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Kunal Sangoi
+91 22 6623 3370
kunal.sangoi@edelcap.com

Ganesh Duvvuri
+91 22 4040 7586
ganesh.duvvuri@edelcap.com

Omkar Hadkar
+91 22 6620 3147
omkar.hadkar@edelcap.com

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IndiaInternet
1

ThechangingfaceofIndiaInternet

336mnnetizensby2016fromcurrent
100mn(2010)

$12bnopportunitysizeofetailmarkettobedrivenbyapparels
andlifestyleproducts,books,consumerelectronicsby2016

175mntargetedbroadbandconnectionsby2017
asannouncedinNationalAgendaforInformation&
CommunicationsTechnologyandElectronics

$125bnisthemarketcapitalizationoftop15Chinese
Internetcompanies

25%plusCAGRinonlineadvertisements
through2016

20xrevenueincreasein2yearsforFlipkart.com

$430mnworthinvestmentsinInternet
companiesbyVCandPEfirmsyeartodate
1

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IndiaInternet

THISPAGEISINTENTIONALLYLEFTBLANK

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IndiaInternet

ExecutiveSummary

Since 1994, when it named Internet as the `Person of the year, Time magazine had as
manyas23coversonevents,trends,companiesandindividualswhoinfluencedtheworld
with their clout on the spiralling cyberspace. Internet has witnessed plenteous success
stories, creating billions of dollars of wealth by some nifty and inventive individuals,
indelibly stamping its invaluable place in our lives. The World Wide Web has brought
together smallcontributions of millions of people and made them mattermore, realising
thewordsofthefatherofInternet,VintonCerfthattheInternetliveswhereanyonecan
access it. Today, the world acknowledges the indomitablepower of the Internet whichis
taking giant strides in India, especially in ecommerce and social mediatectonic changes
thatarecollectivelyalteringtheoverallonlinespace.WeseeIndiapoisedonthecuspofan
explosion in Internet access and usage over the next five years akin to the adoption of
mobilehandsetsandtariffcutsintelecomindustry.

TimeCover,July1994

Etailmarkettoshootup20xby2016toUSD12bn
We expect the etail market to see a multifold growth over the next five years, reaching
USD12bn by 2016 from current USD590mn. This implies that about 3.5% of the per capita
income would be spent online by every transacting user, from less than 2% currently.
However, the overall market would still be less than 2% of total retail sales in India. This
wouldbelowerthanChinaandtheUSatover4%currently.

Internetadvertisingspendtosurge3xtoUSD800mn
WeexpecttheonlineadvertisingtosurgetoUSD800mnby2016,expandingitsshareoftotal
adpieto~8.5%from3.6%levelcurrently.Onlinemediumisanemergingplatformwhichhas
been globally acknowledged as an interactive medium with high potential. Internet as an
advertisingmediumhasmanyuniquebenefits,pushingmarketerstoincreasethespending
onthisplatform.Internetpotentiallywillhavethehighestreachthananyotheradvertising
mediumby2016.

OnlineclassifiedsmarkettotouchUSD700mn
We expect the online classifieds market to reach at least USD700mn by 2016 from the
current USD245mn. Spending on classified segments will see a further impetus as activity
based search increases with more and more users migrating online. Major beneficiaries in
classifiedswouldbejobs,search,entertainment,matrimony,realestate,education,carsand
othergeneralB2Cclassifieds.However,unlikeintheUSwherethebiggestclassifiedssiteis
Craiglist (general B2C), we expect India to see vertical classified models emerging in
respectivesegments.

Enablersforrapidgrowthfallinginplace
Key growth enablers for online businesses content, access and payments are falling in
place.Thiswillgiverisetoecommerce,onlineclassifiedbusinessesanddigitalmediaamong
other key themes, throwing up billions worth investment opportunities. Rising income,
changingusagepatternsandimprovingmassaffordabilitywilldrivethismegatrend.

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IndiaInternet
Increasingusage,userbasestrongpushfactors
WiththethirdlargestInternetuserbaseof100mn,penetrationisnomoreaconstraint.We
see fast growth in the number of transacting users (1.5mn per month) as one of the most
important parameters that is attracting all stakeholders towards online businesses. With
various enablers falling in place, we expect the growth of online transacting users (5.6x) to
surpassthenumberofInternetusers(3.3x).Atthecurrentpace,weexpectthetotalInternet
userbasetoincreasetoalmost336mnby2016andthedailytimespentonlineinIndiawill
morethanquadruplefromcurrent42mnhours.

Onlinebusinessesofferhugewealthcreationprospects
Overthepastfiveyears,Chinahasseenaterrificgrowth inthemarketcapitalizationofits
Internetfirms.Collectivemarketcapoftop15InternetcompaniesinChinaisoverUSD125bn.
Similarly, in the US, we saw the rise of Facebook, (preparing for IPO with USD100bn
valuation) and Groupon (daily deal site) valued at USD15bn. India, on the other hand, has
only four listed Internet firms with a total market value of just under USD3bn. The Indian
market with over 120mn users (as of 2011) is on the verge of a strong takeoff with key
enablersfallingintoplace.WebelievethattheInternetspacewillgetmuchlargeroverthe
next five years and we would see multiple players valued at USD1bn plus getting listed,
offeringimmenseopportunitiestoparticipateintherealdotcom.

MobileInternettodrivenextphaseofusagegrowth
SignificantleverageopportunityvestsinmobileInternetwithIndiaimprovingitsteledensity
steadily. From about 14mn mobile Internet users currently, reduced prices of 3G enabled
handsets and low cost data plans will take this user base significantly higher. The 3G
providersarealreadyofferingInternetinasachettoencouragesamplingoftheservice.

