Macquarie Indian ECommerce+ - +LONGTERMGRP+

Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our
website www.macquarie.com/disclosures.
INDIA

Inside
Indian E-Commerce Tip of the iceberg 2
What do you get in this report? 8
India is on the cusp of E-Commerce
revolution 9
Drivers of E-Commerce growth in India 12
Indian E-Commerce Eco-system 21
Look out for more IPOs 25
Regulation: Hurdle remains on FDI policy 26
Listed Company Profiles 27
Info Edge (INFOE IN, Not Rated) 28
J ust Dial (J UST IN, Not Rated) 34
Online Travel: Lions share of Indian
E-commerce 39
MakeMyTrip (MMYT US, Not Rated) 42
Yatra.com (Unlisted) 48
IRCTC (Unlisted) 51
Online E-Tailing: Growing the fastest 53
Snapdeal (Unlisted) 54
Flipkart (Unlisted) 56
Myntra.com (Unlisted) 59
J abong.com (Unlisted) 62
Fashionandyou.com (Unlisted) 64
Network 18 Media Investments
(NETM IN, Not Rated) 66
Analyst(s)
Atul Soni
+91 22 6720 4089 atul.soni@macquarie.com
Nitin Mohta
+91 22 6720 4090 nitin.mohta@macquarie.com

13 J anuary 2014
Macquarie Capital Securities India (Pvt)
Ltd
Hunting Stocks
Indian E-Commerce Tip of the iceberg
We believe e-commerce is the most exciting and fastest growing segment of
the Internet story in India and is likely to remain so for the foreseeable future.
The growth over the last couple of years has been even faster than expected.
In this report, we investigate several critical components along the e-
commerce value chain and compare/contrast different business models and
various market players.
India is at the cusp of the e-commerce revolution: US$18bn
market by 2015E
Early Stages of Growth & Dri vers in place. Indian E-commerce has shown
strong CAGR of 30%+since FY09 and we expect it to become an attractive
Rs1.1 trillion (US$18bn) opportunity by FY15E. We believe that India will
continue to witness high growth rates in e-commerce due to
(1) rising internet penetration, (2) 300m+middle class population,
(3) increasing mobile penetration, (4) low levels of e-commerce activity.
Nature of Indian E-commerce Industry. Compared to the west, Indias e-
commerce industry is still in its infancy. E-commerce contributes only 0.6%
of the countrys GDP vs 1%-3% for other countries (Fig 16), with only 12%
of Indias online population transacting online vs 64% for the US and 50%+
for China (Fig 3). Travel has the lions share of 71% of Indian e-commerce,
but e-tailing has grown the fastest, at a 59% CAGR between FY09-13E, to
reach 16% market share (Fig 7).
Look out for more IPOs
With only two listed internet companies in India, we believe the segment is
going to see more companies come to the capital markets within the next 18-
24 months. Our research on private equity data and the recent multi-million
dollar fundraisings by some of the countrys top e-commerce players also
corroborates the same thesis.
Valuations & Risks
Internet companies trade at high multiples. Internet companies tend to
trade in a high multiple zone of 20x-50x 1 year forward earnings due to the
basic nature of high growth estimates in future years. Pages 6-7 show a
comparison of valuations across US, China and India for internet companies.
Risks Finally a bet on model and company execution. It is easy to see
that e-commerce will grow substantially in coming years, but picking which
models and companies are going to be winners is much harder. We believe
risks reside mostly with the different business models and execution of
different players in the market.
Conclusion: Battle of business models
In this report, we have taken a deep dive into different e-commerce business
models relevant to India Inventory, Marketplace and Hybrid. We conclude,
there is room for all models to exist, but it will be a race to the finish. Thus, the
company which will emerge as the top player will likely do so based on its top
managements execution and capital management ability.
Macquarie Research Hunting Stocks
13 January 2014 2
Indian E-Commerce Tip of the iceberg
Executive Summary
In this report, we undertake a comprehensive study of the Indian e-commerce industry. We
believe e-commerce is likely to be one of the fastest-growing segments in the Indian
Internet space. And it is happening against a positively changing macro backdrop the
Indian economy is forecast to grow 57% per annum over the next three years.
The Indian E-Commerce industry is a very recent phenomenon and has been in its infancy
for the larger part of the previous decade. However, in last four years, the industry has
witnessed an incredible CAGR in excess of 30%+ annually. As per IAMAI estimates, the
industry has increased from Rs192bn (US$3.8bn) in 2009 to Rs630bn (US$9.5bn) in
2013E. However, our estimates may ultimately prove conservative, as the adoption of e-
commerce in India has occurred faster than many had expected, and e-commerce growth
could follow the same trend.
Fig 1 Indian E-commerce industry to cross Rs1.1 Trillion (US$ 18bn) in 2015

Source: IAMAI, Macquarie Research, January 2014
Huge Potential for growth. The various drivers of driving e-commerce in India are in
place, including rising income levels in middle class Indians, an increasing internet
penetration rate in the population, current low levels of online e-commerce activity and
development of the ancillary logistics and payments industries to drive online purchasing
activity. The chart below shows that the numbers of Indians on the internet and number of
Indians using e-commerce are still pretty low. This presents a unique opportunity where
one sees rising internet usage but still low levels of e-commerce activity.
Fig 2 Huge scope for increasing online buyers Fig 3 . With penetration rates of mere 12% !!!!

Source: IAMAI, Macquarie Research, January 2014 Source: IAMAI, Macquarie Research, January 2014

192 263 351 473 850 1,148 630
36%
34%
35%
35% 35%
33%
-
200
400
600
800
1,000
1,200
1,400
2009 2010 2011 2012 2013E 2014E 2015E
31%
32%
33%
34%
35%
36%
37%
Indian Digital Commerce Mkt (Rs bn) YoY growth rate (%)
320
1350
24
200
1220
245
538
20
79
205
156
270
11
27 25
0
200
400
600
800
1000
1200
1400
1600
USA China Australia Brazil India
Population (m) No. of Internet Users (m) No. of Online Buyers (m)
1.6x
2.0x
1.8x
2.9x
8.2x
Ratio of Online Population to Online buyers (x)
64%
50%
55%
34%
12%
0%
10%
20%
30%
40%
50%
60%
70%
Online Buyers as % of Internet Users
We project Indian E-
Commerce Industry
to growth to
US$18bn
opportunity by
FY15E.
13 January 2014 3
Driver for growth in place. We list below the key drivers for driving growth in E-
commerce in India. We present a chart below giving a snapshot of the six key drivers and
then explain them in more detail one by one in the next pages.
Fig 4 Key Drivers of growth in Indian E-Commerce Sector

Source: Macquarie Research, January 2014
E-Commerce Models in India. E-commerce business models differ from traditional
models since they deliver the products directly to the consumer, eliminating multiple
players in the process. Various examples in the developing and developed world show that
top players have almost always outsourced forward logistics, while controlling the back-
end supply chain such as warehousing and inventory management. Most of the energies
of the global e-commerce players have been spent on establishing warehouses that are
capable of handling thousands of orders per hour. Currently, Indian e-commerce
entrepreneurs are looking at their business in three ways
Fig 5 Various approaches to Indian E-Commerce


Indian E-
Commerce
Business Models
Inventory Led
E.g. Flipkart.com
Niche Business
E.g. Infoedge's
naukri.com
Mass Business
E.g. Justdial.com
Marketplace
E.g.
Snapdealcom
Hybrid
E.g. Amazon.com
The drivers for
growth in E-
Commerce in India
are contributing to
its immense
potential.
13 January 2014 4
Travel has the lions share but E-Tailing growing the fastest. Indian E-Commerce is
dominated by the online travel segment, which contributes more than 70% of the countrys
e-commerce revenues. However in the last three years, we have seen strong growth in
the e-tailing segment (FY09-13 CAGR of 59%), which is expected to grow even faster in
the coming years on the back of rising mobile penetration and better payment
mechanisms. We expect these trends to continue, with E-tailing showing the strongest
growth amongst peer groups.
Fig 6 Breakdown of Indian Ecommerce Industry
2013E

Fig 7 ..growth rates for E-Tailing the fastest

Look out for more IPOs in 12-24 month time frame. In the Indian context, only two
internet-based companies are listed on the markets, including Infoedge (INFTEC IN),
which runs Indias largest job portal (naukri.com), and justdial (JUST IN), which is Indias
largest local search site. In our conversations with various founders and top management
leaders in Indian e-commerce companies, we got a sense that most companies would be
hitting relevant milestones with regards to revenues and profitability in 12-24 months time
frame. This should clear the way for multiple IPOs from this segment.
Global Phenomenon: 6 out of top 10 internet IPOs have come in the last three years. We
present a chart below showing the biggest internet IPOs in history.
Fig 8 2011-13 has witnessed 60% of the largest internet IPOs...ever..
Name Amount Raised (US$ bn) Year
Facebook 16.0 2012
Twitter 1.8 2013
Google 1.7 2004
Yandex 1.3 2011
Infonet Services 1.1 1999
Shanda Games 1.0 2009
Zynga 1.0 2011
Giant Interactive 0.9 2007
Renren 0.7 2011
Groupon 0.7 2011
Source: Bloomberg, Macquarie Research, January 2014

Online travel
industry
71%
Financial
services
6%
Classifieds
market
5%
Others
2%
E-Tailing
16%
150
16 15
8
449
100
36
31
-
50
100
150
200
250
300
350
400
450
500
Online travel
industry
E-Tailing Financial services Classifieds
market
Market Size (Rs bn) 2009 Market Size (Rs bn) 2013E
2009-13E
CAGR:
32%
2009-13E
CAGR:
59%
2009-13E
CAGR:
25%
2009-13E
CAGR:
40%
E.g. MakeMyTrip,
Yatra, IRCTC etc
E.g. flipkart,
snapdeal, jabong,
myntra etc
E.g. various
telecom and
banks
E.g. Infoedge
ltd, JustDial
Indian E-Commerce
market is dominated
by travel but E-
Tailing is the fastest
growing segment.
13 January 2014 5
Higher Private Equity participation should lead to increased exits going forward.
Bain & Company states that out of the 225 IT& ITES deal in India in 2012, 98 deals were in
the e-commerce space. We have seen strong pick-up in private equity deals in the space
since 2011.
Fig 9 IT & ITES deals have climbed sharply in the last two years.

Source: Bain & Company, Macquarie Research, January 2014
Valuations. Compared to the west, Indias e-commerce industry is still in its infancy, but
we believe that it may become a bigger part of the entire retail universe than in the west.
Internet companies tend to trade at high multiples of 20x-50x 1 year forward earnings due
to the very nature of high growth estimates in comparison to traditional brick and mortar
businesses.
We believe that for many young Indians, online shopping may become their primary way to
shop throughout their lives. Whenever significant opportunities such as e-commerce
present themselves, many market participants compete aggressively to try to emerge as
undisputed leaders to gain brand recognition and customer loyalty, and oftentimes these
players change their business models along the way to grow with the market.

494
448
216
380
531
551
70
85
30 30
135
225
38
47
29 30
86
98
14%
19%
14%
8%
25%
41%
-
100
200
300
400
500
600
2007 2008 2009 2010 2011 2012
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
PE activity in India - Total Deals IT & ITES Deals
Number of E-commerce deals IT & ITES deals as % of total deals
Internet company
valuations tend to
be in rich zone due
to high-risk/high-
return skew.

M
a
c
q
u
a
r
i
e

R
e
s
e
a
r
c
h

H
u
n
t
i
n
g

S
t
o
c
k
s

1
3

J
a
n
u
a
r
y

2
0
1
4

6

Fig 10 Global E-commerce Comp Sheet: Indian e-commerce names are in nascent stage

Company Name

Analyst Name

Rec

BB Code

Price
(lcy)
Market
Cap
(US$M)

Currency

Revenues (lcy m)

Net Profit Margin (%)

FCF (lcy m)
Indian E-Commerce Companies FY14E FY15E FY16E FY14E FY15E FY16E FY14E FY15E FY16E
JustDial na Not rated JUST IN 1,339 1,439 INR 4,606 5,791 na 25 26 na na na na
Infoedge na Not rated INFOE IN 465 782 INR 5,479 6,753 8,366 23 22 22 1,422 1,617 2,141
Makemytrip na Not rated MMYT US 19 698 USD 97 115 153 (12) 2 8 (23) 4 na

Macquarie E-Commerce Coverage Universe - US companies CY13A CY14E CY15E CY13A CY14E CY15E CY13A CY14E CY15E
Amazon Ben Schachter Outperform AMZN US 394 180,178 USD 75,334 92,124 111,325 1 2 4 2,353 4,389 7,550
eBay Ben Schachter Neutral EBAY US 52 67,034 USD 16,094 18,678 22,291 22 22 22 3,164 4,204 5,042

Google Ben Schachter Outperform GOOG US 1,117 373,283 USD 47,161 54,207 61,756 32 34 35 13,738 18,092 21,268
Yahoo Ben Schachter Neutral YHOO US 40 40,507 USD 4,427 4,388 4,269 15 15 16 812 507 542
OpenTable Tom White Neutral OPEN US 80 1,851 USD 189 225 260 25 25 26 59 70 84
Yelp Tom White Neutral YELP US 72 4,985 USD 229 361 532 (4) 2 6 9 46 81

Facebook Ben Schachter Outperform FB US 57 144,053 USD 7,621 9,636 11,682 28 29 30 2,944 4,270 5,280
Twitter Ben Schachter Underperfo
rm
TWTR US 66 36,108 USD 630 1,052 1,482 (8) (1) 3 (90) (49) 25
LinkedIn Tom White Outperform LNKD US 204 24,349 USD 1,529 2,221 3,006 13 15 19 319 533 816

Expedia, Inc. Tom White Neutral EXPE US 69 8,989 USD 4,781 5,741 6,756 9 9 8 889 1,366 1,217
Tripadvisor Tom White Outperform TRIP US 80 11,419 USD 938 1,176 1,440 26 26 26 278 328 400

ValueClick Tom White Neutral VCLK US 23 1,515 USD 566 609 656 20 22 22 192 161 173
Groupon Tom White Neutral OPEN US 80 1,851 USD 189 225 260 25 25 26 59 70 84

Macquarie E-Commerce Coverage Universe - Asian Companies
Yahoo Japan Nathan Ramler Outperform 4689 JP 592 32,577 JPY 342,987 386,299 409,859 34 33 33 129,186 122,656 132,471
E-commerce
China Dangdang
Jiong Shao Outperform DANG
US
9 721 CNY 6,291 8,178 10,468 (3) 0 3 (363) (0) 500
Vipshop Holdings Jiong Shao Outperform VIPS US 82 4,776 USD 1,632 2,736 3,717 3 3 4 223 298 344
Rakuten NathanRamler Underperform 4755 JP 1,638 20,680 JPY 525,415 575,806 634,718 10 12 17 (257,156) 11,799 46,257
Note: Prices as of 6 January 2014 close. Data for not-rated companies based on Bloomberg consensus estimates.
13 January 2014 7
Fig 11 Global E-commerce Comp Sheet: The group trades at expensive valuation multiples

Company Name
Bloomberg
Code
Market Cap
(US$ m)

PER (x)

Current P/FCF (x)
Indian E-Commerce Companies
FY14E FY15E FY16E FY13A FY14E FY15E
JustDial JUST IN 1,439 80 64 na na na na
Infoedge INFOE IN 782 45 36 29 34 30 23
Makemytrip MMYT US 698 -58 289 64 (0) 191 na

Macquarie E-Commerce Coverage Universe - US companies
CY13A CY14E CY15E CY13A CY14E CY15E
Amazon AMZN US 180,178 490 85 38 77 41 24
eBay EBAY US 67,034 19 17 14 21 16 13

Google GOOG US 373,283 25 21 18 27 21 18
Yahoo YHOO US 40,507 27 25 24 50 80 75
OpenTable OPEN US 1,851 40 34 30 31 27 22
Yelp YELP US 4,985 nmf 612 156 568 109 62

Facebook FB US 144,053 67 53 42 49 34 27
Twitter TWTR US 36,108 nmf nmf 1,213 (399) (743) 1,424
LinkedIn LNKD US 24,349 123 73 43 76 46 30

Expedia, Inc. EXPE US 8,989 22 20 18 10 7 7
Tripadvisor TRIP US 11,419 48 39 32 41 35 29

ValueClick VCLK US 1,515 15 12 12 8 9 9
Groupon OPEN US 1,851 40 34 30 31 27 22

Macquarie E-Commerce Coverage Universe - Asian Companies
Yahoo Japan 4689 JP 32,577 29 27 25 0 0 0
E-commerce China
Dangdang
DANG US 721 nmf 135 12 (2) (2,316) 1
Vipshop Holdings VIPS US 4,776 83 43 27 21 16 14
Rakuten 4755 JP 20,680 43 32 21 (0) 2 0
Note: Prices as of 6 January 2014 close. Data for not-rated companies based on Bloomberg consensus estimates.

13 January 2014 8
What do you get in this report?
In this report, we have analysed critical components of the e-commerce landscape and
how they are being impacted in the Indian context. We also highlight the various e-
commerce business models in use in India and a brief overview of the leading players in
each of the segments.

