cup of tea.

“If I was teaching a class at business school, on the final exam I would pass out the information on an Internet company and ask each student to value it. Anybody that gave me an answer, I’d flunk.” - Buffett

It is for this reason that Buffett has given a pass on Amazon and Google. These businesses have rapid change, losses or negative cash flows, cash burn month over month and so on. However, these funds do produce a Facebook, LinkedIn or Palantir (Thiel’s VC fund’s float came from Paypal) from time to time - Maybe a couple of times a decade. They are successful that way because they are first in line to hear the ideas and willing to part with lot of small amount of cash to see them to fruition and are discerning enough to know which of those are creating a new market for themselves, rather than fight an existing market - This is of course the key!

This sort of investment has high uncertainty and medium risk for medium/high returns. You have to fixate on what your edge/odds are and decide what portion of your portfolio you are willing to commit on something like this and follow the investee companies closely.

(VP_amit) #11

Agreed - management of Info Edge is top class!

(iamket) #12

Insurance float has an apparent ‘zero cost’ but there is an obligation on this float to earn the desired return so that the effective combined ratio gives a return greater than the cost of claims+expenses. So indirectly the float carries a cost of probable future claims. And if this desired return falls short, the business would run into a potential loss.

(Dinesh Sairam) #13

I get your stand now. But for the life of me, I would never buy a company whose value I can’t find out with reasonable conviction. So maybe that’s why this Info Edge’s business model seems weird to me. Godspeed to anyone who can SOTP value their purchases of Info Edge throughout its life.

That is why pricing is so important in Insurance. All these costs should have already been diversified among the insurance holders via proper pricing for risk. For a company like Berkshire Hathaway run by a mathematical genius like Warren Buffet, the float most definitely comes at zero cost. For less accurate insurance businesses, the float may come at a very minor cost.

(iamket) #14

Rather than digress into a discussion on cost of float for an insurance company, I would rather talk about Info Edge. Think of it as having two management teams, one team runs and hands over its profits to the other team for investments in other businesses, or in debt instruments till that happens. It is like any other operational company that keeps on allocating its surplus capital to either expansion or in new businesses, which they would operate. The difference here is that the capital is allocated to start ups and internet ventures, which the team has experience in running, and identifying as good prospects. I treat this as a smart capital allocation and of which I want to be part of, as I dont get these opportunities on my own as an individual. So far they have displayed a remarkable success in identifying and investing in good businesses.

As far as the value is concerned, think of it as a PE fund, listed and trading on the bourses. (Come to think of it, Alphabet is also more or less a holding company, enjoying revenue streams from Google, etc. to be deployed in other businesses). The value fluctuates in line with market perception of the vlaue of its unlisted businesses. And therein would lie an opportunity.

(sarangg) #15

I had also analyzed in this company in the past, and for me it seemed un investable due to its current valuations, because if you look at MCap - Cash on hand v/s current profits (subtracting mutual fund/cash return), it comes out to some ridiculously high multiple, while the optical P/E ratio is not that high for a high growing business with significant operating leverage.

However, using such a valuation doesn’t work because many of the businesses in InfoEdge are generating losses, so valuing it on a p/e multiple basis basically assigns negative value to companies such as 99acres making losses and almost zero to Zomato, Shaadi etc. which are clearly valuable standalone businesses in their own respect and have enormous franchise value, which over time shall reflect in their bottom line.

Additionally, as far as promoter and management ethics go, I believe InfoEdge is probably in the top 0.1% in the Indian company universe, speaking from personal experience with people close to the founder and their kids, who are extremely hard working and humble. Their past performance as a VC speaks for itself, and I believe that they have significant brand value in the VC/Startup space, which is incredibly important when it comes to deal sourcing (from my experience in the VC industry in India and from colleagues in the US). The difference between a mediocre and great VC is huge when it comes to returns because the mediocre VC’s don’t get access to the best deals - top entrepreneurs choose top VC firms because of the additional strategic benefits, which is a huge advantage for a company like InfoEdge and win-win situation for both InfoEdge and the investee companies.

However, a good company does not a good stock make, and I think price is the most important determiner of future returns. I think hard to value businesses with (large) hidden values are best bought at the trough of an economic cycle when business are painted with a wide brush and optical P/E ratios.

Hence I am not invested in InfoEdge currently (and have no plans to do so), but I am keeping a keen watch on their performance and share price, so that if Mr. Market gives me an opportunity to buy this incredible franchise at ~0.3-0.5x its intrinsic value, I would be more than happy to pick up a large position.

Not Invested, but will buy as price falls

(rskothari) #16

During the year ended March 31, 2015 , the Company had issued 10,135,135 equity shares at Rs 740/- per share to qualified institutional buyers on September 12, 2014.
Rs 5915.42 Mn out of net amount of Rs 7,344.35 Mn (after deducting Rs 155.65 Mn issue expenses) is still unutilised till March 31, 2017. It remains invested in Mutual Funds (Debt) & Term Deposits with banks.
Utilisation of partial amount was towards meeting working capital and general corporate purposes (99 acres)
I am unable to understand from above the purpose of QIP when company is generating and have excess funds from Recruitment Portal Business.

Disclosure: Not Invested but interested in the developments


They have outlined the “use of proceeds” pretty clearly and what they have used it for is not beyond what they have mentioned.

As for not utilising the funds completely - I don’t think this is a bad thing. If you are not finding something worth investing, its better not to. And its better to preserve cash to fund subsequent rounds. For eg., See how their funding for Zomato was spread from 2011 to 2015.

Same is the case with meritnation

So it is by design that startups raise funds in rounds and it is necessary to preserve capital to participate in future rounds of your investee companies over the years. And then there is no telling when a great opportunity might present itself. This is one of the reasons why I like them - They know how to preserve cash and not take a “spray and pray” approach to VC investing.

In this aspect I liken them to Berkshire Hathaway that is sitting on a $100 billion cash - They are not going to invest it just because they have the cash. I have also noticed that Inox Wind hasn’t used its IPO proceeds from 2015 and that is one of the reasons it has a strong balance sheet in comparison to peers and is able to handle periods of headwinds (no pun intended) with ease unlike say, a Suzlon.

(rskothari) #18

I really appreciate disclosures by the company. I got information from Annual Report and disclosures were really good.
I am learning about equity investments and posts from seniors like you are very helpful. I understand from your opening post about investment philosophy of the company. But my query was about why to raise additional funds when you already have surplus funds. Further, purpose of QIP was general in nature and broad and hence there is no point in mentioning that funds are used for the purpose for which it is raised.