India:SwellingNetheadspresentprospectsgalore
Tosumup,wethinkthattheIndianinternetmarketisatastagewhereChinawasin2006
and we see the suitable structural drivers in place for an explosive surge in businesses.
Currently, the Indian internet market is shallow and there are lots of emerging players
scatteredacrossmultiplesegments.ButasJackWelchsaid,InternetisindeedtheViagrafor
big businesses hence in India, we see large players emerging in the ecommerce and
classified verticals where localization is critical. In areas such as search advertising, global
players like Google will continue to dominate. We see businesses that are able to provide
smooth consumer experience and gratification will win in the long term while in classifieds
and advertisement led models, business that are able to keep consumers engaged through
theircontentrelatedpullwillemergeaswinners.

Howtoplaytheinternettheme
Large investment opportunities will arise over the next 23 years in public markets for
investors astheinternetthemeunfolds. Untilecommerce,classifiedandonlineportalslist
on Indian bourses, we believe investors can play the rising internet user theme through
telecomservicesprovidersthatwillseelargerevenueopportunityfromdatarelatedservices
3G and BWA. While the hardware/instrument (smartphones, tablets, servers, routers,
switches)relateddemandwillbelarge,thesamewillbecateredbyforeigncompanies.

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IndiaInternet
Contents

Keyinvestmentthemes.............................................................................................................6
EvaluatingInternetbusinessmodelsFewthoughts..............................................................11
CurrentstateofIndianInternetmarket..................................................................................12
StructuraldriversFallinginplacefortakeoff.......................................................................16
ecommerce:etailUSD12bnopportunity!..........................................................................23
Onlinepayment..45
Onlineadvertisingmarketoverview.......................................................................................51
Socialnetworking/microblogging.................................................................................60
MobileadvertisingandVAS..............................................................................................63
Onlineclassifieds......................................................................................................................67
Recruitment,Entertainment,Matrimony,RealEstate,Education...................................69
Onlinegaming.........................................................................................................................73
Onlineportals..........................................................................................................................76
Enterpriseopportunities..........................................................................................................80
Keychallenges.........................................................................................................................85
Companysection
InfoEdge..........................................................................................................................89
Billdesk.com......................................................................................................................95
ConsimInfo......................................................................................................................99
Flipkart.com...................................................................................................................101
Indiamart.com...............................................................................................................103
Justdial.com...................................................................................................................105
MakeMyTrip.com..........................................................................................................109
Quikr.com......................................................................................................................115
Rediff.com.....................................................................................................................117
Snapdeal.com................................................................................................................121
Zapak.com......................................................................................................................123

AppendixI:FinancialsandValuationsofInternetcompanies..............................................127
AppendixII:TopChineseandUSwebsites...........................................................................129
AppendixIII:TopWebsitesinIndiabycategory139

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IndiaInternet

Keyinvestmentthemes

The increasing usage of Internet all over the world has unlocked tremendous avenues for
businesses, products and services. Globally, huge opportunities have evolved around the
ecosystem not only in online commerce but in areas such as digital advertising, classified,
socialnetworking,onlinegamingandmobileInternet.WhiletheChineseInternetmarkethas
seentheemergenceoflocalplayersinmostsegmentsduetomuchimportancegivenbythe
Chinese government to security and censorship related aspects, we note that in India,
categories like search advertising and social networking would remain dominated by global
corporations.Further,inIndiaduetoEnglishspeakingonlineuserbase,languageislessofa
barrier leading to global players finding quicker adaptation. We also see large players
emerging in the ecommerce and classified verticals where localization is critical while in
areassuchassearchadvertising,globalplayerslikeGooglewillcontinuetodominate.InIndia,
weseethefollowingkeythemesplayingoverthenextfiveyears.

Theme1:etailUSD12bnopportunity!

Paymentsandhighercustomer
gratificationarekeyinflection
points

Build up of an econsumption economy: Indias ecommerce market is slated for an


acceleratedgrowthtobuildafullfledgedeconsumptioneconomy.Inthenextfiveyearsi.e.
by2016,weexpectIndiasetailmarkettobeoverUSD12bnfromthecurrentUSD590mn
(2011).Thiswouldstillimplylessthan2%ofoverallretailsalesand3.5%ofpercapitaincome
ofeverytransactinguser.Inthisnontravelsegment,weseecategoriessuchasapparelsand
lifestyle products, books, consumer electronics and computer hardware, software and
peripheralstobemajorrevenuegrossers.Thegrowthofthismarketwillbedrivenby:1)An
increaseinonlinetransactingusers(thusfaronlineshoppersincludingtravelaccountfor
only30%ofInternetusers30mnbutincreasingattherateof1.5mnpermonth,2)Shiftin
buyingpatternsi.e.onlineconsumptiondrivenbymassmarketingbyecommerceplayers,
3) Online adoption by traditional brickandmortar retailers and 4) Developing trust for
onlineshopping.

Chineseexperience:OnlinecommerceinChinahasseenaphenomenalgrowthofover85%
through 200510 and stands at USD55bn in 2010. We note that the growth in the Chinese
market was initialized by C2C sites and then through the B2C model, allowing third party
merchants to sell their products (e.x. Taobao establishing TMall). Heavy advertisement
educatedthemarketalongwithinnovativepaymentmethodssuchascashondeliveryand
prepaid cards (available at post offices, cyber caf) and addressed trust issues that led to
suchahighgrowthinChina.