Infoedge Ltd.
Leading bouquet of businesses including Naukri.com: Leading Indian player in job
search, Jeevansathi.com: Top 3 matrimony site , 99acres.com: Leading real estate
classified site etc.
Strategic investments in sites like zomato.com, policybazaar.com etc
JustDial
India's leading local search engine
Makemytrip.com
India's #1 travel site
Yatra.com
Leading competitor to Makemytrip
IRCTC
800 pound gorilla in rail bookings
Snapdeal.com
India's #1 online marketplace
Flipkart.com
India's #1 inventory based online store
Myntra.com
India's #2 shopping site
Jabong.com
Top 3 player: New kid on the block and growing rapidly
Fashionandyou.com
India's leading flash sale site for lifestyle products
13 January 2014 9
India is on the cusp of E-Commerce
revolution
The Indian E-Commerce industry is a very recent phenomenon and has been in its infancy
for the larger part of the previous decade. However, in last four years, the industry has
witnessed an incredible CAGR in excess of 30%+ annually. As per IAMAI estimates, the
industry has increased from Rs192bn (US$3.8bn) in 2009 to Rs630bn (US$9.5bn) in
2013E.
Fig 12 Indian E-commerce industry could cross Rs1.1 Trillion (US$ 18bn) in 2015

We are at nascent stages of E-Commerce Industry lifecycle vs Rest
of the World
We see huge potential for growth in content of the Indian e-commerce landscape. The
various drivers of driving e-commerce in India are in place, including rising income levels in
middle class Indians, increasing internet penetration rate in the population, current low
levels of online e-commerce activity and development of the ancillary logistics and
payments industries to drive online purchasing activity. The chart below shows that the
numbers of Indians on the internet and number of Indians using e-commerce are still pretty
low. This presents a unique opportunity where one sees rising internet usage but still low
levels of e-commerce activity.


192 263 351 473 850 1,148 630
36%
34%
35%
35% 35%
33%
-
200
400
600
800
1,000
1,200
1,400
2009 2010 2011 2012 2013E 2014E 2015E
31%
32%
33%
34%
35%
36%
37%
Indian Digital Commerce Mkt (Rs bn) YoY growth rate (%)
320
1350
24
200
1220
245
538
20
79
205
156
270
11
27 25
0
200
400
600
800
1000
1200
1400
1600
1.6x
2.0x
1.8x
2.9x
8.2x
64%
50%
55%
34%
12%
0%
10%
20%
30%
40%
50%
60%
70%
We project Indian E-
Commerce Industry
to growth to
US$18bn opportunity
by FY15E
13 January 2014 10
Contribution to Indian GDP: Still early stages
As per the McKinsey Global Institute, the Internet already has an immense impact on the
global economy, contributing an estimated US$1.7 trillion, or 3% of global GDP. Yet half
the number of Internet users live outside the advanced economies, often in countries that
are quickly developing, have significant economic potential and are socially and culturally
diverse, India being a prime example of the above. KPMG estimates that the E-Commerce
industry could contribute around 4% to the GDP by 2020 (vs less than 1% currently).
Fig 15 E-Commerce Industry in early stages in
India

Fig 16 can lead to huge head room for growth..

Source: IAMAI, Macquarie Research, January 2014 Source: IMF, IAMAI, Macquarie Research, January 2014
How the pie splits in Indian Ecommerce Traffic
Indian E-Commerce is dominated by the online travel segment, which contributes more
than 70% of the e-commerce revenues in the country. However in the last three years, we
have seen strong growth in the e-tailing segment, which is expected to grow even faster in
the coming years on the back of rising mobile penetration and better payment
mechanisms. We expect these trends to continue, with E-tailing showing the strongest
growth amongst peer groups.
Fig 17 Breakdown of Indian Ecommerce Industry -
2009
Fig 18 Breakdown of Indian Ecommerce Industry
2013E


224
210
30
19
11
0
50
100
150
200
250
Size of E-Commerce Industry (In US$ bn) - 2013
1.3%
2.4%
2.0%
0.9%
0.6%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
E-Commerce Industry as % of country's GDP (2013)
Online travel
industry
78%
E-Tailing
8%
Others
2%
Classifieds
market
4%
Financial
services
8%
Online travel
industry
71%
Financial
services
6%
Classifieds
market
5%
Others
2%
E-Tailing
16%
13 January 2014 11
We explain the constituents of the e-commerce traffic in India:
Online travel includes booking rail, air, bus tickets, hotel accommodations and tour
packages. The largest players in this category include Indian Railways, Makemytrip,
cleartrip, yatra, goibibo etc.
E-Tailing includes purchases of various consumer products/services such as
electronics, apparel, footwear, jewellery, home & kitchen appliances, consumer
durables, furnishings. The largest players in this category include flipkart, snapdeal
etc.
Financial Services includes services such as paying insurance premiums and
renewals, paying utility and mobile bills, trading shares and securities. The largest
players in this category include various telecom and banking players.
Classified includes jobs, matrimony, car, real estate etc. The largest players in this
category include Infoedge, Timesjobs.com (part of Times of India) and Shine.com (part
of HT Media) etc.
Others include online entertainment ticketing, online food delivery, buying
discounts/deals/vouchers etc.
Fig 19 Online travel still the largest but E-Tailing growing the fastest


150
16 15
8
449
100
36
31
-
50
100
150
200
250
300
350
400
450
500
Online travel industry E-Tailing Financial services Classifieds market
2009-13E
CAGR: 32%
2009-13E
CAGR: 59%
2009-13E
CAGR: 25%
2009-13E
CAGR: 40%
E.g. MakeMyTrip, Yatra,
IRCTC etc
E.g. flipkart, snapdeal,
jabong, myntra etc
E.g. various telecom
cos and banks
E.g. Infoedge ltd,
JustDial
13 January 2014 12
Drivers of E-Commerce growth in India
We list below the key drivers for driving growth in E-commerce in India. We present a chart
below giving a snapshot of the six key drivers and then explain them in more detail one by
one in the next pages.
Fig 20 Key Drivers of growth in Indian E-Commerce Sector


13 January 2014 13
Driver 1: Number of Internet users to cross US by 2014
As per Internet and Mobile Association of India (IAMAI) and IMRB International, the
number of Internet users in India had reached 205m in October 2013, registering a YoY
growth of 40%. They expect the number to reach 243m by June 2014 and nearly 300m
users by December 2014, at which point of time it would have overtaken the US as the
second largest Internet base in the world. China currently leads with more than 550m
internet users, while the US currently has an estimated 245m internet users.
Fig 21 Overall Internet users growth gaining
momentum.
Fig 22 .though penetration rates still low which
leaves room for upside

Urban & Rural users showing strong growth. As per IAMAI, the number of internet
users in urban India was 137m in October 2013 and is expected to touch 158m by June
2014. Similarly, Internet users in rural India stood at 68m in October 2013 which is
expected to touch 85m by June 2014. Currently, urban users constitute ~65% of the total
user base in India.
Fig 23 Urban users contribute ~65% of user base. Fig 24 .though rural user growth faster


106
137
190
205
213
243
84
111
149
162
169
192
0
50
100
150
200
250
300
Jun-11 Jun-12 Jun-13 Oct-13 Dec13E June14E
Claimed Users (m) Active Users (m)
Estimated CAGR of
32% during 2011-14
80%
78%
49%
45%
40%
17%
0%
20%
40%
60%
80%
100%
Japan USA Russia Brazil China India
Internet Penetration Rate (%)
83.5
99
130.4
137
141
158
66
80
108
116
120
136
0
20
40
60
80
100
120
140
160
180
Estimated CAGR
of 24% during
2011-14
22.5
38
59.6
68
72
85
18
31
41
46
49
56
0
10
20
30
40
50
60
70
80
90
Estimated CAGR
of 56% during
2011-14
13 January 2014 14
Driver 2: Favourable Demographics: 300m+ middle class population
India has various demographic parameters working in its favour, namely:
One of the highest levels of youth population in the world. Indias populations
median age is 25 years, which is among the lowest in the world. Further, 58% of the
population is under 30 years of age. This presents a large user base which would be
capable and willing to use internet commerce for its needs.

Fig 25 India is the 4rth largest economy globally...
Fig 26 with low levels of ecommerce contribution
to GDP..

Source: Makemytrip, Macquarie Research, January 2014 Source: KPMG, IAMAI, Macquarie Research, January 2014
Rapidly growing middle class. Indias middle class population stands at over 300m.
This is the worlds second largest middle population after China. As per the World
Bank, average GDP per capita stands at ~US$1,500 for India. With strong economic
growth, these per capita income levels have huge upside.
Rising levels of urbanization. As per the McKinsey Global Institute, the urban
population is already sizable by western standards at 377m (As of 2011) or ~31% of
Indias total population. By 2020, India is likely to have acquired an additional 112m
urban residents due to continued migration from rural to urban areas.
Fig 27 Non Metros contributed only 39% of internet
users in India

Fig 28 which has risen to 47% in 2011

Source: KPMG, Macquarie Research, January 2014 Source: KPMG, Macquarie Research, January 2014

16 15.9
12.6
4.8 4.7
2.6
2.4
0
2
4
6
8
10
12
14
16
18
European
Union
USA China India Japan Russia Brazil
2012 GDP at Purchasing Power Parity (In US$ trillion)
1.3%
2.4%
2.0%
0.9%
0.6%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
E-Commerce Industry as % of country's GDP (2013)
2006
Top 8 metros
41%
Other metros
20%
1m+ town
10%
Less than 1m
towns
29%
2011
Top 8 metros
35%
Other metros
18%
1m+ town
11%
Less than 1m
towns
36%
13 January 2014 15
Driver 3: Increasing Mobile Penetration
As per Internet and Mobile Association of India (IAMAI) and IMRB International, the
number of mobile internet users stood at 110m as of October 2013 and was estimated to
reach 130m by December 2013. The segment has been showing ~20% QoQ growth in the
past couple of quarters. We expect this trend to continue on the back of decreasing cost of
smartphones and internet usage charges in India.
Fig 29 Mobile internet users have grown 2.7x in 18 months

The charts below show that while India has progressed considerably on mobile
penetration, there is still room for upside left on 3G/4G penetration. In our view, 3G/4G
internet penetration will increase due to decreasing costs of bandwidth and smart-phones
over time in the country.
Fig 30 While mobile penetration rates are healthy Fig 31 3G/4G penetration has room for upside

Source: mobithinking, Macquarie Research, January 2014 Source: mobithinking, Macquarie Research, January 2014

48
91
110
130
37
70
85
103
11
21
25
27
-
20
40
60
80
100
120
140
Jun-12 Jun-13 Oct-13 Dec13E
Mobile Internet Users (m) Mobile Urban User (m) Mobile Rural User (m)
70%
90%
106%
110%
113%
115%
118%
135%
144%
0%
20%
40%
60%
80%
100%
120%
140%
160%
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Mobile subs as a % of population (2Q2013)
92%
84%
39%
29%
20%
18% 17% 16%
7%
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10%
20%
30%
40%
50%
60%
70%
80%
90%
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3G/4G subscribers as % of population (2Q2013)
13 January 2014 16
High speed internet connections set to expand at 44% CAGR during 2012-17. The
chart below shows the growth seen in 2G and 3Q/4G internet connections on mobile
phones in India. In our view, this will become a driving force for increasing e commerce
business in the country.
Fig 32 CAGR of 44% in 3G/4G connections in the next 5 years (2012-17)

Source: GSM Association, Macquarie Research, January 2014
The charts below show that India has a 77% share of mobile users from urban areas. A
large portion of the total mobile users are present in the 18-35 year category which would
be more amenable to e-commerce activity, in our view.
Fig 33 . With Urban users contributing lions share
of Indian mobile usage
Fig 34 .with more than 80% of Indian mobile users
are in 18-35yr category


347
524
741
855
798 812 811 791 776
750
1
11
67
107
171
252
327
409
39
0
200
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600
800
1000
1200
1400
2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E
(m)
2G Connections 3G/4G connections
CAGR of 44% in 3G/4G connections
Urban Users
77%
Rural Users
23%
9%
51%
30%
10%
0%
10%
20%
30%
40%
50%
60%
Less than 18 yrs 18-24 yrs 25-35 yrs more than 35 yrs
Demographics of Mobile Users (2013)
13 January 2014 17
Driver 4: Online Buying in nascent stages: Huge Scope for growth
The chart below shows that the number of Indians on the internet and the number of
Indians using e-commerce are still pretty low. This presents a unique opportunity where
one sees rising internet usage but still low levels of e-commerce activity. We believe that
the next 1-3 years will turn out to be an inflection point where this gap reduces
substantially.

Mobile directly contributes to higher frequency of access. The chart below shows that
more than 50% of urban internet users access the internet daily. This is a potent indicator
of the penetration that the internet has made in India. In our view, this will become a driving
force for increasing e-commerce business in the country.
Fig 37 More than 50% of urban users access the Internet daily..


320
1350
24
200
1220
245
538
20
79
205
156
270
11
27 25
0
200
400
600
800
1000
1200
1400
1600
1.6x
2.0x
1.8x
2.9x
8.2x
64%
50%
55%
34%
12%
0%
10%
20%
30%
40%
50%
60%
70%
Once a Week
10%
Less than once a
month
3%
2-3 times/month
4%
Serveral Times a day
15%
4-5 times/week
16%
2-3 times/week
13%
All 7 days
19%
Once a Day
20%
13 January 2014 18
Driver 5: Healthy internet-capable device ownership + reducing
costs of smart-phones = Higher number of online transactions
Few Introductory facts on Indian Telecom. As of March 2013, India had 868m mobile
phone subscribers, with a tele-density rate of 71% for the whole population. Mobile phone
users comprised 96% of the total telephone users in the country. This is comprised of
~525m users in urban areas and ~343m rural users. Over the past two years, smartphone
penetration has shown healthy growth rates on the back of reducing costs. Entry level
smartphone prices have reduced from ~Rs15,000 (US$300) to ~Rs3,000 (US$50) in the
last three years.
Fig 38 Healthy base of internet-capable mobile
devices
Fig 39 can be augmented by current low levels of
smartphone penetration

Source: TRAI, Macquarie Research, January 2014 Source: Nielsen, IDC, Macquarie Research, January 2014
3G/4G speeds to aid in smartphone adoption. The chart below shows the growth
expected in 2G and 3Q/4G internet connections on mobile phones in India. In our view,
this will become a driving force for increasing e-commerce business in the country.
Fig 40 High speed internet to drive smartphone adoption


25
58
101
149
332
431
540
650
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011 2012E 2013E
Number of Internet capable mobile devices in India (Mn)
43
63
92
115
145
21
42
77
137
275
2 4
11
24
48
1
5
10
18
29
-
50
100
150
200
250
300
2008 2009 2010 2011 2012
(m)
USA China Japan India
11
39
67
107
171
252
327
409
72%
60% 60%
47%
30%
25%
0
100
200
300
400
500
2010 2011 2012E 2013E 2014E 2015E 2016E 2017E
0%
10%
20%
30%
40%
50%
60%
70%
80%
No of 3G/4G connections in India (m) YoY growth (%)
13 January 2014 19
We found more than 80 Smartphones in the Rs2,000 (US$30)-Rs5,000 (US$80) price
range. A simple search on flipkart.com reveals 87 smart-phones between Rs2,000 to
Rs5,000 price range. This is proof of the lowering costs of smartphones in India which can
be a big driver for e-commerce penetration in India.
Fig 41 Large number of smart-phones available in US$30-US$80 price range

Source: Flipkart, Macquarie Research, January 2014

13 January 2014 20
Driver 6: Cash on Delivery: Why it works in India?
Cash on Delivery (COD) is currently one of the most popular modes of payment among
Indian online stores. The major reason for its popularity is that the buyers do not have to
pay anything before the goods are delivered to them. This helps in giving some confidence
to new buyers, as e-commerce is still a growing concept in India. The reasons why COD is
popular in India are as follows:
Lack of Payment Alternatives. A large portion of Indias population does not have a
debit or credit cards; those who do have such cards do not use them much for online
transactions. Therefore COD is one means where a seller can reach out to buyers
even if they dont have means to make an online payment.

Fig 42 Debit card usage is on the rise
Fig 43 but considering Indian Population of 1.2bn,
penetration levels are quite low

Product Condition and Satisfaction. Due to the initial stage of e-commerce in India,
consumers have been hesitant of the process of initiating a refund in case of
unsatisfactory product delivery. Moreover, Indian consumers prefer to physically look,
feel and touch something before buying. In such cases, COD comes as a good option
for buyers to actually check the product before paying for it.
Scam Scare. The trust for online shopping and ecommerce has been increasing in
India but many still fear using new e-commerce companies and fear that theyll be
scammed. COD works in removing this fear for new shoppers.
Banking Channel alternatives: M-Pesa and Prepaid Cards still in nascent stages.
M-Pesa or M-Paisa (as it is known in India) is a mobile-phone based money transfer
service offered by Vodafone in India since 2011. Though mobile penetration in India is
high, mobile-based money transfer systems are still in their infancy. In our view, given
the alternative of Cash on Delivery, these alternate channels would take time to
develop and grow as a viable payment mechanism.

17
23
28
25
18 18 18
50
75
102
137
182
228
278
-
50
100
150
200
250
300
FY06 FY07 FY08 FY09 FY10 FY11 FY12
Credit cards (m) Debit cards (m)
4.5
2.9
2.6 2.6
1.8
1.6
1.2
0.9
0.2
0
1
2
3
4
5
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Number of cards per capita (2011)
13 January 2014 21
Indian E-Commerce Eco-system
To be or not to be: Inventory or No Inventory
E-commerce business models differ from traditional models since they deliver the products
directly to the consumer while eliminating the middleman from the process. Various
examples around the globe show that top e-commerce players usually outsource forward
logistics and control back-end activities like storage and inventory management.
Currently, Indian e-commerce entrepreneurs are looking at their business in three ways:
Fig 44 Various approaches to Indian E-Commerce


Indian E-
Commerce
Business Models
Inventory Led
E.g. Flipkart.com
Niche Business
E.g. Infoedge's
naukri.com
Mass Business
E.g. Justdial.com
Marketplace
E.g.
Snapdealcom
Hybrid
E.g. Amazon.com
All 3 models exist in
India and the top
players in each
would garner lions
share, in our view.