Glance at India etailers: Flipkart.com Supposedly Indias Amazon.com, it started with


books and now trades in multiple product categories (revenues up 20x in two years),
Snapdeal.comDailydealsiteofferinggroupdiscountcouponsexpandedintoproductsnow
(targetingINR5bninrevenuesinFY13),Letsbuy.comPopularforbrandedelectronicsand
amongthemostpopularnamesinmulticategoryetailers.Anothercategoryinecommerce
isprivatesaleswhereplayerslikeFashionandyou.com,99labels.comareexpanding.

Multipletriggersforonline
shoppingtotakeoff

Chinaetailmarkettogross
USD80bn+inCY11

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IndiaInternet
Table1:Aglimpseofinternationaletailmarkets
2010market
Country
Remarks
size(USDbn)
US
166 8%globalretailmarket
51%ofAmericansbuyonline
ExpectedtogrowtoUSD279bn
by2015

29

(mn)

23

267 40%Europeansbuyonline
70%ofonlinebuyersarefrom
UK,GermanyandFrance

22

17

24

26

27

20 20
19 19 20

14
7

Source:Eurostat,Edelweissresearch

May11

Apr11

Mar11

Feb11

Jan11

Dec10

Nov10

Oct10

55 Growthof67%in2010over2009
ProjectedtoreachUSD176bn
by2014

Sep10

30

Aug10

China

36

Jul10

Europe

Chart1:TransactingusergrowthstartsacceleratinginIndia

Source:ViziSense

Chart2:IndiaetailmarkettobeUSD12bnby2016
15
11.8

12

(USDbn)

Growthinetailmarketisjust
beginning

82%CAGR

6.7
6

4.3
2.5

3
0.3

0.3

0.4

2008

2009

2010

0.6

1.3

0
2011 2012E 2013E 2014E 2015E 2016E

Source:Edelweissresearch

Logistics sector to attract capital: Boom in India ecommerce is likely to present a huge
opportunityforthelogisticssector.Usually,5%15%ofthevalueofgoodssoldonlineisspent
onfulfilmenthenceoverthenextfiveyears,webelievethelogisticsindustrywillalsoattract
moreandmorefreshcapital.Largestofthecouriercompaniesalsocoveronlyabout10,000
pin codes from a space of over 150,000 pin codes in India hence the room for expansion
continuestobehigh.

Improvementinlogisticsnetwork
iscriticaltosuccessofetailing

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IndiaInternet
Theme2:ClassifiedsEmergenceofverticalspecificbusinesses

Increasingwebtrafficandlistings
arecrucialinflectionpointsin
classifiedbusinessmodel

Indias online classified market continues to grow upwards of 55%, having reached
USD245mn in 2011. Classified advertising is rapidly taking strides, migrating to online from
newspapers. We think this represents a significant market share gain opportunity. Major
categorieshereareonlinejobs,localsearch,matrimony,realestate,educationandcars.We
notethatallofthesearedominatedbylocalplayersandthepremiseofanyclassifiedmarket
isbasedonthevirtuouscycleofusercreatedcontentthatdrivesmorebusinessesintoit,in
turn attracting additional users. We expect the classified market to reach closer to
USD700mninthenextfiveyears.Improvedcontentandincreasingtrafficarekeyinflection
pointsforgrowthinthismarket.

IndianmarkethasverticalspecificclassifiedportalsindifferentsegmentslikeNaukri.comfor
jobs,Justdial.comforlocalsearch,Bharatmatrimony.comformatrimony,Carwale.comfor
car search, Quikr.com C2C classified, etc. This is unlike international markets where
Craiglist.comorOlx.comintheUSand58.comandGanji.cominChinathatcatertomultiple
segmentswhichwebelievemaybelessofattractiontoIndians.

Indiatoseeverticalspecific
leadersindifferentclassified
segments

Onlineproductbrandingby
consumercompaniestobethe
keytippingpoint

Theme3:Internetadvertisingspendtosurge3xtoUSD800mn
WeexpectonlineadvertisingtosurgetoUSD800mnby2016,expandingitsshareoftotal
ad pie to ~8.5% from current 3.6% level. While Google will dominate the search market,
displayadsmarketpresentsahigheropportunityforlocalplayers.GlobalInternetadvertising
isahugemarketwitharevenuesizeofoverUSD63bn(2010)naturallysoduetothelarge
userbaseoftwobillionplus.Further,onlineadvertisement,perceivedasthebestmediafor
direct marketing, essentially falls into three categories viz. search, display and classifieds.
Globally, search is the biggest category followed by display and classified ads. With the
overallIndianonlineadmarketatUSD255mn(includingsearch),forming ameager3.6%of
thetotaladbudget(comparedto12%forChinaand17%inUS),thismarketisslatedfora
healthygrowth.

Keydriversare:a)increasingreachofonlineplatform,b)growingproportionoftotalad
budget and c) healthy spend by ecommerce companies to drive higher traffic. However,
thekeyinflectionpointforthismarket,inourview,wouldbewhenconsumercompanies
startusingthismediumforbrandingpurposes.Between2007and2011,onlineadmarket
has grown at a CAGR of 44%, reaching USD255mn. However, of this potential market
(USD800mn),45%50%willbesearchadvertisingwhereGoogle isthedominantplayerand
will control 90% (of 45%50%) share. Thus, in the search advertisement, none of Indian
companieshasanypotentialhenceweseedisplayadvertisementspresentingapotentialfor
horizontalportalstocapture.Currently,onlyfewIndiancompanieshavegainedanysizeable
share of display ad revenue including Rediff.com (USD20mn22mn revenues) and Web18
(part of Network18 group) with USD15mn revenues. Yahoo India clocked USD30mn in
revenuesinthedisplayadmarket.Indiatimesalsohasalargeonlinepresence.