13 January 2014 22
Inventory-Led Business Model
Why does it exist in India? For a market like India, where customers have low faith in
shopping online, an inventory-led business model leads to a certain amount of customer
trust. There is an immense need to build this trust to create repeat customers. For
businesses which prefer the inventory-led business model in India, the belief is that this
trust can only be built by excellent customer service, which in turn is best taken care of
when you have control over the inventory. This ensures speedier deliveries, quality checks,
and an overall better customer experience.
Where does it work? Inventory-led business models usually are more prevalent in areas
like fashion, clothing, electronics etc where there are sensitivities to the fact that these are
all high involvement purchases. The business becomes the single interface to the user and
the customer does not have to worry about who the real inventory owner is. This kind of
intangible value creation for the brand would not have come through any amount of
marketing spend.
Challenges facing inventory-led model. Large warehouses, limited credit time from
vendors and added liability of dead stock do not work in favour of this model. It also gets
more complex as the business scales and as one introduces new product categories.
However, the control over the complete value chain that this model offers has a lot of
benefits, as it means greater bargaining power with suppliers and higher gross margins.
Leading players using inventory business model in India. Flipkart (www.flipkart.com)
is the leading player of inventory-led business model in India. For most people who are not
part of the Indian e-commerce ecosystem, Flipkart has become synonymous with
inventory-led business in India. A snapshot of the home page of Flipkart is given below.
Fig 45 Flipkart has become synonymous with inventory business model in India

Source: flipkart, Macquarie Research, January 2014

13 January 2014 23
Marketplace Business Model
Why does it exist? The marketplace model of e-commerce allows for fast scalability with
relatively less capital consumption and more choices for buyers. Additionally, one does not
have to worry about cost of warehousing, purchasing inventory beforehand etc.
Theoretically speaking, one can have thousands and thousands of sellers on a single
marketplace.
Where does it work? The model has been highly successful globally. Except Amazon in
US, in most other countries, a marketplace model has ultimately become the market
leader, e.g., Taobao in China, Mercado Libre in Latin America, Gmarket in South Korea
etc. The model is highly scalable once you are able to fine-tune the processes and put the
right systems in place to be able to maintain marketplace hygiene. In India the marketplace
model can be a successful venture in almost any product type. With so many sellers
having their businesses offline, they can use the marketplace to sell part or all of their
inventory online.
Challenges facing marketplace-led model. The road for creating marketplace is not all
smooth and it poses dependency on every aspect of business on third parties or
outsourcing from supply chains to payment and logistics. In our view, cracking the supply
chain and keeping track of logistics and customer satisfaction is the most complex part of
the whole chain.
Leading players using marketplace business model in India. Snapdeal
(www.snapdeal.com) is the leading player with a marketplace-led business model in India.
For a lot of external elements, snapdeal has become synonymous with marketplace-led
business in India. A snapshot of the home page of snapdeal is given below.
Fig 46 snapdeal has become synonymous with marketplace business model in
India

Source: snapdeal, Macquarie Research, January 2014

13 January 2014 24
Hybrid Business Model
Why does it exist? The hybrid model of e-commerce involves being an offline retailer and
also having an online marketplace.
Where does it work? The model has been highly successful with Amazon in the US. We
also have Rakuten and Yahoo in Japan as an example of this model.
Capital is the biggest challenge. The hybrid business model involves a huge amount of
capital investment in setting and maintaining both offline and online presence.
Leading players using Hybrid business model in India. Amazon (www.amazon.com) is
the leading player of the hybrid-led business model globally. For a lot of external elements,
Amazon has become synonymous with hybrid led business. A snapshot of the home page
of Amazon is given below.
Fig 47 Amazon has become synonymous with hybrid business model globally

Source: amazon, Macquarie Research, January 2014

13 January 2014 25
Look out for more IPOs
The start of good times for E commerce listings
Looking at listings in 12-24 months time. In the Indian context, there are two internet-
based companies listed on markets including Infoedge (INFTEC IN) which runs Indias
largest job portal (naukri.com) and justdial (JUST IN), which is Indias largest local search
site. In our conversations with various founders and top management leaders in Indian e-
commerce companies, we got a sense that most companies would be hitting relevant
milestones with regards to revenues and profitability in 12-24 months time. This should
clear the way for multiple IPOs from this segment.
Global Phenomenon: six out of top 10 internet IPOs have come in last three years.
We present a chart below showing the biggest internet IPOs in History.
Fig 48 2011-13 has witnessed 60% of the largest internet IPOs...ever..
Name Amount Raised (US$ bn) Year
Facebook 16.0 2012
Twitter 1.8 2013
Google 1.7 2004
Yandex 1.3 2011
Infonet Services 1.1 1999
Shanda Games 1.0 2009
Zynga 1.0 2011
Giant Interactive 0.9 2007
Renren 0.7 2011
Groupon 0.7 2011
Higher Private Equity participation should lead to increased exits going forward.
Bain & Company states that out of the 225 IT& ITES deal in India in 2012, 98 deals were in
the e-commerce space. We have seen a strong pick-up in private equity deals in the space
since 2011.
Fig 49 IT & ITES deals have climbed sharply in the last two years.

Source: Bain & Company, Macquarie Research, January 2014

494
448
216
380
531
551
70
85
30 30
135
225
38
47
29 30
86
98
14%
19%
14%
8%
25%
41%
-
100
200
300
400
500
600
2007 2008 2009 2010 2011 2012
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
PE activity in India - Total Deals IT & ITES Deals
Number of E-commerce deals IT & ITES deals as % of total deals
Internet company
valuations tend to
be in rich zone due
to high-risk/high-
return skew
13 January 2014 26
Regulation: Hurdle remains on FDI policy
Why Amazon could not enter India?
Introduction. Until 2011, Indian laws prohibited foreign direct investment (FDI) in multi-
brand Indian retail, forbidding foreign groups from any ownership in supermarkets,
convenience stores or any retail outlets, to sell multiple products from different brands
directly to Indian consumers.
Where do things stand as of today? In November 2011, FDI norms in retail in India were
changed and brought about the following changes:
Foreign groups are now allowed to own up to 51% in "multi-brand retailers", as
supermarkets are known in India
Single brand retailers, such as Apple, Ikea etc can own 100% of their Indian stores, up
from the previous cap of 51%
Both multi-brand and single brand stores in India will have to source nearly a third of
their goods from small and medium-sized Indian suppliers
What does this mean? Thus, FDI is currently set at 51% for multi-brand stores and 100%
in single brand retail stores. While 100% FDI is allowed in business-to-business (B2B) e-
commerce, its banned in business-to-consumer (B2C) retail.
The current Indian Foreign Direct Investment (FDI) policy doesnt allow e-commerce
players to retail directly to consumers. FDI is, however, allowed in online marketplaces,
where the site is essentially a platform to sell other retailers products (like Amazon,
Flipkart, etc). So companies either follow the marketplace model to raise investments, or
have structured their business as two separate entities, including the marketplace model,
to comply with the policy. Relaxation of rules on FDI in the space would help raise the
funds a lot of e-commerce players need and attract the interest of bigger international
companies in India.
How are Indian e-commerce companies dealing with the regulation? Indian e-
commerce companies set up separate entities for activities where 100% FDI is allowed.
This usually covers back-end operations such as logistics, inventory and technology, which
enables 100% Indian-owned and controlled front-end entities to leverage the capabilities of
these back-end operations.
but changes can be on the way. Media reports (Link) suggests that Department of
Industrial Policy and Promotion (DIPP) has started consultations with stakeholders on
allowing foreign direct investment in retail e-commerce, to open the sector for foreign
investors before the end of this financial year.

The Indian Govt
policy on FDI in
retail can be a
speed breaker for
potential
investments in the
sector.
13 January 2014 27
Listed Company Profiles
Indian Listed Players: First Movers Advantage
I. JustDial (JUST IN, Not Rated)
II. Infoedge (INFTEC IN, Not Rated)
Online Travel: Industry Overview
I. Makemytrip (MMYT US, Not Rated)
II. Yatra (Unlisted)
III. IRCTC (Unlisted)
E-Commerce: Industry Overview
I. Snapdeal (Unlisted)
II. Flipkart (Unlisted)
III. Jabong (Unlisted)
IV. Myntra (Unlisted)
V. Fashionandyou (Unlisted)
Others
I. Network18 Media Investments (NETM IN, Not Rated)


13 January 2014 28
INDIA

INFOE IN Not rated
Stock price as of 10/01/2014 Rs 465
GICS sector Technology/Internet
Market cap US$m 782
Avg Value Traded (3m) US$m 9.1
12m high/low Rs 495/285
PER FY15 x 34
P/BV FY 15 x 5.8

Historical financials
YE March (Rs m) FY11A FY12A FY13A
Revenue 3,217 3,903 4,700
% growth 36 21 20
EBITDA 835 1,167 1,186
% growth 30 40 2
EPS 5 10 10
% growth 2 86 4
EBIT Margin 23 28 23
Source: Company data, FactSet,January 2014

Share Price Driver
Thematic
Growth
Value
Event

Info Edge Share Price Chart

Source: Bloomberg, January 2014
Analyst(s)
Atul Soni

13 January 2014
Ltd

MacVisit: Info Edge
Core business strong, string of pearls
strategy for unlisted investments
We met with Mr. Ambarish Raghuvanshi, Group President Finance and Chief
Financial officer (CFO) of Info Edge (India) Limited, which is Indias largest
on-line classifieds company in recruitment, matrimony, real estate, education
and related services.
Impact
Business Model: String of Pearls strategy. Info Edge operates in 4 key
business lines and has 6 strategic investments in external unlisted
ecommerce ventures. Its 4 key business segments are:
Recruitment. This comprises online recruitment classifieds
(www.naukri.com, Indias leading job site and www.naukrigulf.com, a job
site focused at the Middle East job market) and offline executive search
(www.quadranglesearch.com). Related sites in this business are a
professional networking site (www.brijj.com) and a fresher hiring site
(www.firstnaukri.com).
Matrimony. This comprises online matrimony classifieds
(www.jeevansathi.com) and 14 offline Jeevansathi Match Points.
Real Estate. This comprises online real estate classifieds
(www.99acres.com), a real estate brokerage business
(www.allcheckdeals.com, housed in a subsidiary named India Private
Limited).
Education. This comprises online education classifieds
(www.shiksha.com).
Key Drivers for growth. Info Edge believes it stands to benefit from the
secular growth story of increasing internet penetration, strong and established
brands, increasing 3G mobile subscriber base and young demographics
profile for the country.
Key Strengths & weaknesses.
Key strengths include 1) First mover advantage in various categories, 2)
Recruitments, contributing ~77% of company revenues is ~50% EBITDA
margin business, 3) No debt and cash generating business.
Key weaknesses include 1) Low barriers to entry, 2) Failure to adapt to
newer technological shifts, 3) Competition
Outlook
Valuation. The stock is currently trading at 34x FY15 earnings on Bloomberg
estimates.

0
100
200
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400
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600
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Share Price (Rs)
13 January 2014 29
Ownership

History and corporate governance
Promoters 52%
FII 27%
DII 11%
Share ownership as of 30
th
September 2013. Source: Bombay Stock
Exchange, January 2014
Top Shareholders:
HDFC AMC: 6%
Mathews International, Nalanda India Equity: 4%
Capital group, Reliance Capital Trust: 3%
The company was incorporated in 1995 as Info Edge (India)
Private Limited and converted into a Public Limited in April,
2006. Info Edge is largely known for its recruitment portal
Naukri.com in India. It was the first listed internet-based
player on Indian bourses.
Auditors: Statutory Audit performed by PWC
5 Independent Directors out of 9 Directors

Balance sheet data and refinancing (as of 2QFY14)

Management and Directors background
Cash and cash equivalents: Rs4.8bn
Gross Debt: Nil

Sanjeev Bikhchandani, Founder and Executive Vice
Chairman Founded the company in 1995 and previously
worked with Lintas and GSK.
Hitesh Oberoi, Managing Director and CEO Joined the
company in 2000 and has worked with HLL previously.
Ambarish Raghuvanshi, CFO. Joined the company in
2000 and has worked with Bank of America and HSBC
previously.

Latest Qtr Stand-alone results highlights (2QFY14)

Latest Consolidated Annual results highlights (FY13)
Revenue: Rs1.2bn (up 15% YoY)
Operating Income: Rs402m
Operating Income margin: 32.5%
PAT: Rs333m
Diluted EPS: Rs3.05
Operating Income: Rs1,069m
Operating Income margin: 23%
PAT: Rs916m
Diluted EPS: Rs8.39
Fig 1 Sales has seen a CAGR of 28% since FY06 Fig 2 . EBIT Margins have been steady.

Source: FactSet, Macquarie Research, January 2014 Source: FactSet, Macquarie Research, January 2014

196 329 583 566 576 755 1,084 1,069
24% 24%
27%
23%
24%
23%
28%
23%
0
200
400
600
800
1,000
1,200
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
0%
5%
10%
15%
20%
25%
30%
EBIT (Rs m) EBIT Margin (%)
824
1,396
2,189
2,458
2,371
3,217
3,903
4,700
87%
69%
57%
12%
-4%
36%
21% 20%
0
1,000
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3,000
4,000
5,000
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0%
20%
40%
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80%
100%
Sales/Revenue (Rs m) YoY Growth (%)
13 January 2014 30
The growth proposition

The value propositon
Info Edge stands to benefit from the secular growth story of
increasing internet penetration, strong and established
brands, increasing 3G mobile subscriber base and young
demographics profile for the country.

Info Edge owns a diversified portfolio of portals like
Naukri.com, 99acres.com, Jeevansathi.com and
Shiksha.com, which have established market and mind
share.
This is evident in Naukris market leadership among job
portals, with 60%+ market share and 99.acress market
leadership (30%+) among real estate classifieds portal. Its
matrimony portal Jeevansathi (JS) is one of the top
players in the online matrimony space.
Its investment companies like Zomato, PolicyBazaar and
Meritnation have also shown early success with strong
market share and brand recognition.
The business model

The main risks
Info Edge operates in 4 key business lines (Recruitments,
Matrimony, Real Estate & Education) and has 6 strategic
investments in external unlisted ecommerce ventures, which
are listed below:

Competition from new or existing players
Macro environment: Any negative development in the macro
environment can slow growth for the company, since
classified business is highly linked to condition of the
economy

Strengths

Weaknesses
First mover advantage in various categories
Recruitments, contributing ~77% of company revenues, is
~50% EBITDA margin business
No debt and cash generating business
Low barriers to entry
Failure to adapt to newer technological shifts
Competition
Opportunities

Threats
Rising internet penetration
Improving macroeconomic conditions
Strong growth in Mobile platform

Technological obsolence
Competing products from new or existing players

Investee Company Website
Total amount
invested (Rs m)
Approx. diluted
and converted
shareholding %
% of the
total amount
invested
Year of
Investment
Active
Zomato Media Pvt Ltd. www.zomato.com 860 58% 30% 2010
Applect Learning Systems Pvt Ltd. www.meritnation.com 615 54% 22% 2008
Etechaces Marketing and Consulting Pvt Ltd. www.policbazaar.com 325 32% 11% 2008
Kinobeo Software Pvt Ltd. www.mydala.com 270 47% 9% 2011
Canvera Digital Technologies Pvt Ltd. www.canvera.com 375 25% 13% 2012
Happily Unmarried Marketing Pvt Ltd. www.happilyunmarried.com 50 25% 2% 2012
Sub Total 2,495 88%
Written off/ provisioned for/ exited
Studyplaces, Inc. www.studyplaces.com 45 13% 2% 2008
Ninety Nine Labels Pvt Ltd. www.99labels.com 285 47% 10% 2011
Nogle Technologies Pvt Ltd. www.floost.com 26 31% 1% 2011
Sub Total 356 12%
Total 2,851 100%

13 January 2014 31
Selected Financials
Fig 3 Historical P&L Statement

Source: FactSet, Company Data, January 2014

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Mar '11 Mar '12 Mar '13
366 Days 365 Days 365 Days 365 Days 366 Days 365 Days 365 Days 365 Days 366 Days 365 Days
Sales/Revenue 192 441 824 1,396 2,189 2,458 2,371 3,217 3,903 4,700
Sales Growth (%) 115 130 87 69 57 12 -4 36 21 20
Cost of Goods Sold (COGS) incl. D&A 72 408 607 1,043 1,564 1,836 985 1,359 1,670 2,265
COGS Growth (%) 77 470 49 72 50 17 -46 38 23 36
Gross Income 120 32 217 353 625 622 1,385 1,859 2,233 2,434
Gross Income Growth (%) 147 -73 572 63 77 -1 123 34 20 9
Gross Margin (%) 63 7 26 25 29 25 58 58 57 52
SG&A Expense -- -- -- -- -- -- 761 976 896 1,267
SGA Growth (%) -- -- -- -- -- -- -- 28 -8 41
SG&A to Sales (%) -- -- -- -- -- -- 32 30 23 27
Other Operating Expense 84 0 21 24 42 56 49 128 253 99
EBIT (Operating Income) 36 32 196 329 583 566 576 755 1,084 1,069
EBIT Growth (%) 397 -12 510 68 77 -3 2 31 44 -1
EBIT Margin (%) 19 7 24 24 27 23 24 23 28 23
Nonoperating Income (Expense) - Net 3 6 16 67 195 278 272 199 389 472
Interest Expense 1 2 4 7 0 0 1 1 1 1
Interest Expense Growth (%) 49 184 161 62 -94 -7 64 34 -17 42
Unusual Expense (Income) - Net 0 0 0 0 0 0 38 -103 8 237
Pretax Income 39 37 207 389 778 844 810 1,056 1,464 1,303
Pretax Income Growth (%) 354 -6 467 88 100 8 -4 30 39 -11
Pretax Margin (%) 20 8 25 28 36 34 34 33 38 28
Income Taxes 14 33 74 118 224 261 318 400 529 529
Tax Rate (%) 37 92 36 30 29 31 39 38 36 41
Equity in Earnings of Affiliates 0 0 0 0 0 -12 -6 -1 -30 -15
Other After Tax Adjustments 0 0 0 0 0 0 0 0 114 4
Consolidated Net Income 24 3 133 271 554 570 487 654 1,020 763
Minority Interest Expense 0 0 0 0 0 0 -34 23 -14 -153
Net Income 24 3 133 271 554 570 521 631 1,033 916
Net Income Growth (%) 45 -87 4,187 104 105 3 -9 21 64 -11
Net Margin (%) 13 1 16 19 25 23 22 20 26 19
Net Income available to Common 24 3 133 271 554 570 521 631 1,033 916
EPS (recurring) -- -- 1.5 2.8 5.1 5.2 5.0 5.1 9.5 9.9
EPS (recurring) Growth (%) -- -- -- 85.9 79.6 2.9 -4.1 2.2 85.9 4.1
EPS (diluted) -- -- 1.5 2.8 5.1 5.2 4.8 5.8 9.5 8.4
EPS (diluted) Growth (%) -- -- -- 85.7 79.6 2.9 -8.7 21.3 63.6 -11.4
EBITDA 45 43 223 375 639 637 641 835 1,167 1,186
EBITDA Growth (%) 213 -4 417 68 70 -0 1 30 40 2
EBITDA Margin (%) 24 10 27 27 29 26 27 26 30 25

13 January 2014 32
Fig 4 Historical Balance Sheet


Cash & ST Investments 119 177 447 2,596 1,583 3,296 3,864 4,111 3,159 3,633
Cash & ST Investments Growth (%) 196 49 153 480 -39 108 17 6 -23 15
Cash & ST Investments / Total Assets (%) 77 57 70 84 38 82 68 56 35 34
Short-Term Receivables 10 34 28 48 107 137 197 277 123 211
Accounts Receivable Growth (%) 109 231 -18 73 124 28 45 41 -56 72
Accounts Receivable Turnover (x) 26 20 27 37 28 20 14 14 19 28
Other Current Assets 7 27 51 317 499 62 1,124 1,507 2,154 2,574
Total Current Assets 136 238 526 2,961 2,189 3,494 5,186 5,895 5,436 6,419
Net Property, Plant & Equipment 16 35 76 90 374 383 345 694 627 1,004
Total Investments and Advances 0 0 0 0 1,557 107 68 593 2,849 2,451
Long-Term Note Receivable 1 15 16 16 13 16 20 14 16 67
Intangible Assets 0 25 19 14 8 3 19 47 15 616
Deferred Tax Assets 1 -- -- 7 11 19 34 59 42 45
Other Assets 0 0 0 0 0 0 0 0 112 149
Total Assets 154 313 638 3,088 4,152 4,023 5,671 7,301 9,097 10,751
Total Assets Growth (%) 101 103 104 384 34 -3 41 29 25 18
Asset Turnover (x) 2 2 2 1 1 1 0 0 0 0
Return on Assets (%) 21 1 28 15 15 14 11 10 13 9
ST Debt & Curr. Portion LT Debt 0 0 1 2 34 2 3 4 4 5
Accounts Payable 13 35 77 142 248 158 209 352 382 557
Accounts Payable Growth (%) 457 178 118 85 74 -36 33 68 9 46
Income Tax Payable -- -- -- -- 427 3 1,057 1,482 1,994 2,497
Other Current Liabilities 60 148 306 793 739 571 626 1,054 1,467 1,495
Total Current Liabilities 73 183 383 936 1,448 734 1,896 2,892 3,846 4,553
Current Ratio 2 1 1 3 2 5 3 2 1 1
Quick Ratio 2 1 1 3 2 5 3 2 1 1
Cash Ratio 2 1 1 3 1 4 2 1 1 1
Long-Term Debt 0 0 1 2 2 1 3 3 3 5
Long Term Debt Growth (%) -53 44 222 85 -3 -29 104 -5 -3 73
Provision for Risks & Charges 1 2 4 14 21 34 25 40 1 4
Deferred Tax Liabilities -- 2 2 -- -- -- -- -- -- --
Other Liabilities 0 -0 0 0 0 0 -0 0 0 0
Total Liabilities 75 187 390 953 1,471 770 1,924 2,934 3,850 4,562
Total Liabilities / Total Assets (%) 48 60 61 31 35 19 34 40 42 42
Common Equity 79 126 247 2,135 2,681 3,253 3,746 4,351 5,272 6,085
Common Equity / Total Assets (%) 52 40 39 69 65 81 66 60 58 57
Total Shareholders' Equity 79 126 247 2,135 2,681 3,253 3,746 4,351 5,272 6,085
Total Shareholders' Equity / Total Assets (%) 52 40 39 69 65 81 66 60 58 57
Return on Equity (%) 36 3 71 23 23 19 15 16 21 16
Accumulated Minority Interest 0 -- 0 0 0 0 0 16 -25 105
Total Equity 79 126 247 2,135 2,681 3,253 3,746 4,367 5,247 6,189
Liabilities & Shareholders' Equity 154 313 638 3,088 4,152 4,023 5,671 7,301 9,097 10,751
Assets
Liabilities & Shareholders' Equity

13 January 2014 33
Fig 5 Historical Cash Flow Statement


Net Income / Starting Line 39 37 207 389 778 853 810 1,004 1,472 1,540
Net Income Growth (%) 354 -6 467 88 100 10 -5 24 47 5
Depreciation, Depletion & Amortization 9 11 28 46 56 71 65 80 83 118
Other Funds 2 44 -64 -120 -215 -380 -263 -353 -680 -634
Funds from Operations 49 92 171 315 619 544 612 731 876 1,024
Changes in Working Capital 38 21 172 266 259 -240 22 540 402 120
Net Operating Cash Flow 87 113 342 581 878 304 633 1,271 1,278 1,143
Net Operating Cash Flow Growth (%) 292 29 204 70 51 -65 108 101 1 -11
Net Operating Cash Flow / Sales (%) 46 26 42 42 40 12 27 40 33 24
Cash Flow Return on Invested Capital (%) 129 110 183 49 36 10 18 31 27 20
Capital Expenditures -8 -55 -63 -54 -326 -87 -44 -434 -89 -533
Capital Expenditures Growth (%) 68 549 15 -15 508 -73 -49 878 -80 501
Capital Expenditures / Sales (%) 4 12 8 4 15 4 2 13 2 11
Net Assets from Acquisitions 0 0 0 0 0 0 -34 -109 0 0
Sale of Fixed Assets & Businesses 0 0 1 0 2 1 1 5 72 156
Purchase/Sale of Investments -5 -16 -105 -2,054 -439 2,642 -998 -1,528 -434 -564
Other Funds 0 0 0 0 -20 -99 34 104 0 0
Net Investing Cash Flow -14 -70 -168 -2,108 -784 2,457 -1,042 -1,962 -451 -941
Net Investing Cash Flow Growth (%) -191 -419 -139 -1,158 63 -- -142 -88 77 -109
Net Investing Cash Flow / Sales (%) -7 -16 -20 -151 -36 100 -44 -61 -12 -20
Cash Dividends Paid -0 -0 -9 -16 -20 -20 -20 -20 -41 -109
Cash Dividend Growth (%) -- 40 2,129 75 25 0 0 0 100 167
Change in Capital Stock 1 0 0 1,638 0 0 0 0 0 0
Issuance/Reduction of Debt, Net -0 0 1 2 1 -1 3 1 -0 3
Other Funds -0 -0 -1 -2 -3 -3 -3 -3 -7 -18
Net Financing Cash Flow 0 -0 -10 1,621 -23 -25 -21 -23 -48 -124
Net Financing Cash Flow Growth (%) -- -600 -2,038 -- -101 -6 13 -9 -105 -159
Net Financing Cash Flow / Sales (%) 0 -0 -1 116 -1 -1 -1 -1 -1 -3
Miscellaneous Funds 0 -0 -0 -0 -0 0 -0 0 0 0
Net Change in Cash 74 42 165 94 71 2,736 -430 -714 779 78
Free Cash Flow 79 58 279 527 552 217 589 838 1,189 610
Free Cash Flow Growth (%) 357 -27 383 89 5 -61 171 42 42 -49
Free Cash Flow per Share -- -- 3 6 5 2 5 8 11 6
Free Cash Flow Yield (%) -- -- -- 3 2 2 2 2 3 2
Operating Activities
Investing Activities
Financing Activities


13 January 2014 34
INDIA

JUST IN Not rated
Stock price as of 10/01/2014 Rs
Market cap US$m 1439
Avg Value Traded (3m) US$m 10m
12m high/low Rs 1479/590
PER FY15 x 64
P/BV FY15 x 14.2

YE March (Rs m) FY11A FY12A FY13A
Revenue 1,839 2,621 3,626
% growth 41 42 38
EBITDA 454 673 1,014
% growth 53 48 51
EPS 3.9 7.4 10.1
% growth Na 89.4 36.5
EBIT Margin (%) 21 22 24

Share Price Driver
Thematic
Growth
Value
Event

Just Dial Share Price Chart

Analyst(s)
Atul Soni

13 January 2014
Ltd

MacVisit: Just Dial
Dialling In
Event
We met Mr. Ram Kumar Krishnamachari, Chief Financial Officer (CFO) of
Just Dial, to understand the outlook and the business drivers for the company
and their positioning vs the offerings of competitors.
Impact
Business Model: Search is the key driver. Just Dial is a local search
engine company which provides search services with information & user
reviews of local businesses, products & services across India. The search
results are delivered through multiple platforms such as Internet, Mobile
internet (App), Telephone (Voice) and text (SMS). The service is provided free
of cost to users, whereas it generates revenue from paid advertisers who
subscribe to fee-based campaign packages to list their business
(predominately, SMEs) on a priority basis on search results.
Key drivers for growth. Just Dial has successfully transformed itself from a
mere voice based local search service provider to a provider of services
across other emerging & underpenetrated platforms like internet & mobile
internet. Currently, JDLs internet platform generates ~45% of the search
requests, followed by traditional voice (~30% in 2QFY14 vs ~64% in FY09)
and mobile internet (~25% in 2QFY14 vs ~2% in FY09). Increasing
smartphone penetration and an underpenetrated internet market offer
significant opportunities for JDL. The CFO said that voice calls are growing at
20% pa while mobile internet is growing at 150%.
Key strengths & weaknesses
Key strengths include: 1) First mover advantage in the category, 2)
Profitable business model, 3) No debt and cash generating business, 4)
Access through multiple platforms.
Key weaknesses include: 1) Low barriers to entry, 2) Potential failure to
adapt to newer technological shifts.
Key threats & challenges
Competition. The biggest threat facing Just Dial is competition from
established players (Google, Facebook, etc) launching similar
applications, which could hamper the companys strong growth
momentum.
Macro environment. Any negativity in the macro environment could slow
down Just Dials growth since a large portion of the companys paying
customers are small and medium size enterprises which could be
affected by macroeconomic conditions.
Outlook
Valuation. The company is currently trading at 64x FY15 earnings on
Bloomberg estimates.

0
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Jun-13 Sep-13 Dec-13
JustDial Share Price (Rs)
13 January 2014 35
Ownership

Promoters 33%
FII 22%
DII 6%
Share ownership as of 30th September 2013.Source: Bombay Stock
Exchange, January 2014
Top Shareholders:
Tiger Global: 13%
SAIF II Mauritius:11%
Sequoia capital: 9%
Just Dial is a local search engine company in India,
incorporated in 1993 as A&M communications by Mr. V.S.S
Mani. The company started offering local search services in
1996 under the Just Dial brand. The official website
www.justdial.com was launched in 2007
Auditors: S R Batliboi & Associates LLP.


Cash and cash equivalents: Rs5.7bn
Gross Debt: Nil

Mr. V.S.S. Mani, Managing Director Founder and an
industry veteran with over 25 yrs of experience in media and
local search services.
Mr. V. Krishnan, Executive Director Co-Founder and has
over 20 yrs of experience in strategic planning and
execution.
Mr. Sandipan Chattopadhyay, CTO. Over 16yrs of
experience in technology services and been with Just Dial
since 2009.
Mr. Ramkumar Krishnamachari, CFO. Over 22yrs of
experience in finance and accounting.
Latest Consolidated Quarter results (2QFY14)

Operating Income margin: 27.3%
PAT: Rs287m
Diluted EPS: Rs4.07
Operating Income margin: 24%
PAT: Rs684m
Diluted EPS: Rs9.95
Fig 1 Sales CAGR of 39% since FY08 Fig 2 Improvement in EBIT margins has been steady...

Source: Company Data, Macquarie Research, January 2014 Source: Company Data, Macquarie Research, January 2014

696
859
1,309
1,839
2,621
3,628
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY08 FY09 FY10 FY11 FY12 FY13
Revenues (Rs m)
8 35
245
386
583
864
1%
4%
19%
21%
22%
24%
-
100
200
300
400
500
600
700
800
900
1,000
0%
5%
10%
15%
20%
25%
30%
EBIT EBIT Margin (%)
13 January 2014 36

Just Dial has transformed itself from a mere voice based
local search service providers to be present across various
mediums including voice, internet & mobile internet.
Currently, JDLs internet platform generates ~45% of the
search requests, followed by traditional voice (~30% in
2QFY14 vs ~64% in FY09) and mobile internet (~25% in
2QFY14 vs ~2% in FY09).
Increasing smartphone penetration and an underpenetrated
internet market provide significant opportunities for JDL,
which has a strong mindshare with users. The CFO said
that voice calls are growing at 20% pa while mobile internet
is growing at 150%.
Just Dial monetises its services by allowing service
providers to be given top billing when a user asks for a
service category or for leads to be referred to them.
This means that when a user is searching for dentists in
Mumbai, the user is sent 4 numbers, with the service
provider who has opted for a platinum listing headlining the
list. The users contact number is also passed on to the
premium biller.
Monetisation is platform agnostic and leads are generated
from clients requests for category searches. 35% of the
searches are category searches, and these are the key
leads generated for their clients.
The business model

The main risks
Just Dial, is a local search engine company which
provides search services with information & user reviews of
local businesses, products & services across India.
The search results are delivered through multiple platforms
such as Internet, Mobile internet (App), Telephone (Voice)
and text (SMS).
The service is provided free of cost to users, whereas it
generates revenue from paid advertisers who subscribe to
fee-based campaign packages to list their businesses
(predominately, SMEs) on a priority basis on search results
Competition. The biggest threat facing Just Dial is
competition from established search players launching
similar applications which could hamper the companys
strong growth momentum.
Macro environment. Any negativity in the macro
environment could slow down growth for Just Dial since a
large portion of the companys paying customers are small
and medium size enterprises which could be affected by
macroeconomic conditions.

Strengths

Weaknesses
First mover advantage in the category.
Profitable business model,
No debt and cash generating business.
Access through multiple platforms.
Low barriers to entry,
Potential failure to adapt to newer technological shifts
Opportunities

Threats
Strong growth and increased penetration rate in the Mobile
platform are the biggest opportunities for the company.
Technological obsolence.
Competing product from new or existing players.

13 January 2014 37
Selected Financials

Source: Company Data, January 2014



(Rs m) FY08 FY09 FY10 FY11 FY12 FY13 1QFY14 2QFY14
Revenues
Sale of search related services 510 735 1,161 1,796 2,594 3,628 1,046 1,127
Yellow pages publication services 186 124 148 - -
Other operating revenue (revenue from reseller) - - 43 27
Total revenue 696 859 1,309 1,839 2,621 3,628 1,046 1,127
Employee benefits expense 421 523 669 947 1,308 1,779 487 577
Other expenses 240 261 343 438 639 841 196 197
EBITDA 35 76 297 454 673 1,008 363 353
EBITDA Margin (%) 5% 9% 23% 25% 26% 28% 35% 31%
Depreciation and amortisation 27 41 53 68 90 144 42 44
EBIT 8 35 245 386 583 864 321 309
EBIT Margin (%) 1% 4% 19% 21% 22% 24% 31% 27%
Finance cost 0 0 0 0 0 0
Other income 20 59 39 37 150 135 73 87
Exceptional item (15)
Profit before Tax (PBT) 28 94 283 423 732 984 394 396
Tax expense/(income)
Current tax 42 35 119 206 279 113 108
Deferred tax charge /(credit) (33) (14) 99 15 3 19
Fringe benefit tax 3 3 - - 2
Total tax expense 11 24 99 135 209 300 113 108
Profit after tax before MI 17 69 184 288 523 684 281 288
Share in loss of minority interest 0 0 0 0
PAT from continuing operations (A) 17 69 184 288 523 684 281 288
Profit/(loss) after tax from discontinuing operations (B) - - - (2) 5 - - -
Restated profit for the year (A + B) 17 69 184 286 528 684 281 288
EPS (Rs)
Basic 8.93 10.30 4.01 4.10
Diluted 7.78 9.95 3.98 4.07
Diluted Share Count (m) 67.9 68.7 70.6 70.8
(Rs m) FY08 FY09 FY10 FY11 FY12 FY13 2QFY14
Fixed assets
Tangible assets 115 137 182 254 327 535 560
Intangible assets 15 12 10 19 21 72
Capital work-in-progress 3 0
Intangible assets under development 9 16
Total 131 149 192 273 360 623 560
Deferred tax assets (net) 113 127 28 12 9 -
Long-term loans and advances 23 32 78 146 204 206 224
Other non-current assets 7 0 0
Current Assets
Current investments 407 402 780 1,160 1,568 4,858 5,457
Trade receivables 8 1 0 11 - 9 4
Cash and bank balances 138 204 121 201 237 239 266
Short-term loans and advances 14 40 35 86 59 112 85
Other current assets 4 40 27 3
Total assets 841 955 1,235 1,894 2,478 6,074 6,599
Non-current liabilities
Long-term borrowings 0 3
Other long-term liabilities 41 15 15 1 23 30 31
Long-term provisions 15 15 16 6
Current liabilities
Trade payables 29 20 31 50 44 67 54
Other current liabilities 380 451 535 875 1,326 1,691 1,608
Short-term provisions 11 15 13 21 13 18 21
Deferred tax Liability 9 13
Share capital 11 11 11 521 531 695 701
Reserves and surplus 354 428 626 411 542 3,556 4,164
Non controlling interest 1
Share application money pending allotment 8 0
Total assets 841 955 1,235 1,894 2,478 6,074 6,599