Internetadvertisingpieto
increaseto8.5%oftotaladspend

Risingonlineadspendtobenefit
horizontalandverticalportals

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IndiaInternet
Chart3:ComparisonofInternetpenetrationrate
andshareofadvertising

Chart4:Potentialmarketforonlineadvertising
900

800

10.0

720

8.0

60

540

6.0

40
20

(%)

80

(USDmn)

Internetpenetration(%)

100

360

4.0

255

180

2.0

0
0

5
10
15
Onlineadspend/totaladspent(%)

20

0.0
2011
Onlinead

Source:PWCIndiaEntertainmentandMediaOutlook2011

2016
%oftotaladspend
Source:Edelweissresearch

Currently only 14mn mobile users (of the 487mn active mobile subscribers) surf Internet
through their phones (based on a study by Juxt Consultants for 2011). However, since the
device accessibility is available throughout, this segment can offer an advertiser with an
attractivemediumandreach,oncethesmartphoneusersgainscale.Webelievethattherise
in mobile Internet has been spearheaded by social networking followed by content side
searchi.e.restaurants,ticketsearch,etc.Overall,thismarketislikelytobescatteredacross
segments,makingitdifficultforanyscaleplayertoemerge.Likethetravelsegment,itmay
see 23 players in each of these segments, ranging well below USD100mn in revenues by
2016.

Highmobilepenetrationpresents
anattractivemediumaswellas
reachforadvertisers

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IndiaInternet
Fig1:MacroenvironmentscanusingPESTframeworkforInternetindustry

Political

Economic

Proconsumertelecompolicy

Risingpercapitaincometodrive
higherconsumption

Rollingoutofnationwideopticfibre
network

Evolvedfundingnetworkangel
investor,venturecapitalist,private
equityandfinalIPO

Betterdealsonline

Likelyspectrumauctionfor
broadbandat700MHz

Impetusonincreasingbroadband
penetrationto175mnby2017

Social

Technology

Changinginternetusagesocial,
entertainment,onlinepayments,e
Commerce

Wirelessandfixedbroadband
penetrationincreases,tariffdeclines
andspeedimproves

Favourabledemography60%of
populationbetween1560age
group

Mobileinternetpromotes
innovationinonlineshopping
modes

Evolvedpaymentsystemsandbetter
userexperience

Source:Edelweissresearch

10

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IndiaInternet

EvaluatingInternetbusinessmodel:Fewthoughts

We believe, while evaluating an Indian Internet business, relevant metrics under


considerationwillchangedependingonthebusinessphasei.e.,earlystage,growthstageand
mature stage. Since in the initial years, Internet businesses burn cash, traditional financial
metrics like operating margins and return ratios may not be parameters to evaluate the
business.Weattempttohighlightthemetrics/evaluationcriteriathatinvestorswillconsider
atvariousstagesofabusinesslifecycle

Early stage: The management calibre, business ideas and its success in the global market,
monthlyuniquevisitorsandtrafficshare;keyfocusshouldremainonthewayinwhichthe
companycreatesvalue.

Growthphase:Forecommerce:Unitssold,averageordersize,numberofdailytransactions,
netrevenuemarginandcustomerreviewsareimportant.Foradvertisingledmodels:Total
pagesviews,timespent,revenueperthousandpagesviewed(CPM)andtrafficshare.

Mature phase: Market share and competitive scenario, further growth potential, optimal
operatingmarginandreturnratio.

Keyoperatingmetricsmigrate
withthebusinessphase

Fig.2:Evaluationmetricschangedependingonthebusinessphase
EarlyPhase

Growthphase

Maturephase

Traffic share
Businessconcept

Traffic share
Timespentontheportal

Marketshare
Competitivescenario

Opportunitysize
Mangementcalibre

eCom dailytransactions,
avgsize oftransaction

Profitmultiple
Cashflows

ManyCompetitors

Revenuemultiplefor
valuation
Competitiveshakeout
andemergingleaders

FewCompetitors

Source:Edelweissresearch

11

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IndiaInternet

CurrentstateofIndianInternetmarket

Largemarket,butlowpenetration
Currently, India is the third largest Internet market, based on the total number of users. In
absoluteterms,ithas100mnusersnexttoChinas420mnandUSAs240mn.However,the
Internetpenetrationratestandsatjust8.5%.Thiscomparestoapenetrationrateof74%in
the US and 31.2% in China. While the main access mode then remained cyber cafes, the
growthinuserbaseofhighspeedbroadbandaccesshascontinuedtoremainslowwithjust
12.4mn subscribers i.e. 11% of the total Internet user base. In 2010, Indias Internet users
grew by 23% YoY to 100mn users (Source: www.Internetworldstats.com). Further, over the
pastfiveyears,thenumberofInternetusersgrewataCAGRofonly15%.Thisisamongthe
lowestcomparedtorestoftheBRICcountries.DespitetherobustgrowthinIndiasGDP,until
now issues such as low PC penetration, poor connectivity and expensive devices (3G
handsets) have led to slower growth. This landscape, however, is about to change as
explainedinthenextsectionStructuraldriversinplace.