13 January 2014 38


(Rs m) FY08 FY09 FY10 FY11 FY12 FY13
A. CASH FLOW FROM OPERATING ACTIVITIES
Profit before taxation 32 100 292 423 716 984
Non cash adjustments:
Depreciation and amortisation 24 38 50 68 90 144
Employee stock compensation 6 3 14 3 6 3
Loss/(profit) on sale/scrap of fixed assets (0) (1) (0) 12 (0) 3
Unrealized foreign exchange loss (net) 0 1
Advertisement expenses 4
Loss/(profit) on sale of current investments 1 (20) (3) (3) (42) (102)
Loss on sale of long term investments 0
Interest income (5) (8) (8) (2) (4) (4)
Dividend income (14) (29) (26) (29) (44) (12)
Interest Expense 0 0 0 0 0 -
Operating profit before working capital changes 44 83 319 478 722 1,016
Changes in Working Capital:
(Increase)/decrease in trade receivables (6) 7 0 (0) 1 (9)
(Increase)/decrease in short-term loans and advances 8 (26) 5 (67) (2) (53)
(Increase)/decrease in long-term loans and advances 23 (9) (9) (41) (4) (24)
(Increase)/decrease in other current assets (4) 3 (1)
Increase/(decrease) in trade payables 11 (9) 11 20 (5) 23
Increase in other current liabilities 126 72 82 339 452 366
Increase/(decrease) in other noncurrent liabilities (7) (26) (0) 1 7 7
Increase/(decrease) in long-term provisions (27) 2 (2)
Increase/(decrease) in short-term provisions 5 7 (2) 7 (8) 5
Cash flow from operations 176 101 404 733 1,166 1,330
Direct taxes paid (34) (40) (45) (133) (209) (307)
Net cash generated from operating activities 142 61 359 600 957 1,023
B. CASH FLOW USED IN INVESTING ACTIVITIES
Purchase of fixed assets (57) (62) (99) (192) (231) (361)
Proceeds from sale of fixed assets 1 2 0 16 0 1
Investment in subsidiaries (14)
Purchase of current investments (307) (564) (900) (2,006) (3,932) (8,249)
Purchase of long term investment (145) (580)
Sale of current investments 49 588 526 1,774 3,422 5,061
Loans given (112)
Proceeds from loan repaid 156
Proceeds from dilution of shares 5
Investment in bank deposit (37) (143) (47) (50) (25) (2)
Redemption/maturity of bank deposit 33 42 188 39 23
Interest received 5 8 8 2 4 4
Proceeds from sale of investments 22
Dividend received 14 29 26 29 44 12
Net cash used in investing
activities (298) (98) (312) (528) (1,209) (3,534)
C. CASH FLOW FROM FINANCING ACTIVITIES
Long term borrowings taken 5
Repayments of long term borrowings (1) (1) (1) (2) (2) (1)
Receipts from issuance of Pref Shares 202 334
Share Application money pending 8
Receipts from issuance of equity shares 1 0 2550
Share issue expenses (0) (41) -45
Interest paid (0) (0) (0) (0) (1)
Dividend paid (2)
Dividend distribution tax (0)
Net cash generated from/(used in) financing activities 200 (4) 4 (1) 291 2,512
Net increase/(decrease) in cash and cash equivalents 44 (41) 52 71 40 -
Cash and cash equivalents at beginning of the period/year 49 93 52 104 175 215
Cash and cash equivalents at end of the period/year 93 52 104 175 215 215
13 January 2014 39
Online Travel: Lions share of Indian E-
commerce
Travel has the lions share
Indian Aviation sector growing second-fastest in the world. As per KPMG, growth in
Indias aviation industry is the second fastest worldwide. Rising household incomes, an
expanding middle class and more inbound and outbound traffic is responsible for the rapid
growth in the sector.
India is the ninth-largest civil aviation market in the world and is poised to feature among
the top five global markets over the next decade. Airline passenger traffic rose rapidly from
59m in FY05 to 162m in FY12.
Fig 50 Domestic travel has grown faster than international travel except FY09

Source: KPMG, Macquarie Research, January 2014
Online Travel to grow 2x as fast of total travel growth. Makemytrip estimates that the
online travel market will grow at a CAGR of 20% between 2011-15 vs 10% for the total
travel market. This represents immense scope for growth in the segment.
Fig 51 Online Travel to grow 2x of total travel industry

Source: Makemytrip, Macquarie Research, January 2014

19 22 26 30 32 34 38 41 40 51 71 87 77 89 106 122
15%
16% 16%
6%
9%
10%
8%
28%
38%
23%
-11%
16%
18%
15%
0
20
40
60
80
100
120
140
(m)
-20%
-10%
0%
10%
20%
30%
40%
50%
International (m) Domestic (m)
International YoY growth rate (%) Domestic YoY growth rate (%)
20 20
23
26
29
6
7
9
11
13
0
5
10
15
20
25
30
35
2011 2012 2013E 2014E 2015E
Total Travel Market (In US$ bn) Online Travel Market (In US$ bn)
Total Travel Mkt
CAGR: 10%
Online Travel Mkt
CAGR: 20%
Travel constitutes
71% of Indian E-
Commerce Industry
in 2013E.

13 January 2014 40
Indian E-Commerce is dominated by the online travel segment which contributes more
than 70% of the e-commerce revenues in the country. However in the last three years, we
have seen strong growth in e-tailing segment, which is expected to grow even faster in the
coming years on back of rising mobile penetration and better payment mechanisms. We
expect these trends to continue, with e-tailing showing the strongest growth amongst peer
groups.
Fig 52 Breakdown of Indian E-commerce Industry -
2009
Fig 53 Breakdown of Indian E-commerce Industry
2013E

What constitutes Online Travel? Online travel includes booking rail, air, bus tickets, hotel
accommodations and tour packages. The largest players in this category include Indian
Railways, Makemytrip, cleartrip, yatra, goibibo etc. India has five major airlines (three low
cost and two full cost carriers). Indian travellers are used to booking air tickets for both low
cost and full cost airlines from third-party sites for two reasons: 1) the travel portals offer
tickets at same or cheaper prices than airline websites themselves, and 2) travel portals
have been operational since 2005 in India, which makes their customer base sticky and
loyal.
Fig 54 Online travel still the largest segment.


Online travel
industry
78%
E-Tailing
8%
Others
2%
Classifieds
market
4%
Financial
services
8%
Online travel
industry
71%
Financial
services
6%
Classifieds
market
5%
Others
2%
E-Tailing
16%
150
16 15
8
449
100
36
31
-
50
100
150
200
250
300
350
400
450
500
2009-13E
CAGR: 32%
2009-13E
CAGR: 59%
2009-13E
CAGR: 25%
2009-13E
CAGR: 40%
13 January 2014 41
India has various demographic parameters working in its favour namely:
One of the highest levels of youth population in the world. Indias populations
median age is 25 years, which is among the lowest in the world. Further, 58% of the
population is under 30 years of age. This presents a large user base which would be
capable and willing to use internet commerce for its needs.

Fig 55 India is the fourth largest economy globally...
Fig 56 with more than 80% of Indian mobile users
in 18-35yr category

Source: Makemytrip, Macquarie Research, January 2014 Source: KPMG, IAMAI, Macquarie Research, January 2014
Rapidly growing middle class. Indias middle class population stands at over 300m.
This is the worlds second-largest middle population after China. As per the World
Bank, average GDP per capita stands at ~US$1,500 for India. With strong economic
growth, these per capita income levels have huge upside.
Rising levels of urbanization. As per the McKinsey Global Institute, the urban
population is already sizable by western standards at 377m (as of 2011) or ~31% of
Indias total population. By 2020, India is likely to have acquired an additional 112m
urban residents due to continued migration from rural to urban areas.
Fig 57 Non Metros contributed only 39% of internet
users in India

Fig 58 which has risen to 47% in 2011

16 15.9
12.6
4.8 4.7
2.6
2.4
0
2
4
6
8
10
12
14
16
18
European
Union
USA China India Japan Russia Brazil
2012 GDP at Purchasing Power Parity (In US$ trillion)
9%
51%
30%
10%
0%
10%
20%
30%
40%
50%
60%
Less than 18 yrs 18-24 yrs 25-35 yrs more than 35 yrs
Demographics of Mobile Users (2013)
2006
Top 8 metros
41%
Other metros
20%
1m+ town
10%
Less than 1m
towns
29%
2011
Top 8 metros
35%
Other metros
18%
1m+ town
11%
Less than 1m
towns
36%


13 January 2014 42
INDIA

MMYT US Not rated
Stock price as of 10/01/2014 US$ 19
Market cap US$m 698
Avg Value Traded (3m) US$m 1
12m high/low US$ 20/13
PER FY16 (Bloomberg) x 64x
P/BV FY16 (Bloomberg) x 7.2
Number of analysts covering MMYT 6

YE Dec (US$m) FY11 FY12 FY13A
Revenue 125 197 229
% growth 49 58 16
EBITDA 6 7 -16
% growth na 13 -338
EPS 0.2 0.2 -0.7
% growth Na 9 -462
EBIT Margin (%) 3 2 -9

Share Price Driver
Thematic
Growth
Value
Event

MakeMyTrip Share Price Chart

Analyst(s)
Atul Soni

13 January 2014
Ltd

MacVisit: MakeMyTrip
Leading Online Travel Player
We met with Mr. Jonathan Huang, Director, Investor Relations of MakeMyTrip
Limited (MMYT US) which is Indias largest online travel company. The
company provides air tickets, customized holiday packages, hotel bookings,
railway tickets, bus tickets, car hire etc.
Impact
Business Model: All things travel. MMYT is the largest online travel site in
India in terms of market share with 47% of domestic gross bookings. MMYT
earns its revenue from direct customer payments and commissions made
through transactions on its site. It operates in 3 key business lines including
Air Ticketing (Domestic and International), Hotels and Packages and Others
(Rail and Bus Ticketing, Travel Insurance etc). During FY13, the three
segments contributed 65%, 31% and 4% respectively. Management indicated
that the desired mix for hotels and air tickets is to reach 50-50 within the next
18-24 months.
Recent acquisitions expected to drive growth in improving economic
environment. The company has been acquiring assets in the hotels and
ticketing space to cement its leading position in the space. A list of the
acquisitions is as follows:
Recent acquisitions show focus on Hotel and Packages segment
Date Name Deal value (In US$ m)
Nov-12 ITC Group (Thailand) 3
Nov-12 Hotel Travel Group 25
Nov-11 My Guest House Accommodations Pvt Ltd. na
Aug-11 Le Travenues Technology Pvt. Ltd. 5
Feb-11 Luxury Tours & Travel Pte Limited 3
Mar-10 Travis Internet Private Limited na
Source: Company Data, Macquarie Research, January 2014
Key drivers of growth. MMYT expects to benefit from the secular growth
story of increasing internet penetration, its strong and established brand
name, an increasing 3G mobile subscriber base, rising urban population in
India and young demographic profile of the country.
Key strengths & weaknesses
Key strengths include: 1) First mover advantage, 2) largest seller of
domestic hotel bookings, 3) established user base.
Key weaknesses include: 1) Low barriers to entry, 2) high competitive
intensity in the segment, 3) high dependency on macroeconomic
conditions.
Outlook
Valuation. The company is currently trading at 64x FY16 earnings on
Bloomberg estimates

0
5
10
15
20
25
30
35
40
45
Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13
MMYT Share Price (In US$)

13 January 2014 43
Ownership

Promoters 12%
Top Shareholders:
SAIF: 31%
Tiger Global: 19%
T. Rowe Price Associates: 10%
Travogue & Wasatch Advisors: 8% each
Share ownership as of 30
th
March 2013. Source: SEC filings
MakeMyTrip Limited was founded in 2000 and provides
services and products including air tickets, customized
holiday packages, hotel bookings, railway tickets, bus
tickets, car hire and facilitating access to travel insurance.
Auditors: Messrs. Vivek N. Gour, Ranodeb Roy and
Frederic Lalonde.


Cash and cash equivalents: US$30m
Gross Debt: US$0.1m

Deep Kalra, Founder and CEO Founded the company in
2000 and has previously worked with GE Capital, AMF
Bowling Inc. and ABN AMRO Bank.
Keyur Joshi, Co-Founder & Chief Commercial Officer
Joined the company in 2000 and has over12 years
experience in the travel industry.
Rajesh Magow, Co-founder & CEO-India. Joined the
company in 2001 and has over 20yrs of experience.
Latest Consolidated Qtrly results highlights (2QFY14)

Revenue: US$47m (up 4% YoY)
Operating Income: Loss of US$1.5m
Operating Income margin: -3%
PAT: Loss of US$7.5m
Diluted EPS: Loss of US$.08
Revenue: US$229m (up 17% YoY)
Operating Income: Loss of US$20m (vs US$4m in FY12)
Operating Income margin: -9% (vs 2% in FY12)
PAT: Loss of US$28m (vs US$7m in FY12)
Diluted EPS: Loss of US$0.74

Fig 1 Sales CAGR of 40% since FY10

Fig 2 Macroeconomic conditions have hit EBIT
margins.

Source: Factset, Macquarie Research, January 2014 Source: Factset, Macquarie Research, January 2014

84 125 197 229
49%
58%
16%
0
50
100
150
200
250
FY10 FY11 FY12 FY13
0%
10%
20%
30%
40%
50%
60%
70%
Sales/Revenue (in US$ m) YoY Growth (%)
-6
4 4
-20
-7%
3%
2%
-9%
-25
-20
-15
-10
-5
0
5
10
FY10 FY11 FY12 FY13
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
EBIT (In US$ m) EBIT Margin (%)

13 January 2014 44

Makemytrip expects to benefit from the secular growth story
of increasing internet penetration, its strong and established
brand name, the increasing 3G mobile subscriber base and
the young demographic profile of the country.

The company provides air tickets, customized holiday
packages, hotel bookings, railway tickets, bus tickets, and
car hire etc.
It operates in 3 key business lines including Air ticketing
(Domestic and International), Hotels and Packages and
Others (Rail and Bus ticketing, travel Insurance etc).
During FY13, the three segments contributed 65%, 31%
and 4% respectively.
The business model

The main risks
The company traditionally derived the majority of its
revenues from air ticketing but the closure of a major airline
in India along with the adverse macroeconomic environment
during 2011-13 shifted the companys focus to Hotels and
Packages as the new growth area for the future.
This renewed focus led the Hotels and Packages to
increase its revenue contribution to 31% in FY13 (vs 15% in
FY08)
Price wars from competition.
Macro environment. Any negativity in the macro
environment could slow down growth for the company.

Strengths

Weaknesses
First mover advantage in the category
Largest player in its category controls almost 47% market
share
Ability to provide access through multiple platforms
Low barriers to entry.
Newer technological shifts can negatively impact the
company.
Opportunities

Threats
Strong growth and increased penetration rate in the mobile
platform are the biggest opportunities
Technological obsolence.
Competing product from new or existing players.


13 January 2014 45
Selected Financials

Source: Factset, Company Data, January 2014

Mar '10 Mar '11 Mar '12 Mar '13 Sep '13
365 Days 365 Days 366 Days 365 Days LTM
Sales/Revenue 84 125 197 229 244
Sales Growth (%) 22 49 58 16 16
Cost of Goods Sold (COGS) incl. D&A 61 80 149 209 225
COGS Growth (%) -20 30 86 41 36
Gross Income 22 45 48 19 18
Gross Income Growth (%) -- 102 7 -60 -60
Gross Margin (%) 27 36 24 8 7
SG&A Expense 28 41 44 39 47
SGA Growth (%) -- 44 8 -10 -1
SG&A to Sales (%) 34 33 22 17 19
Other Operating Expense -0 -0 0 0 --
EBIT (Operating Income) -6 4 4 -20 -28
EBIT Growth (%) 42 -- -2 -592 -1,415
EBIT Margin (%) -7 3 2 -9 -12
Nonoperating Income (Expense) - Net 1 1 -2 1 1
Interest Expense 1 1 0 0 5
Interest Expense Growth (%) -13 -47 -37 -70 --
Unusual Expense (Income) - Net -0 2 1 0 --
Pretax Income -6 2 1 -19 -33
Pretax Income Growth (%) 16 -- -52 -1,915 -1,274
Pretax Margin (%) -7 2 1 -8 -13
Income Taxes 0 -3 -6 9 9
Tax Rate (%) -- -126 -587 -- --
Equity in Earnings of Affiliates 0 0 -0 -0 -0
Consolidated Net Income -6 5 7 -28 -42
Minority Interest Expense -0 0 -0 0 0
Net Income -6 5 7 -28 -42
Net Income Growth (%) 16 -- 49 -484 -1,073
Net Margin (%) -7 4 4 -12 -17
Net Income available to Common -6 5 7 -28 -42
EPS (recurring) -0.36 0.19 0.20 -0.74 -1.13
EPS (recurring) Growth (%) 47 -- 9 -462 -979
EPS (diluted) -0.35 0.15 0.19 -0.74 -1.13
EPS (diluted) Growth (%) 36 -- 27 -489 -1,042
EBITDA -4 6 7 -16 -23
EBITDA Growth (%) 50 -- 13 -338 -2,087
EBITDA Margin (%) -5 5 3 -7 -10
(In US$ m)

13 January 2014 46

Mar '09 Mar '10 Mar '11 Mar '12 Mar '13
-- 365 Days 365 Days 366 Days 365 Days
Cash & ST Investments 14 23 68 44 37
Cash & ST Investments Growth (%) -- 64 202 -36 -17
Cash & ST Investments / Total Assets (%) 36 44 59 26 19
Short-Term Receivables 4 11 11 21 25
Accounts Receivable Growth (%) -- 160 -0 87 24
Accounts Receivable Turnover (x) -- 11 11 12 10
Inventories 4 7 17 22 22
Inventory Growth (%) -- 67 134 34 -1
Inventory Turnover (x) -- 11 7 8 9
Other Current Assets 2 2 6 52 58
Total Current Assets 24 43 102 139 142
Net Property, Plant & Equipment 3 4 4 7 9
Total Investments and Advances 0 0 0 5 6
Long-Term Note Receivable 0 0 1 1 1
Intangible Assets 2 2 3 8 35
Deferred Tax Assets -- -- 3 9 1
Other Assets 8 1 4 1 1
Total Assets 38 51 116 170 195
Total Assets Growth (%) -- 34 129 47 15
Asset Turnover (x) -- 2 1 1 1
Return on Assets (%) -- -14 6 5 -15
ST Debt & Curr. Portion LT Debt 48 45 4 0 1
Accounts Payable 8 14 13 25 47
Accounts Payable Growth (%) -- 86 -6 93 85
Other Current Liabilities 7 14 18 24 36
Total Current Liabilities 62 73 35 49 84
Current Ratio 0 1 3 3 2
Quick Ratio 0 0 2 2 1
Cash Ratio 0 0 2 1 0
Long-Term Debt 0 0 0 0 0
Long Term Debt Growth (%) -- 236 13 19 60
Provision for Risks & Charges 0 0 0 1 1
Deferred Tax Liabilities -- -- -- -- 1
Other Liabilities 3 3 4 1 7
Total Liabilities 65 76 40 51 93
Total Liabilities / Total Assets (%) 172 149 34 30 48
Common Equity -27 -25 76 119 101
Common Equity / Total Assets (%) -72 -49 66 70 52
Total Shareholders' Equity -27 -25 76 119 101
Total Shareholders' Equity / Total Assets (%) -72 -49 66 70 52
Return on Equity (%) -- -- 19 7 -25
Accumulated Minority Interest 0 0 0 0 1
Total Equity -27 -25 76 119 102
Liabilities & Shareholders' Equity 38 51 116 170 195
Assets
Liabilities & Shareholders' Equity
(In US$ m)

13 January 2014 47



Mar '10 Mar '11 Mar '12 Mar '13 Sep '13
365 Days 365 Days 366 Days 365 Days LTM
Net Income / Starting Line -6 5 7 -28 -42
Net Income Growth (%) 16 -- 46 -491 -1,108
Depreciation, Depletion & Amortization 2 2 3 4 --
Other Funds 8 -2 0 22 31
Funds from Operations 3 5 10 -2 -7
Changes in Working Capital 3 -10 1 18 1
Net Operating Cash Flow 6 -5 11 17 -7
Net Operating Cash Flow Growth (%) -- -180 -- 50 -117
Net Operating Cash Flow / Sales (%) 7 -4 6 7 -3
Cash Flow Return on Invested Capital (%) -- -18 11 15 --
Capital Expenditures -1 -3 -9 -7 --
Capital Expenditures Growth (%) 17 157 216 -22 --
Capital Expenditures / Sales (%) 1 2 5 3 --
Net Assets from Acquisitions -- 0 -2 -10 --
Sale of Fixed Assets & Businesses 0 0 0 0 --
Purchase/Sale of Investments 4 -3 -6 -1 --
Other Funds -- 0 -30 -4 --
Net Investing Cash Flow 3 -5 -47 -21 -1
Net Investing Cash Flow Growth (%) -- -308 -786 55 96
Net Investing Cash Flow / Sales (%) 3 -4 -24 -9 -0
Change in Capital Stock 0 59 36 -1 --
Issuance/Reduction of Debt, Net 0 0 -0 -0 --
Other Funds -- -7 0 0 -0
Net Financing Cash Flow 0 53 36 -1 -1
Net Financing Cash Flow Growth (%) -99 49,443 -32 -103 -902
Net Financing Cash Flow / Sales (%) 0 42 18 -0 -0
Exchange Rate Effect -1 -0 -4 -2 -3
Miscellaneous Funds -0 0 -0 0 0
Net Change in Cash 8 43 -4 -8 -12
Free Cash Flow 5 -6 5 14 -10
Free Cash Flow Growth (%) -- -215 -- 150 -128
Free Cash Flow per Share 0 -0 0 0 -0
Free Cash Flow Yield (%) -- -1 1 3 --
Operating Activities
Investing Activities
Financing Activities
(In US$ m)
13 January 2014 48
Yatra.com (Unlisted)
No. 2 Travel Platform in India
Meeting with CFO. We interacted with Mr. Alok Vaish, Group CFO at Yatra Online Pvt
Ltd, which is Indias second-largest on-line travel company. The company provides a
complete suite of travel services including air tickets, customized holiday packages, hotel
bookings, railway tickets, bus tickets, car hire etc. Currently, the company generates ~70%
of its revenues from air ticketing, which it is targeting to reduce to 50% in 24-30 months.
Company Profile. Yatra.com is an Indian online travel company based in Gurgaon,
Haryana, India. It was founded by Dhruv Shringi, Manish Amin and Sabina Chopra in
August 2006. As of 2012, Yatra.com was the second-largest travel portal in India with
~20% market share. It provides information, pricing, availability, and booking facilities for
domestic and international air travel, railway reservations, hotel bookings, holiday
packages, buses, and car rentals. Yatra is trying to become a one-stop-shop for all travel-
related services. As a consolidator of travel products, Yatra.com provides reservation
facilities for more than 5,000 hotels across 336 cities in India and over 90,000 hotels
around the world.
Access. Users can access Yatra.com multiple ways including online website, a 24x7 multi-
lingual call centre, a network of brick and mortar stores and through mobile phones.
Financial Details
Our interaction with the CFO revealed that the company is looking to generate Rs45bn
(approx US$750m) of gross revenues in FY14. For FY11, the company reported revenues
of Rs1.3bn (vs Rs1.1bn in FY10). The company had reported a loss after tax of Rs390m in
FY11 (vs loss of Rs82m in FY10). The company is looking to break even in 12-18 months
time.
Air ticketing profitable, Hotels and packages in investment mode. The CFO indicated
that they are showing profitability in the air tickets operations, while hotels and packages
would continue to see investments for some time.
Funding and Business Strategy
Driven by acquisitions. Yatra.com has been active in the acquisitions mode, making 4
major acquisitions till now. They are as follows:
Fig 59 Acquisitions focus to fuel growth
Name Date Area
Travel Services International Oct-10 Ticket consolidator
MagicRooms.in Jun-11 Global distribution system
BuzzInTown.com Jan-12 Events and entertainment portal
Travelguru.com Jun-12 Travel Portal
Source: Company data, Macquarie Research, January 2014
Investors and Funding History. Yatra.com has marquee investors backing the company
with the likes of Reliance Venture Asset Management Ltd, TV18 Group, Norwest Venture
Partners and Intel Capital.
Funding. In April 2011, the company announced receiving funding of Rs2bn
(US$45m) from Valiant Capital Management, Norwest Venture Partners (NVP) and
Intel Capital.
Advt for equity stake to local movie star, Mr Salman Khan ensures top of the mind
recall during advertising. Yatra.com started an innovative advertising for equity program
by associating with local movie star Salman Khan during April 2012. Media reports suggest
that Khan has received a ~5% stake in yatra.com and would become the brand
ambassador for the company. (Link)
Yatra.com is the No.
2 Travel Platform in
India

13 January 2014 49
Fig 60 Advt for Equity for local movie star. Fig 61 .. ensures top of mind brand recall..

Source: Company data, Macquarie Research, January 2014 Source: Company data, Macquarie Research, January 2014
Business Model
Yatra.com: Renewed focus on hotels and packages. Yatra.com earns its revenue from
direct customer payments and commissions transactions made on its site. They also have
revenue-sharing agreements with the other companies who get customers via yatra.com.
This is a valid and stable business model in use by all travel portals.
Fig 62 Yatra.com Homepage snapshot: second-largest online travel site in India

Source: yatra.com, January 2014

13 January 2014 50
Future driver for growth: Mobile
Showing tremendous growth potential. The CFO shared that they have been seeing
increasing traction from the mobile medium for growth. Some key highlights from mobile
are:
Presently, 20% of overall searches are happening on mobile
15% of total bookings are on mobile
The stickiness of the mobile customer is higher than the internet customer
The initial cost are higher for mobile customer but returns over long term are greater
The company is targeting 40%-50% of searches and bookings to happen on the
mobile platform.
High speed internet connections set to expand at 44% CAGR during 2012-17. The
chart below shows the growth seen in 2G and 3Q/4G internet connections on mobile
phones in India. In our view, this would become a driving force for increasing e commerce
businesses in the country.
Fig 63 CAGR of 44% in 3G/4G connections in the next 5 years (2012-17)

Issues and Challenges: Competition the biggest challenge
Competition is high in the segment. As the top three players in the online travel
segment constitute 80-85% of the total industry, competition remains intense. Since all the
B2C e-commerce players have been aggressively expanding their product offerings,
product differentiation has become less of an attraction. In our view, online shoppers are
even less loyal than traditional offline shoppers. As a result, B2C players are mainly
differentiating themselves through price. In order to keep their prices competitive,
aggressive marketing promotions have to be run and sustained.

347
524
741
855
798 812 811 791 776
750
1
11
67
107
171
252
327
409
39
0
200
400
600
800
1000
1200
1400
2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E
(m)
2G Connections 3G/4G connections
CAGR of 44% in 3G/4G connections
13 January 2014 51
IRCTC (Unlisted)
800 pound Gorilla in Online Rail Bookings in India
Company profile. IRCTC is the Indian railway portal which is used to book rail tickets in
India. It started operations in 2002 when it booked a mere 27 tickets on the first day of
launch.
IRCTC: How it works? Users can book train tickets using the website via internet or from
mobile devices or from third-party sites like makemytrip, cleartrip etc. The main site,
IRCTC, charges Rs10-20 depending upon the ticket type. This is the primary source of
revenue for the site. Also, various travel portals like yatra.com, makemytrip.com have tied
up with IRCTC in order to offer ticket booking services through their own sites. IRCTC
collects a fee from those agencies as well. IRCTC is now also offering flight tickets, hotel
bookings, car rentals and tourist packages through its site. The site also features paid
advertisements on its site for third-party clients. IRCTC being one of the most visited pages
in India, these ads earn considerable revenue.
Fig 64 IRCTC Homepage snapshot: Largest site for rail bookings in India

Source: IRCTC, Macquarie Research, January 2014

Indias largest travel
website used for
booking train
tickets.
13 January 2014 52
Volume of bookings. Currently, the website books more than 400,000 tickets in a day.
The IRCTC website comprises ~45% of all visitors to travel websites in India and ~20% of
the total Internet audience in India.
Fig 65 IRCTC tickets bookings have shown 66% CAGR between FY07-13 !!!

Source: IRCTC, Macquarie Research, January 2014
Financials. Due to IRCTCs status of being a professionally-run government department,
it has been financially successful story in India. The chart below shows the growth of
revenues and profits for the company.
Fig 66 Financial performance healthy. Fig 67 .. on back of steady mix of income streams

Source: IRCTC, Macquarie Research, January 2014 Source: IRCTC, Macquarie Research, January 2014

6.8
18.9
44.1
72
96.9
116.1
140.6
0
20
40
60
80
100
120
140
160
Number of Tickets Booked (m)
CAGR of
66%
132
155
181
191
139
180
5
12
16 15
12
15
0
50
100
150
200
250
Revenues (US$ m) Profits (US$ m)
Licensee
Catering
3%
Internet
Ticketing
27%
Tourism
27%
Department
Catering
35%
Bottled Water
Operations
8%
13 January 2014 53
Online E-Tailing: Growing the fastest
E-Tailing is the fastest growing segment in India
Online retail is just 2% of total organized retail market, showing its huge potential. As per
an Ernst & Young study, the Indian retail industry was estimated at US$528bn in 2012 and
is growing at 11% annually. Unorganized retail accounts for ~90% of the Indian retail
industry. Organized retail accounts for 10% of the total retail market and is growing at 24%
annually. Currently, online retail constitutes a mere 2% of the total organized retail
market in India.
Fig 68 Organized Retail accounts for ~10% of Indian
retail market.
Fig 69 . Online retail is ~2% of organized retail
industry..

What constitutes E-Tailing? E-Tailing includes purchases of various consumer products/
services such as electronics, apparels, footwear, jewellery, home & kitchen appliances,
consumer durables, and furnishings. The largest players in this category include flipkart,
snapdeal etc.
Fig 70 Online travel still the largest but E-Tailing growing the fastest


15 19 22 28 35 44
85
301
343 346
397
436
484
640
0
100
200
300
400
500
600
700
800
2007 2008 2009 2010 2011 2012 2015E
Organized retail (In US$bn) Unorganized retail (In US$bn)
235 258 318 447 572
1.6%
1.4% 1.4%
1.6% 1.6%
0
100
200
300
400
500
600
700
2007 2008 2009 2010 2011
1.3%
1.4%
1.4%
1.5%
1.5%
1.6%
1.6%
1.7%
Size of the online retail market (US$ million)
Online retail as % of organized retail
150
16 15
8
449
100
36
31
-
50
100
150
200
250
300
350
400
450
500
2009-13E
CAGR: 32%
2009-13E
CAGR: 59%
2009-13E
CAGR: 25%
2009-13E
CAGR: 40%
Online retail is just
2% of total
organized retail
market offering
huge potential.
13 January 2014 54
Snapdeal (Unlisted)
Indias largest online marketplace
Meeting with founder, Mr Kunal Bahl. We interacted with Mr. Kunal Bahl, Founder & CEO,
and Mr. Aakash Moondhra, CFO of snapdeal, which is Indias largest on-line marketplace
company.
Company Profile. Snapdeal.com is an online marketplace, headquartered in New Delhi.
The company was started in February 2010 by Kunal Bahl, a Wharton graduate, and Rohit
Bansal, an alumnus of IIT Delhi. Snapdeal.com started as a daily deals platform but
expanded in September 2011 to become an e-commerce company via a marketplace
model. The company started with 20+ employees in 2010 and now employs over 1,000 in
its operations.
Customer and Merchant Base. As of February 2013, the company had over 25m
registered users. It registers 35m+ page visits and over 300m page views every month. It
offers an assortment of 4m+ products in over 500+ categories from over 20,000 sellers,
shipping to 4,000 towns and cities in India.
Financial Details: Target US$1bn sales in FY15
Our interaction with the founder revealed that the company is currently generating Gross
Merchandise Value (GMV) of US$500m and looking to generate US$1bn by FY15. During
2013, the company grew revenues 6x by increasing their product categories and
assortments.
Mr. Kunal Bahl, Founder & CEO has discussed in media reports and interviews that the
company is looking at possible listing in the next 12-24 months. (Link1) & (Link2)
Funding Details & Acquisitions
Snapdeal has received three rounds of funding amounting to US$107m. The details on the
funding timeline and investors are as follows:
Fig 71 Funding Details for Snapdeal: Ebay is the largest investor in snapdeal
Date Investors Amount (In US$ m)
Jan-11 Nexus Venture Partners and Indo-US Venture Partners 12
Jul-11 Bessemer Venture Partners, Nexus Venture Partners and Indo-US
Venture Partners
45
Jun-13 eBay and existing investors 50
Snapdeal has done three acquisitions since inception. The details on the acquisitions are
as follows:
Fig 72 Acquisitions have been strategic in nature
Date Acquiree Details
Jun-10 Grabbon.com Bangalore-based group buying site
Apr-12 esportsbuy.com Delhi based online sports goods retailer
May-13 Shopo.in Online marketplace for Indian handicraft products

Leader in
marketplace model
of E-commerce in
India

13 January 2014 55
Future driver for growth: Mobile
Showing tremendous growth potential. Our interaction with the founder showed that the
company views mobile as a key driver for increasing revenues.
Currently, mobile is contributing 30% of orders placed (up from 5% less than 12 months
ago). Its mobile commerce site witnesses about 12m average visits per month. 75% of the
mobile-based transactions involve cash on delivery and 25% are prepaid transactions,
while the majority of customers are from Delhi, Mumbai, Chennai, Kolkata, Bangalore and
Hyderabad.
The top selling categories over m-commerce on Snapdeal are mobiles, men's apparel,
women's apparel, pen drives and memory cards and men's footwear.
Issues and Challenges
Challenges facing marketplace-led model. Snapdeal is Indias largest online marketplace
company. Thus the challenges inherent to the model would be the same as faced by
snapdeal.
These include dependency of every aspect of business on third parties or outsourcing right
from supply chains to payment and logistics. In our view, cracking the supply chain and
keeping track of logistics and customer satisfaction is the most complex part of the whole
chain.