Internetuserssettocross120mn
in2011

80.0

(%)
40.0

200
119

8.0%

75.0

6.0%

50.0

4.0%

25.0

2.0%

0.0

0.0%

%penetration

Source:Internetworldstats

Users

2010

2009

2008

2007

2006

2005

2004

2003

0.0
2002

Russia

Brazil

Japan

India

Users

20.0

60

2001

76

US

100.0

2000

100 99

China

10.0%

60.0

240

100

125.0

(mn)

300

African
continent

(mn)

400

Chart6:InternetusersinIndiaandpenetrationrate

(%)

Chart5:Internetusersandpenetrationrateacross
majorcountries(June2011)
100.0
500
420

Penetration
Source:WorldBank,Edelweissresearch

Searching,buyingnontravelproductsSecondpopularactivityonline
We see the Indian online users activity shift towards searching and buying nontravel
productsasleadindicatorsuggestingpreparednessofonlineuserforetailactivities.While
the top activity remains emailing (similar to US), the change in usage patter suggests key
trends taking shape. In Japan reading news is top activity while in China, it is instant
messaging(Source:BCG).Socialnetworkingandonlinevideosarerapidlygainingpopularity
andmaygofurtherupincomingyears.

Onlineactivitiesleadindicatorof
businessopportunities

12

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IndiaInternet
Chart7:ToponlineactivitiesbyanIndianuser
Emailing

95.0

Searchorbuynontravelproducts

76.0

Webinfosearch(text,image)

74.0

Downloadmusic

69.0

Jobsearch

62.0

SocialNetworking

61.0

Searchorbuytravelproducts

59.0

Instantmessaging/chatting

57.0

PCtomobileSMS

54.0

Paybillsonline

51.0
0.0

20.0

40.0

(%)

60.0

80.0

100.0

Source:JuxtIndiaOnlineLandscape2011

DrawingparallelbetweenInternet,telecompenetration
WedrawaparallelbetweenspreadofInternetandmobilephonepenetrationinIndia.We
observethattwomajortriggersledtoasignificantincreaseinthemobilephonepenetration
viz.lowertelecomtariffandmoreimportantlyproliferationoflowcosthandsets.Similarly,
we believe lower broadband and 3G access cost as well as the availability of low cost
smartphone/3Genabledhandsetsistheinflectionpoint.

Decreasing3G,broadbandand
handsetcostkeyinflectionpoint

Chart8:IndiaInternetandtelecompenetration
75.0
60.0

Fallinghandset pricesandtariff
cutsledtoexponentialgrowth
intelecompenetration

(%)

45.0
30.0
15.0

Telecompenetration

Internetpenetration

FY11

FY10

FY09

FY08

FY07

FY06

FY05

FY04

FY03

FY02

FY01

FY00

0.0

Source:TRAI,Internetworldstats

Broadbandofftakeslow,butpotentialremainshigh
IndiainitiallyembracedtheInternetwithahighdegreeofenthusiasmamongdialupusers
withastronggrowthintheuserbasebetween2001and2005.ByendofJune2011,there
wereonly12.4mnbroadbandsubscribers(YoYgrowthofjust34%)asperTelecomRegulatory
AuthorityofIndia(TRAI)i.e.11%ofthetotalInternetuserbase.Theoverallsubscriberbase
hasgrownat52%CAGRoverCY0510(onalowerbase)thoughthegrowthinthepasttwo

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IndiaInternet
yearshasparticularlybeenlow.WiththerollingoutoffiberopticnetworkandBWAauction,
thegrowthofthissegmentisexpectedtopickupsignificantly.

Chart9:AbsolutenumberofbroadbandconnectionsinIndia
15
12.4
11.2
12
7.7
5.3

6
3

1.3

2.3

150.0
120.0

(mn)

(mn)

Chart10:Broadbandusersacrosscountries

90.0
60.0

3.1
30.0

0.1 0.1 0.1 0.2

India

USA

China

Brazil

2010

2009

2008

2007

2006

2005

2004

2003

2001

2002

0.0

June'2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Russia

Source:WorldBank,TRAI

Higherpercentageofyoungerpopulation
OneofthepertinentfactorsaboutIndiasInternetuserbaseisthatmorethan3/4thofthe
online population is in the 1534 age group. This is among the highest across most of the
markets (see chart below) hence lends itself to significant long term opportunity. Further,
Indias high proportion of young and middle age population is likely to remain a significant
proportiongoinginto2015aswell.

Chart11:Indiasyoungandmiddleagedpopulationtoremainindominantproportion
100.0

10

57

57

58

60

62

63

37

36

34

32

30

28

CY90

CY95

CY00

CY05

CY10

2015E

80.0

Favourabledemographics

(%)

60.0
40.0
20.0
0.0

<15 years

15-60 years

>60 years

Source:McKinsey,Edelweissresearch

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Chart12:Agewisebreakupofonlinepopulationacrosscountries
Philippines
Indonesia
Malaysia
India
China
Taiwan
NewZealand
Singapore
HongKong
Australia
SouthKorea
Japan

Threefourthofonlinepopulation
isin1535agebracket

1524yrs

40
40
38
38
33

30
33

20
17

8 2
7 3
26
23
9 4
38
15
6 3
30
23
9
5
24
28
22
16
10
20
21
19
17
23
20
25
27
19
9
20
23
25
21
11
21
21
21
18
19
22
25
26
18
9
18
22
23
17
20
(%)
2534yrs
3544yrs
4554yrs
55+yrs

Source:comScoreMediaMetrixDemographicReport,May2010

MostvisitedsitesinIndia
Google undoubtedly leads the ranking in India as well as in terms of number of unique
visitors per month with over 100mn visits in August 2011 (combined domain visits .com
and .in), followed by Facebook with 44mn and Yahoo with close to 42mn. Rediff.com,
Snapdeal.comandIn.comaretheonlythreeprivateIndianwebsitesamongthetop20.