13 January 2014 56
Flipkart (Unlisted)
Indias largest inventory-led e-commerce Company
Company Profile. Flipkart is an Indian e-commerce company founded in 2007, by Sachin
and Binny Bansal and headquartered in Bangalore, Karnataka. It is considered as the
pioneer in e-commerce in India, which made online shopping popular in India.
How it all started? Flipkart was founded in 2007 by Sachin Bansal and Binny Bansal, both
alumni of the Indian Institute of Technology Delhi. They had been working for Amazon.com
previously. During its initial years, Flipkart focused only on books, but once it expanded, it
started offering other products like electronic goods, air conditioners, air coolers, stationery
supplies and lifestyle products and e-books. Flipkart now employs more than 4,500 people,
and is ranked among the top 20 Indian websites.
Cash on Delivery: Key to success. Flipkart's offering of products on Cash on Delivery is
considered to be one of the main reasons behind its success. Flipkart also allows other
payment methods, including credit or debit card transactions, net banking, e-gift voucher
and Card Swipe on Delivery.
User base. Flipkart has 10m+ registered users and sees about 1m+ visits every day.
Financial Details: Target US$1bn sales in FY15
In his interactions with the media, founder Sachin Bansal has shared that the company
currently generating Gross Merchandise Value (GMV) of US$600m and is looking to
generate US$1bn by FY15. (Link)
The company founders have discussed in media that they are currently not profitable and
are making investments in its growth. (Link1)
Flipkart has received five rounds of funding amounting to US$541m. The details on the
funding timelines and investors is as follows:
Fig 73 Funding Details for Flipkart: Funding does not seem an issue.
May-09 Accel India 1
Jun-10 Tiger Global 10
Jun-11 Tiger Global 20
Aug-12 MIH (part of Naspers Group) and ICONIQ Capital 150
Jul-13 Tiger Global, Naspers, Accel Partners and Iconiq Capita 200
Oct-13 Dragoneer Investment Group, Morgan Stanley Investment Management,
Sofina SA, Vulcan Capital, Tiger Global
160
Flipkart has done four acquisitions since inception. The details on the acquisitions are as
follows:
Fig 74 Acquisition have been strategic in nature
2010 WeRead Social book discovery tool
2011 Mime360 Digital content platform company
2011 Chakpak.com Movie news site
2012 Letsbuy.com Indian e-retailer in electronics

Indias largest
inventory-led e-
commerce Company.
13 January 2014 57
Business Model: Indias answer to Amazon.com
Why does it exist in India? For a market like India, where customers have low faith in
shopping online, the inventory-led business model leads to a certain amount of customer
trust. There is an immense need to build this trust to create repeat customers. For
businesses which prefer the inventory-led business model in India, the belief is that this
trust can only be built by excellent customer service, which in turn is best taken care of
when you have control over the inventory. This ensures speedier deliveries, quality checks,
and an overall better customer experience.
Fig 75 Revenue growth has been exponential for Flipkart
Revenues (Rs m)
FY09 40
FY10 200
FY11 750
FY12E 5,000
FY13E 7,500
FY14E 10,000
FY15E 60,000
Where does it work? Inventory-led business models usually are more prevalent in areas
like fashion, clothing, electronics etc where there are sensitivities to the fact that these are
all high involvement purchases. The business becomes the single interface to the user and
the customer does not have to worry about who the real inventory owner is. The
companies which use this model, though, face increased costs but it has helped develop
trust and service credibility amongst its users. That kind of intangible value creation for the
brand would not have come through any amount of marketing spend.
Fig 76 flipkart.com Homepage snapshot: Indias largest inventory-led e-
commerce site

Source: flipkart.com, January 2014

13 January 2014 58
Challenges facing inventory-led model. They are as follows:
Large warehousing cost and management
Limited credit time from vendors
Liability of dead stock
Increasing complexity as the business scales and as one introduces new product
categories.

13 January 2014 59
Myntra.com (Unlisted)
Indias largest online fashion and lifestyle store
Company Profile. Myntra was established by Mukesh Bansal, Ashutosh Lawania, and
Vineet Saxena in February 2007 and is headquartered in Bangalore.
How it all started? The company started off in the business of personalization of products,
and soon expanded to set up regional offices in New Delhi, Mumbai and Chennai. It began
its operations in the B2B (business to business) segment with the personalization of gifts,
which included T-shirts, mugs and caps to name a few. However, in 2010, the company
shifted its strategy to becoming a B2C (business to customer) oriented firm, expanding its
catalogue to fashion and lifestyle products. Myntra currently offers products from more
than 350 Indian and international brands.
User base: Smaller cities driving growth. Myntras growth is being driven by uptake of
online services in tier-2 and -3 cities. While top 10 cities earlier used to account for 60% of
revenues, now they account for only 45%. Nearly 15% of the companys revenues are
coming from the mobile platform, and Delhi is the largest market by sales, at 15% of its
total sales.
The site is currently getting 15m visitors on a monthly basis, and is doing around 12,000-
13,000 transactions daily. The top selling categories for the company remains sports and
casual wear, while the fastest growing is ethnic wear and accessories, primarily because of
the increasing number of women shoppers on the site. As of now, the site is offering close
to 600 brands and over 50,000 SKUs.
Myntra has received five rounds of funding amounting to US$65m. The details on the
funding timelines and investors are as follows:
Fig 77 Funding Details for myntra: Ample Funding present .
2007 Accel Partners, Sasha Mirchandani from Mumbai Angels and another un-
named angel investor
na
2008 NEA-IndoUS Ventures, IDG Ventures and Accel Partners 5
2011 Tiger Global, IDG Ventures and Indo-US Venture Partners 14
2012 Tiger Global 21
2012 Tiger Global, Accel Partners and others 25
Myntra has done two acquisitions since inception. The details on the acquisitions are as
follows:
Fig 78 Acquisition have been strategic in nature
2012 Exclusively.in Private label brand
2013 Fitiquette US-based technology platform provider

Indias largest
online fashion and
lifestyle store
13 January 2014 60
Financial Details: Target US$200m sales in FY15
Mr Mukesh Bansal, founder of myntra, in his interactions with the media has shared that
the company currently generates Gross Merchandise Value (GMV) of ~US$130m and is
looking to generate US$200m by FY15. Currently, the company is generating single-digit
EBITDA losses. (Link)
The company is not profitable currently but founders have spoken about hitting profitability
in FY15. The founders in media interviews have talked about possible listing during the
next 12-24 month time period. (Link) & (Link)
Fig 79 Revenue has been growing steadily.
Year (Rs m)
FY09 30
FY10 90
FY11 250
FY12E 750
FY13E 4,000
FY14E 8,000
FY15E 12,000
Business Model
Myntra.com sells fashion and lifestyle products online. Offerings include large in-season
product catalogue, cash on delivery, payment in equated monthly instalments facility (EMI)
and a 30-day return policy.
Fig 80 myntra.com Homepage snapshot: Indias largest apparel e-commerce site

Source: myntra.com, January 2014

13 January 2014 61
High Competition in the segment. The competition for online retail is intense, with the
presence of well funded players like flipkart, snapdeal, jabong etc. Since all the B2C e-
commerce players have been aggressively expanding their product offerings, product
differentiation has become less of an attraction. In our view, online shoppers are even less
loyal than traditional offline shoppers. As a result, B2C players are mainly differentiating
themselves through price. In order to keep their prices competitive, aggressive marketing
promotions have to be run and sustained.
Low barriers to entry.
13 January 2014 62
Jabong.com (Unlisted)
Indias #3 player in online retail e-commerce: Focus on smaller cities
paying off
Company Profile. Jabong is a fashion and lifestyle e-portal that sells shoes, apparel,
accessories, home dcor and furniture through its website. The e-store at present carries
over 1,000 brands and over 90,000 products.
How it all started? The site started operations in January 2012. It was co-founded by
Arun Chandra Mohan, Praveen Sinha and Lakshmi Potluri. Currently Jabong is
spearheaded by Arun Chandra Mohan, Praveen Sinha, Manu Jain and Mukul Bafana. In
March 2013, Jabong was shipping 7K+ orders a day.
User base. In less than 20 months since its inception, Jabong.com has become the third-
most visited online shopping website after flipkart and myntra. During September 2013
Jabong was shipping 14K+ orders on a daily basis, of which 60% were from small towns.
Funding Details
According to industry sources, Rocket Internet has committed an amount in the range of
$50-100 million for building out Jabong in India. (Link1 & Link2)
Backed by Rocket Internet. Jabong.com is backed by Berlin-based business incubator
Rocket Internet, a venture arm of the Samwer brothers which is known for cloning
several successful online business models of the US in other markets. The firm follows
both the inventory model (where products are sourced from various brands and strode in
Jabong warehouses) and controlled marketplace model (Jabong just takes care of the
fulfilment, customer service and returns, if any). Jabong is owned by Gurgaon-based
Xerion Retail Pvt Ltd, which also owns the portal FabFurnish.com. Rocket Internet has also
invested in HeavenandHome.com in India. Rocket has 59 companies worldwide and is
present in 40 countries.
Who is Rocket Internet? Jabong is the biggest Rocket project in India. Going by the
Samwer brothers track record, they dont stay in a business for long. Either they sell out
quickly to a direct competitor or a strategic buyer. For instance, the Samwer brothers
started with Alando, an eBay clone, which they sold to eBay itself for $50m just three
months after the launch of the website in 1999. Most recent example is of the sale of
Citydeal, a Groupon clone, to Groupon itself in return for an estimated 10% stake in the
Chicago-headquartered deals company.

Indias #3 player in
online retail e-
commerce.
13 January 2014 63
Business Model: User of Hybrid E-Commerce Model
Jabong.com follows both the inventory model and a managed marketplace model. In
inventory model, products are sourced from brands and stored in the Jabong warehouse.
In managed marketplace model, Jabong doesnt store the inventory but takes care of the
Fulfillment, Customer Service, and Returns if any. Jabong.com offers same-day delivery in
Delhi/NCR, and within 48 hours in top 10 cities and within 23 days in other cities and
towns. Jabongs logistic operations launched JaVAS as a separate service independent of
Jabong. JaVAS covers around 50-55 cities and a majority of its customers are e-
commerce players, though there are some offline players as well.
Fig 81 Jabong.com Homepage snapshot: Indias largest apparel e-commerce site

Source: Jabong.com, January 2014
High competitive intensity in the space.
Low barriers to entry into the space.
13 January 2014 64
Fashionandyou.com (Unlisted)
Leading Indian flash sales site for fashion & lifestyle products
Meeting with CEO, Mr Aasheesh Mediratta. We interacted with Mr. Aasheesh Mediratta,
CEO of FashionAndYou.
Company Profile. FashionAndYou.com is an online fashion & lifestyle store, which offers
daily deals across fashion and lifestyle categories. The site offers more than 15 new sales
across international and national brands, designer wear, regional brands and boutique
labels at up to 80% off every day. The company has an inventory-light model, where the
company stocks inventory only for shops on a must have basis.
How it all started? The site was started in 2010 by Ms Pearl Uppal and Harish Bahl and is
a venture of the Smile Group, responsible for other e-commerce initiatives like BeStylish,
dealsandyou.com, FreeCultr and Juvalia&You. Fashionandyou.com is a part of Brand
Alliance, an international organization formed by major private sales companies in Brazil,
Turkey, Mexico, Australia, the Middle East, the US, India, Russia and Switzerland.
User base. The site has over 3.6m member-base across 1200 locations pan-India. Currently,
60% of the orders come from Tier 1 cities and 40% come from tier 2-3 cities. This has
changed from 80:20 during initial days of the site. Some notable facts about the user base
include:
10% of the traffic comes through mobile but the sales are not material. The company
is working on launching its own mobile application, which could lead to ~20% sales to
come from that medium.
Women constitute 60% of the total customers on the site. For certain categories like
fashion apparel, footwear & fashion accessories, and home & living, almost 70% of the
business comes from women.
FashionAndYou has received two rounds of funding amounting to US$48m. The details on
the funding timeline and investors is as follows:
Fig 82 Funding Details for FashionAndYou
2010 Sequoia Capital India and Nokia Growth Partners 8
2011 Norwest Venture Partners and Intel Capital with participation of existing
investors
40
FashionAndYou has done one acquisition since inception, acquiring fashion &beauty e-
tailer site Urbantouch for US$30m.

Leading Flash sale
site for fashion and
lifestyle products in
India.

13 January 2014 65
Financial Details: Looking for break even in 15-18 months
Mr Aasheesh Mediratta, CEO of fashionandyou, in his interactions has shared that the
company is not profitable currently but is looking to break even in 15-18 months from now.
(Link)
Business Model: Controlled Market Place clear high fashion
inventory
Currently, fashionandyou works on a model whereby inventory is blocked with the vendor.
Then sales are booked online and fulfilment happens through third-party partners. This
works like a controlled market place model. The company shares that the only change in
future could be that their vendor partners could fulfill the orders directly to save on lead
times, leading to early fulfilment of customer orders.
The site has more than 15 new sales every day, which go for a limited time period of 1 day
to 3 days.
Fig 83 fashionandyou.com Homepage snapshot: High fashion clearance through
daily deals.

Source: fashionandyou.com, January 2014

13 January 2014 66
Network 18 Media Investments (NETM IN,
Not Rated)
Interesting mix of internet properties
Company Profile. Network18 Media is a leading media and entertainment company in
India, reaching an average 223m television viewers and 27m digital unique users each
month. The company has varied interests including television, internet, films, digital
commerce, magazines, mobile content etc. For the purpose of the report, we are going to
focus on the internet properties of the company.
Early starter on the Indian internet landscape. The company was an early starter in the
Indian internet industry when it started in 2000. Its digital properties include digital content
(www.moneycontrol.com, ibnlive.com, in.com and firstpost), home shopping
(HomeShop18.com) and online ticketing (bookmyshow.com).
The company has a stated objective of divesting stakes in non-core assets and during
FY13 they sold their entire stake in Newswire18, their Yellow Pages and Askme
businesses and diluted the majority stake in Bookmyshow.
Breakdown of Digital business
The company divides the digital business in three segments:
Digital Content. The company includes content properties, namely,
moneycontrol.com, in.com, ibnlive.com and fistpost.com in this segment. During FY13,
the segment reported revenues of Rs400m (vs Rs702m in FY12).
Digital Commerce. The company includes properties like bookmyshow and
Homeshop18 in this segment. During FY13, the segment reported revenues of
Rs2.7bn (vs Rs1.2bn in FY12).
Newswire18. During FY13, the company divested their entire stake profitably in this
business.
Digital Content
Moneycontrol.com. The site was acquired in June 2000 and is one of India's most
popular financial news and services portals, attracting approx 7.5m unique visitors per
month. The site offers free access to business news and market updates, articles and
independent analysis of various investment options, financial planning etc. The site also
offers a subscription-based service called PowerYourTrade to their users.
in.com. The site was launched in 2008 and is a news and entertainment portal with
approximately 16m+ unique visitors per month. The portal integrates and aggregates
content from the Network18 network of websites and popular third-party websites and
engage with the users by offering communication and other services. It also offers features
like e-mail, videos, games, music and other downloads.
Firstpost.com. The site was launched in 2011 and is attracting 3.5m+ unique visitors per
month. Firstpost.com is an exclusive online news and views website.
IBNLive.com. The site was launched in 2006 and attracts 6.3m+ million visitors per
month.IBNLive.com is a general news site.

Combination of
various internet
businesses.

13 January 2014 67
Digital Commerce
HomeShop18. HomeShop18 is a virtual retail business selling across internet, TV and
mobile. They sell a wide range of consumer products including books, tablets, laptops,
mobile phones, electronics, apparels, cameras, jewellery, watches etc. HomeShop18 has
over 500+ brands spread across 12m SKUs. The business had over 3.7m transactions in
2012. As of Dec, 12, Homeshop18.com had over 7.7m unique visitors.
BookmyShow.com. The site is operated by Bigtree Entertainment Private Limited, in
which Network18 had acquired a stake in 2007. It provides online booking for movies,
plays, sporting events and shows across India. It is Indias leading entertainment ticketing
solutions and reaches more than 100 cities and 1400 screens in the country. As of
December 31st, 2012, bookmyshow.com had 5m+ registered users and recorded over 5m
unique visitors per month during 2012. In August 2012, Network18 diluted its stake to 40%
(vs 60% earlier) through a stake sale to Accel Partners. Network18 continues to be the
largest stakeholder in the company.
Financial Summary
During FY13, the company reported revenues of Rs4bn (vs Rs2.3 in FY12) and operating
losses of Rs1.2bn (flat YoY) in the Digital Content and eCommerce segment.
Fig 84 Financial breakdown of the digital business
(In Rs m) FY12 FY13
Digital Revenues 2338 4009

Breakup of revenues:
* Digital Content 702 880
* Digital Commerce 1188 2763
* Newswire18 448 367

Operating Profit -1263 -1254
Operating Margin -54% -31%

13 January 2014 68
Appendix: Additional Information
Infoedge Limited: Additional Information on Business Segments
Info Edge owns a diversified portfolio of portals like Naukri.com, 99acres.com,
Jeevansathi.com and Shiksha.com, which have an established market and mind share.
Fig 85 Infoedge Portfolio of businesses.