Table2:Indiatop20visitedsites
Rank
Domainname
1
Google.co.in
2
Google.com
3
Facebook.com
4
Yahoo.com
5
Youtube.com
6
Blogspot.com
7
Rediff.com
8
Ask.com
9
Conduit.com
10
Wikipedia.org
11
Microsoft.com
12
Nic.in
13
Snapdeal.com
14
Orkut.co.in
15
Mywebsearch.com
16
Msn.com
17
Irctc.co.in
18
Orkut.com
19
Mozilla.com
20
In.com

Uniqueusers/Month
58,247,862
49,330,971
43,745,989
41,589,214
27,534,360
18,524,893
14,594,949
13,899,280
13,108,224
12,847,686
12,640,813
11,482,968
10,800,721
10,232,026
10,224,330
8,309,393
8,100,684
7,857,411
7,819,565
7,483,323

Indiareach
75.60
64.10
56.80
54.00
35.80
24.10
19.00
18.10
17.00
16.70
16.40
14.90
14.00
13.30
13.30
10.80
10.50
10.20
10.20
9.70

Monthlyvisits
1,277,757,378
688,412,169
553,222,860
518,340,291
162,362,357
59,145,319
158,658,311
51,547,485
131,449,777
34,931,281
27,692,140
65,098,703
25,055,031
42,894,626
83,793,109
63,062,327
36,592,971
24,546,725
14,180,742
19,026,103

Monthlypageviews
4,629,557,446
4,699,310,115
5,123,090,095
2,590,312,175
924,421,748
147,857,765
1,322,326,074
101,119,385
209,861,128
95,465,397
57,234,491
367,839,331
50,874,302
341,201,124
163,929,457
118,096,777
217,825,988
33,375,037
19,579,002
63,792,159
Source:Vizisense

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StructuraldriversFallingintoplacefortakeoff

Our hypothesis is that India will witness a significant growth in the Internet market. Key
emerginginvestmentthemeswillbearounda)ecommerce,b)verticalspecificclassifieds
and c) online advertisement spends. The structural drivers that will lead to unfolding of
thesethemesare

Fig.3:Keyenablersforriseinonlinebusinesses
Changing
onlineuser
lifecycle
Buoyant
funding
environment

Betterand
cheaper
accessmode

Key
Enablers
Comforton
online
payment

Fallingprice
ofaccess
device
Rising
income
levels

Source:Edelweissresearch

A. ChanginglifecycleofanInternetuser

Higheractivitiesresultinhigher
time spent.

Internettodayhastransitionedfrombeingameretoolofinformation/communicationtoone
of infotainment and further to a medium for unique activities (utility bill payments, e
commerce, social networking), leading to higher usage per user. Availability of broadband
penetration acts as a catalyst for shifting the consumer behavior/ habit as well. Today, the
emphasis is more on building a community, on interaction and sharing i.e. expansion in
online needs. As seen from the chart below (refer chart 14), the average time spent by an
individualuserisincreasing,leadingtomorenumberofactivitiesbeingdoneonline.

.inturnresultinginhigher
onlinecommerce

Fig.4:IncreasingexposureofInternet

Infotainer
z
z
z

Emailing
Instantmessaging
Webinfosearch

z
z

Musicandvideo
download
Onlinegaming

z
z
z

Socialnetworking
eCommerce
Billpayments
PCtomobileSMS

Widebusiness
opportunities

Uniqueactivities

Communication

Source:Edelweissresearch
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IndiaInternet
Chart13:Totalhoursonlinepervisitorpermonth

Chart14:TimespentonlineperdayinIndiaisfarlowerthan
othercountries,mayquadrupleby2015

France
Brazil

25.7

Germany

2,348

2,500

27.5

2,000

Russia

(Hoursmn)

23.4
22.8

Japan

17.8

India

12.5

China

12.3

168
2142

23.1
5

10

15
(Hours)

1,025
1,000
500

Worldavg.
0

1,500

20

25

329
2263

180
3675

330

0
India
2006

30

Source:comScoreMediaMetrix,March2011

Brasil
2009

Russia

China
2015E

Source:ChinaInternetNetworkInformationCentre,TheNeilson
Company,InternationalTelecommunicationUnion,comScore,BCG

B. betterandcheapermodeofaccess
WeseetheconstraintofInternetaccessgettingaddressedwiththelaunchof3Gservices
aswellastheexpectedlaunchofbroadbandwirelessaccessinfirsthalfof2012.Subscriber
growth will be driven by demand for faster Internet access, reducing tariff due to higher
competition and deployment of infrastructure. Further proliferation of new access devices
likelowcostsmartphoneandtabletsischangingtheonlineuserexperienceenduringthemto
spend higher time online that in turn will drive various opportunities. The impetus on
increasing broadband penetration remains high on the government agenda as well and as
announced in National Agenda for Information & Communications Technology and
Electronics(ICTE)ittargetstoachieve175mnbroadbandconnectionsby2017and600mnby
2020.

Thegrowthinthebroadbandsubscriberssofarhasbeenslowwithonly12.4mnusersasof
June2011andabsolutenumberofbroadbandusersalsoremainslowerthanpeers.

Broadbandpenetrationsetto
rise.

.butmobileInternetcould
outpaceothermediums

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Chart15:Broadbandsubscribertrend

Chart 16: Growth in broadband users Comparison across


countries

15

150.0

12.4
11.2

12
7.7

(mn)

(mn)

120.0

5.3

6
3

1.3

2.3

90.0
60.0

3.1
30.0

India

USA

China

Brazil

2010

2009

2008

2007

2006

2005

2004

2003

2002

0.0
2001

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

June'2011

0.1 0.1 0.1 0.2


0

Russia

Source:WorldBank,TRAI

Affordability through not only lower tariffs but also smaller packs:Priceofdatapackages
offered by operators has been falling due to intense competition. In order to increase the
datausage,telecomoperatorsarecontinuingtopushInternetinasachetthatofferstrial
packsforjustINR8for10MBusage(Source:Idea).Thisisinessencetogetavoiceuserstart
using data. Data plans are now offered, based on download usage, time based, rate cutter
andsachetbased.FurtheroperatorshavealsostartedsitespecificpackageslikeINR25per
monthforaccessingtheFacebook.Inthetablebelowwehighlightthedataplansofferedby
IdeaCellular(amongtheaggressivetelecomoperators)toprepaidcustomers.

LowcostdataplansInternetin
asachetavailable

Table3:3GDataplansofferedbyIdeaCellularforaprepaidcustomer
RateCutter

TrialPacks(SachetBased)
MRP
(INR)
8
17
48

Bundled
usage
10MB
25MB
46MB

Additional
benefit
10MB
25MB
46MB

Validity Chargesafter
(days)
freeusage
1
5ps/10KB
3
5ps/10KB
3
5ps/10KB

UsageBased
MRP
(INR)
105
205
450
600
750
850
1250
2500
5000

Bundled
usage
100MB
250MB
600MB
1024MB
2048MB
3072MB
5120MB
12GB
30GB

Additional
benefit
100MB
250MB
600MB
1024MB
2048MB
3072MB
5120MB
NA
NA

Validity Chargesafter
(days)
freeusage
30
5ps/10KB
30
5ps/10KB
30
5ps/10KB
30
2ps/10KB
30
2ps/10KB
30
2ps/10KB
30
2ps/10KB
90
2ps/10KB
125
2ps/10KB

MRP
(INR)
29

TimeBased
MRP
(INR)
44
79
145

Rate

Validity
(days)
30

1p/10KB

Free
minutes
30
60
120

Validity
(days)
1
3
7

Chargesafter
freeusage
INR3/min
INR3/min
INR3/min

Source:Company(asatDec15th,2011)

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C.fallingpriceofaccessdevices(smartphones,tablets)
Drivenbyfallingpricesandhigherutilitysmartphoneshaveseentremendousdemand.India
hasseenascorchinggrowthinmobilepenetrationoverthepastsevenyears,settingastrong
ground for mobile Internet. This trend will drive the shift in access devices. In India, at
present 76% of population use only PC as a medium for Internet access. But by 2015, only
21%ofthepopulationwillusePCasamediumforaccess,41%willuseonlymobileswhilethe
restwillusebothPCandmobilephones.Devicepriceshavesignificantlygonedown:AGPRS
enabledphonecostsaslowasINR2,000and3GphoneaboutINR5,000.

Mobilesettobecomelargest
internetaccessmedium

Fig5:SmartphoneavailableatINR5,000andAakashtabletforINR3,000

Source:www.pclaunches.com,Edelweissresearch

Chart17:Internetaccessmediums(in%)

2010

2015

Only
mobile
10%

PC
21%

Mobile&
PC
14%

Only
mobile
41%

Mobile&
PC
38%

PC
76%

Source:McKinsey

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D. supportedbyconsumptiondriveneconomy,risingincomelevels
Weexpecttheriseinthedisposableincomealongwithfavourabledemographicsenhancing
theprivateconsumption.IndiaspercapitaGDPatUSD1,527(2011)hasrisenataCAGRof
12% between 2008 and 2011 and is expected to cross USD2,300 by 2016 at current prices
(IMF projections). Indian economy, being consumption driven (34% of GDP forming private
goodsconsumption)shiftinthebuyingpatterntowardsonlinewithimpactofotherenabling
factorswilldrivesignificantgrowth.

Chart18:ComparativeGDPpercapita
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004

Risingpercapitaincometodrive
higherconsumption

500

1,000

1,500

2,000

2,500

(USD)

Source:IMF,Edelweissresearch

E. improvingusercomfortinonlinepayments
Cashondeliveryisagame
changer

Indian user is conservative and research driven while transacting online. This has led to a
slow growth in e commerce initially. But with the availability of new payment options in
addition to credit cards (debit card, net banking, cash cards, online wallets etc) volume of
transactionswillseeapickup.Railticketingthroughirctc.com(agovernmentportal)hasled
to a wider acceptance of online payment solutions. However, the real innovation in the
IndianonlinemarkethasbeentheCODmodei.e.CashonDelivery.Thus,withthesemultiple
payment options, buyer is now more comfortable transacting online that will fuel e
commercegrowthmultifold.

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Fig.6:Differentpaymentoptionsavailable

Amex/Diners

Cashcards

Netbanking

Cards

ewallets

Payment
options

Cashon
delivery

Source:Edelweissresearch

Table4:Volumeandvalueofdebit,creditcardtransactionsincreasesignificantly
Volumeofcreditanddebitcardtransactions
FY04
FY05
FY06
FY07
Creditcards 97.4 129.5 156.1 169.5
YoYGrowth(%)
32.9 20.6 8.6
Debitcards
86.4 41.5 45.7 60.2
YoYGrowth(%)
(51.9) 10.0 31.7

Significantriseinnumberofdebit
cardtransitions

FY08
228.2
34.6
88.3
46.7

FY09
259.6
13.8
127.7
44.6

FY10
234.2
(9.8)
170.2
33.3

(mn)
FY11
265.1
13.2
237.1
39.3

Valueofcreditanddebitcardtransactions
(INRbn)
FY05
FY06
FY07
FY08
FY09
FY10
FY11
654
618
755
Creditcards
257
339
414
580
YoYGrowth(%)
31.9 22.1 40.1 12.8 (5.4) 22.1
Debitcards
54
59
82
125
185
264
357
YoYGrowth(%)
10.0 38.6 53.2 48.1 42.4 35.2
Source:ReserveBankofIndia

F. buoyantfundingenvironmentaidscompanyexpansions
One of the key enablers for growth of the Internet market in India will be the capital
availability. We note that yeartodate Indian Internet companies have received over USD
430mn funding to support their expansion plans. This growth capital will enable the
companiesinvestinbuildingtheinfrastructureandalsospendonmarketingthatwillcreate
widespread awareness as businesses achieve scale. Attractive valuations given by Venture
Capital and Private Equity firms have led to significant deal closures. With more marketing
power and funded status, higher number of Internet players collectively will help educate
andenablethemarketgrowth.