Fig 86 Recruitment still contributes 77% of company standalone revenues


92% 90%
86%
84% 83% 81%
77%
8% 10%
14%
16% 17% 19%
23%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Recruitment Solutions Others
13 January 2014 69
Recruitment business driving profitability. Among the key businesses of Infoedge, the
recruitment business contributes entirely to the profitability, with the rest (real estate,
matrimony and education) being at breakeven/loss.
Fig 87 Recruitment business posting ~50% EBITDA
Margins
Fig 88 Profitability still elusive for non recruitment
businesses

Business Segment 1: Recruitment
Introduction. As of March, 13, Recruitment solutions continue to be the dominant
business, with 77% of total standalone revenues of Info Edge Ltd. The recruitment services
business comprises the following portals:
Naukri.com: This is the companys flagship brand and Indias largest online jobsite.
The resume database has expanded more than 3x since inception and its traffic share
(among online recruitment sites in India) has remained strong at 60%+. Resultantly,
despite diversification into multiple portals, recruitment solutions (including both online
and offline recruitment services) still account for 75%+ of the standalone revenues.
Fig 89 Naukri.com Homepage snapshot: Indias largest recruitment site

Source: naukri, Macquarie Research, January 2014

13 January 2014 70
Quadrangle.com: This is primarily an off-line headhunting business that derives
revenues from successfully positioning a person with a company.
Naukrigulf.com: This is a jobsite that focuses on the Middle Eastern market
Firstnaukri.com: Launched in January 2009, this site focuses on fresher hiring
Brijj.com: This is a professional networking site
Revenue Model. Revenue is generated in the form of subscription fees, which is
recognised pro-rata over the subscription or advertising agreement, usually ranging
between 1-12 months.
Fig 90 Number of candidate resumes has grown
consistently
Fig 91 Average daily resumes modified increasing
showing the recent macro in India

Competition. Naukri.com is the largest player in the segment. In Sept 2013, the gap with
Monster India increased to 47%, with Times Jobs to 54%.
Fig 92 Naukri.com has a strong lead over competition

13 January 2014 71
Profitability. The recruitments business is contributes fully to the profits for the company,
with the other businesses of real estate, matrimony and others at breakeven/losses. The
chart below shows the revenues and EBITDA margins for the recruitment business.
Fig 93 Recruitment business is the cash cow for Infoedge


13 January 2014 72
Business Segment 2: Real Estate
Introduction. As of March, 13, real estate solutions contributed 12% of total standalone
revenues of Info Edge Ltd. The real estate services business comprises the following
portals:
Online real estate classifieds (www.99acres.com)
Real estate brokerage business (www.allcheckdeals.com )
99acres.com: 99acres is the 2
nd
largest business segment of Info Edges standalone
business, which provides an online real estate classifieds platform for real estate
properties in India. Established in 2005, 99 acres has grown strongly, at a 42% revenue
CAGR between FY07-13. This has also seen its contribution to Info Edge's standalone
revenues rising from 7% to 12% in FY13.
Access to information on prices across the real estate market is the main USP (unique
selling point) for the site since the sector is inherently affected by informational asymmetry.
Real estate players are one of the highest advertising spenders across categories which is
evidenced by the paid listing growth of 122% CAGR over FY08-13 at 99acres.com.
Fig 94 99acres.com Homepage snapshot: The largest real estate classified site in
India

Source: 99acres, Macquarie Research, January 2014

13 January 2014 73
Competition. 99acres.com is the largest player in the segment.
Fig 95 99acres.com is the leading player in online real estate classified space

Profitability. The recruitment business contributes fully to the profits for the company with
the other businesses of real estate, matrimony and others at breakeven/losses. The chart
below shows the revenues and EBITDA margins for the other business.
Fig 96 Other Businesses have shown strong growth but profitability still
elusive


13 January 2014 74
Business Segment 3: Matrimony
Introduction. Jeevansathi.com (JS), Info Edge's matrimony portal, is the 3
rd
largest player
in the Indian online matrimony market. In India, due to higher focus on arranged marriages
involving consent of parents, the demand for match making services has long been in
existence. The matrimony market has been largely fragmented with these services
accessed through print, community-specific matrimony houses, online matrimony portals or
through relatives' contact. An internet-savvy generation, higher internet penetration and
continued increase in the profile base (and hence probable matches) have resulted in
matrimony portals becoming a credible alternate resource.
Fig 97 jeevansathi.com Homepage snapshot: Indias 3
rd
largest matrimony site

JS was acquired by Info Edge in 2004 and has witnessed revenue CAGR of 17%, with the
number of listed profiles witnessing a CAGR of ~30% over FY09-13. Unlike other portals of
Info Edge (naukri, 99acres), JS growth traction has not been as strong, considering no
first-mover advantage, highly fragmented nature of the market and strong competition in
the online space.
Fig 98 Revenue growth has been modest in jeevansathi.com

Profitability. The recruitment business contributes fully to the profits for the company with
the other businesses of real estate, matrimony and others at breakeven/losses. The chart
below shows the revenues and EBITDA margins for the other business.
170
199
221
254
323
17%
11%
15%
27%
0
50
100
150
200
250
300
350
FY09 FY10 FY11 FY12 FY13
0
0.05
0.1
0.15
0.2
0.25
0.3
Jeevansathi Revenues (m) YoY growth (%)
13 January 2014 75
Fig 99 Other Businesses have shown strong growth but profitability still
elusive

Investments: String of Pearl Strategy
Info Edge's strategy to monetize the nascent and fast growing Indian internet space has
not only led to strong home-grown brands like Naukri.com, 99acres, etc but also led to
investment in rapidly growing web/mobile based start-ups. Strong profitability and robust
cash flows from the core business as well as extensive domain knowledge in the internet
space also were the key reasons for these investments.
Reasons for these investments. In addition to promoting businesses internally, Info Edge
recognised that some of the ideas in developing online businesses would come from
outside the company. Thus, the company decided to made investments in early stage
start-up ventures. The objectives for the same are: (i) support the growth of these
entrepreneurial-driven activities, (ii) gain from enhanced value creation, where this occurs,
and (iii) bring such enterprises into the Info Edge fold if such opportunities arise in future.
Most of these companies are in the incubation/ early stage phase
Fig 100 List of Investments by Infoedge Ltd


Investee Company Website
Total amount
invested (Rs m)
Approx. diluted
and converted
shareholding %
% of the
total amount
invested
Year of
Investment
Active
Zomato Media Pvt Ltd. www.zomato.com 860 58% 30% 2010
Applect Learning Systems Pvt Ltd. www.meritnation.com 615 54% 22% 2008
Etechaces Marketing and Consulting Pvt Ltd. www.policbazaar.com 325 32% 11% 2008
Kinobeo Software Pvt Ltd. www.mydala.com 270 47% 9% 2011
Canvera Digital Technologies Pvt Ltd. www.canvera.com 375 25% 13% 2012
Happily Unmarried Marketing Pvt Ltd. www.happilyunmarried.com 50 25% 2% 2012
Sub Total 2,495 88%
Written off/ provisioned for/ exited
Studyplaces, Inc. www.studyplaces.com 45 13% 2% 2008
Ninety Nine Labels Pvt Ltd. www.99labels.com 285 47% 10% 2011
Nogle Technologies Pvt Ltd. www.floost.com 26 31% 1% 2011
Sub Total 356 12%
Total 2,851 100%
13 January 2014 76
Justdial: Additional Information on Business Segments
JustDial: How it works?. Justdial's search service bridges the gap between the users and
businesses by helping users find relevant providers of products and services quickly, while
helping businesses listed in Justdial's database to market their offerings. The company is
basically an online directory of services / establishments which provide users contact
numbers for the services they desire. Users generally request for the number of a specific
retailer/service provider or for category of service providers e.g. Dentist in Mumbai. Justdial
offers various subscription packages to service providers to avail of the leads generated by
user requests. Their core market is small businesses i.e. local barbers, retailers, service
providers who cannot spend money on advertising etc. In that ways they are actually a 3rd
party marketer / business sourcing agency for small firms which uses technology as its
tool. Currently, In the local search space they are the clear leaders with no real competitors
who can compete with them in terms of reach and database strength.
Volume of Searches. From being primarily a voice company they are now a mobile &
internet company with 88% of searches across those platforms including 23% of the online
searches via mobile devices. As of 2QFY14, the company was servicing 62m+ web
searches, 22m+ searches on its smartphone application and mobile internet and
12m+ voice calls on a per month basis.
Monetization of search queries. Justdial monetises its services by allowing service
providers to be given top billing when a user asks for a service category or for leads to be
referred to them. This means that when an user asks for dentists in Mumbai, the user is
sent four numbers with the service provider who has opted for a platinum listing headlining
the numbers sent across; the users contact number is also passed on to the premium
biller. Monetisation is platform-agnostic and leads are generated with client requests for
category searches. 35% of the searches are category searches; these are the key leads
generated for their clients.
Fig 101 Search volume has grown strongly. Fig 102 but paid campaigns have grown even faster..

Subscription services. They have various categories of subscription for each category
sorted by postal pincodes. They offer 1 platinum billing customer in each pincode area
which means that the provider gets top billing in all leads generated for a year this can be
broken up into portions as per client request. Pricing is determined by a proprietary engine
which takes into account historical demand for key words, past payment willingness from
providers in that locality, etc. As a result there is no average pricing for listing. A platinum
provider gets a renewal request once his subscription period is over to keep the listing.
82
131
175
254
364
238
0
50
100
150
200
250
300
350
400
FY09 FY10 FY11 FY12 FY13 1HFY14
Total Usage (Million)
FY09-13 CAGR
of 45%
41
62
120
171
206
460
0
50
100
150
200
250
300
350
400
450
500
Paid Campains (In thousands)
FY09-13 CAGR
of 50%
13 January 2014 77
Number of subscribers and listings. The client base is fairly concentrated across
services and geographies, with no category contributing more than 3%. Mumbai and Delhi
contribute up to 40-43% of total subscriptions. They have marketing offices in 11 cities
which contribute 90% of the revenues; they cover an additional 40 odd cities which make
up 7% of revenues, but are growing fast. They have a total of 222K paid subscribers,
which in managements estimates should grow at 25-30% per annum on a net basis.
Key Highlights about JustDial:
Approximately 364m usages in FY13.
Database of approximately 9.1 million listings as of March 31, 2013.
Justdial users have contributed 33,515,517 reviews and ratings for various listings to
date.
Justdial had approximately 206,500 campaigns as of March 31, 2013. Business
owners have the option to list their business on Justdial's database for free.
Fig 103 JustDial Homepage snapshot: Building on Local search

Source: JustDial, Macquarie Research, January 2014

13 January 2014 78
Makemytrip: Additional Information on Business Segments
Introduction. MakeMyTrip Limited was founded in 2000 and provides services and
products include air tickets, customized holiday packages, hotel bookings, railway tickets,
bus tickets, car hire and facilitating access to travel insurance. Through its primary
websites, www.makemytrip.com and www.hoteltravel.com the company provides access to
all major domestic full-service and low-cost airlines, over 11,300 hotels and guesthouses in
India, more than 102,800 hotels outside India, Indian Railways and several major Indian
bus operators. The company is headquartered in Gurgaon, Haryana and has employee
strength of more than 1,200 employees. In 2007, the company was listed on the New York
stock exchange in the US.
Fig 104 MakeMyTrip Portfolio of businesses.

Diversified Portfolio. The company had traditionally derived majority of its revenues from
air ticketing but the closure of Kingfisher Airlines in India along with adverse macro
economic environment during 2011-3 made the company focus on Hotels and Packages
as the new growth area for the future. This renewed focus led the Hotels and Packages to
increase its revenue contribution to 31% in FY13 (vs 15% in FY08). Our interaction with
the management showed that the desired mix for hotels and air tickets is to reach 50-50
within the next 18-24 months.
Fig 105 Company has been moving focus from air
ticketing due to reducing margins in the segment
Fig 106 to Hotels & packages, which would be the
focus area for future revenue growth

Source: MMYT, Macquarie Research, January 2014 Source: MMYT, Macquarie Research, January 2014

FY08
Air Ticketing
85%
Hotels &
Packages
15%
FY13
Air Ticketing
65%
Others
4%
Hotels &
Packages
31%
13 January 2014 79
Reducing margins in Air ticketing leads to renewed focus on Hotels and Packages.
Among the key businesses of MakeMyTrip Ltd, air ticketing margins have been reducing
due the closure of Kingfisher Airlines in India along with adverse macro economic
environment during 2011-3. They have already come down from 7%+ to ~6% levels vs
Hotels and Packages segment, which has been on an increasing trend.

Fig 107 Air Ticketing margins has been reducing
Fig 108 while Hotels and packages has been showing
increasing margins

Financials. The companys gross bookings grew from US313m in FY09 to US$1,170m in
FY13. On a net basis, revenues grew to US$88m in FY13 (vs US$ 26m in FY09), showing
a CAGR of 37%. Do note that net revenues constitute revenues less service costs.
Fig 109 Total Gross bookings has been growing at
a CAGR of 39% during FY09-13
Fig 110 while margins have been impacted from
negative industry conditions and recent acquisitions.


7.2%
7.6%
7.4%
7.9%
6.0%
6.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Adjusted Operating Margins for Air Travel (%)
10.6%
14.0%
11.5%
11.9% 12.0%
12.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Adjusted Operating Margins for Hotels and Packages (%)
0
200
400
600
800
1000
FY09 FY10 FY11 FY12 FY13
0%
10%
20%
30%
40%
50%
60%
70%
Gross Bookings - Air Ticketing (US$ m)
Gross Bookings - Hotels and Packages (US$ m)
Air Ticketing YoY growth (%)
Hotels and Packages YoY growth (%)
(10.2)
0.8
4.6
10.9
(5.2)
(3.5)
-15
-10
-5
0
5
10
15
Adjusted Operating Profits (In US$ m)
1.9% 7.5% 12.4%
13 January 2014 80
Fig 111 MakeMyTrip Homepage snapshot: Focusing on Travel in India

Source: makemytrip, Macquarie Research, January 2014

13 January 2014 81
Important disclosures:
Recommendation definitions
Macquarie - Australia/New Zealand
Outperform return >3% in excess of benchmark return
Neutral return within 3% of benchmark return
Underperform return >3% below benchmark return

Benchmark return is determined by long term nominal
GDP growth plus 12 month forward market dividend
yield
Macquarie Asia/Europe
Outperform expected return >+10%
Neutral expected return from -10% to +10%
Underperform expected return <-10%
Macquarie First South - South Africa
Outperform expected return >+10%
Neutral expected return from -10% to +10%
Underperform expected return <-10%
Macquarie - Canada
Outperform return >5% in excess of benchmark return
Neutral return within 5% of benchmark return
Underperform return >5% below benchmark return
Macquarie - USA
Outperform (Buy) return >5% in excess of Russell
3000 index return
Neutral (Hold) return within 5% of Russell 3000 index
return
Underperform (Sell) return >5% below Russell 3000
index return

Volatility index definition*
This is calculated from the volatility of historical
price movements.

Very highhighest risk Stock should be
expected to move up or down 60100% in a year
investors should be aware this stock is highly
speculative.

High stock should be expected to move up or
down at least 4060% in a year investors should
be aware this stock could be speculative.

Medium stock should be expected to move up
or down at least 3040% in a year.

Lowmedium stock should be expected to
move up or down at least 2530% in a year.

Low stock should be expected to move up or
down at least 1525% in a year.
* Applicable to Asia/Australian/NZ/Canada stocks
only
Recommendations 12 months
Note: Quant recommendations may differ from
Fundamental Analyst recommendations
Financial definitions
All "Adjusted" data items have had the following
adjustments made:
Added back: goodwill amortisation, provision for
catastrophe reserves, IFRS derivatives & hedging,
IFRS impairments & IFRS interest expense
Excluded: non recurring items, asset revals, property
revals, appraisal value uplift, preference dividends &
minority interests

EPS = adjusted net profit / efpowa*
ROA = adjusted ebit / average total assets
ROA Banks/Insurance = adjusted net profit /average
total assets
ROE = adjusted net profit / average shareholders funds
Gross cashflow = adjusted net profit + depreciation
*equivalent fully paid ordinary weighted average
number of shares

All Reported numbers for Australian/NZ listed stocks
are modelled under IFRS (International Financial
Reporting Standards).

Recommendation proportions For quarter ending 31 December 2013
AU/NZ Asia RSA USA CA EUR
Outperform 47.89% 60.13% 37.97% 39.49% 59.64% 48.65% (for US coverage by MCUSA, 6.52% of stocks followed are investment banking clients)
Neutral 35.56% 22.65% 46.84% 54.50% 35.54% 32.43% (for US coverage by MCUSA, 4.35% of stocks followed are investment banking clients)
Underperform 16.55% 17.22% 15.19% 6.01% 4.82% 18.92% (for US coverage by MCUSA, 0.00% of stocks followed are investment banking clients)

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David Gambrill (Thailand) (662) 694 7753
Find our research at
Macquarie: www.macquarie.com.au/research
Thomson: www.thomson.com/financial
Reuters: www.knowledge.reuters.com
Bloomberg: MAC GO
Factset: http://www.factset.com/home.aspx
CapitalIQ www.capitaliq.com
Email macresearch@macquarie.com for access

Asia Sales
Regional Heads of Sales
Robin Black (Asia) (852) 3922 2074
Chris Gray (ASEAN) (65) 6601 0288
Peter Slater (Boston) (1 617) 598 2502
Jeffrey Shiu (China & Hong Kong) (852) 3922 2061
Thomas Renz (Geneva) (41) 22 818 7712
Bharat Rawla (India) (9122) 6720 4100
Jurgan Usman (Indonesia) (6221) 515 1555
Miki Edelman (Japan) (813) 3512 7857
John Jay Lee (Korea) (822) 3705 9988
Ruben Boopalan (Malaysia) (603) 2059 8888
Gino C Rojas (Philippines) (632) 857 0861
Eric Roles (New York) (1 212) 231 2559

Regional Heads of Sales contd
Paul Colaco (San Francisco) (1 415) 762 5003
Erica Wang (Taiwan) (8862) 2734 7586
Angus Kent (Thailand) (662) 694 7601
Julien Roux (UK/Europe) (44) 20 3037 4867
Sean Alexander (Generalist) (852) 3922 2101
Regional Head of Distribution
Justin Crawford (Asia) (852) 3922 2065
Sales Trading
Adam Zaki (Asia) (852) 3922 2002
Phil Sellaroli (Japan) (813) 3512 7837
Kenneth Cheung (Singapore) (65) 6601 0288

Sales Trading contd
Mike Keen (UK/Europe) (44) 20 3037 4905
Chris Reale (New York) (1 212) 231 2555
Marc Rosa (New York) (1 212) 231 2555
Stanley Dunda (Indonesia) (6221) 515 1555
Suhaida Samsudin (Malaysia) (603) 2059 8888
Michael Santos (Philippines) (632) 857 0813
Isaac Huang (Taiwan) (8862) 2734 7582
Dominic Shore (Thailand) (662) 694 7707

Macquarie Indian ECommerce+ - +LONGTERMGRP+

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