Lackoffundscouldderailmany
onlinebusinesses
toresultincompetitiveshake
out

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Table5:LargenumberofprivatemarketdealsintheInternetspace
Date
Nov11

Nov11

Investee

Investor

FashionAndYou

NorwestVenturePartners,IntelCapital.
SequoiaCapitalIndiaandNokia
GrowthPartners
MayfieldFund,NorwestVenture
Partners,NokiaGrowthPartnersand
IntelCapital
Concor
Softbank
SAIFPartnersandMakeMyTrip
SAIFPartnersandDeepKalra
Bessemer,NVPandIndoUSVenture
Partners
TigerGlobal
TigerGlobal
SequoiaCapitalandSAPVentures
NokiaGrowthPartners,NVPandEBay
HelionVenturePartner,Inventus
CapitalPartners&Seedfund
InfoEdge
IndoUSVenturePartners
IntelCapital,InfoEdge
TigerGlobal,IDGVenturesandIndoUS
VenturePartners
IndoUSAndNexusVenturePartners
Helion,AccelandTigerGlobal
IndoUSVenturePartners,IDGand
Qualcomm
SequoiaCapitalIndia

DealsAndYou

Sep11
Sep11
Aug11
Jul11
Jul11

Cleartrip
InMobi
iXiGO
Zovi
Snapdeal

Jun11
Jun11
Jun11
May11
May11

Caratlane
Flipkart
JustDial
Quikr
Redbus.in

May11
Apr11
Apr11
Mar11

99labels.com
Indiaplaza.in
PolicyBazaar
Myntra

Jan11
Jan11
Jan11

Snapdeal
Letsbuy.com
Apalya

Dec10

FashionAndYou

MoneyRaised
(USDmn)

BusinessofWebsite

40

Groupdiscount(Lifestyle)

17

Groupdiscount

40
200
19
6

Onlinetravel
Mobileadnetwork
Onlinetravelaggregator
Apparel

40

Groupdiscount

6
20
10
8

DiamondandJewellerry
Onlineretailer(books)
Classifiedsearch
HorizontalClassified

Onlinebusbookingagents

4
5
9

Groupdiscount(Lifestyle)
Onlineretailer

14

Lifestyleandgifts

12
6

Groupdiscount(Sevices)
B2C(consumereletronics)

MobileVAS

Groupdiscount(Lifestyle)

Source:Companyreports,Mediasources

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ecommerce:etailUSD12bnopportunity!

Buildupofaneconsumptioneconomy:Weexpectthenextlegofgrowthinecommerce
being driven by etailing post the success of online travel market (attributed to Indian
railways).Weestimatethenontravelecommercei.e.etailmarkettogrossUSD12bnby
2016fromthecurrentUSD590mn.Thiswouldstillimplylessthan2%ofoverallretailsales
fromcurrent0.1%.Webelievebusinessesthatfocusonimprovingkeyaspectsofcustomer
gratification through user interface, smooth payment systems will emerge winners. The
growthofthismarketwillbedrivenby:1)Anincreaseinonlinetransactingusersthusfar
online shoppers account for only 30% Internet users (30mn but increasing at the rate of
1.5mn per month) 2) Shift in buying patterns i.e. online consumption driven by mass
marketing by ecommerce players, 3) Online adoption by traditional brickandmortar
retailers and 4) Developing trust for onlineshopping. We see categoriessuch as apparels
andlifestyleproducts,books,consumerelectronicsandcomputerhardware,softwareand
peripheralstobemajorrevenuegrossers.Whilethereisenoughoptimismonthegrowthof
ecommerceinIndia,wenotethatchallengesdoexistintermsoflogisticsandfulfillment
issues.

Glimpse of India etailers: Flipkart.com Supposedly Indias Amazon.com, it started with


books and now trades in multiple product categories (revenues up 20x in two years),
Snapdeal.comDailydealsiteofferinggroupdiscountcouponsexpandedintoproductsnow,
Letsbuy.comPopularforbrandedelectronicsandamongthemostpopularnamesinmulti
category etailers. Another category in ecommerce is private sales where players like
Fashionandyou.com,99labels.comareexpanding.

Chineseexperience:OnlinecommerceinChinahasseenaphenomenalgrowthofover85%
through 200510 and stands at USD55bn in 2010. We note that the growth in the Chinese
market was initialized by C2C sites and then through the B2C model, allowing third party
merchants to sell their products (e.x. Taobao establishing TMall). Heavy advertisement
educatedthemarketalongwithinnovativepaymentmethodssuchascashondeliveryand
prepaid cards (available at post offices, cyber caf) and addressed trust issues that led to
suchahighgrowthinChina.

Marketsizetogrow20xinthe
nextfiveyears

Fewplayersmakinglargestrides

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Fig.7:ecommercecommercebusinessclassification
ECommerce

B2B,B2C,C2C

EMarketplaces

Services

Products

Shopping
cartsites

Private
shopping
clubsites

Ticketing
sites

Dailydeals/
groupbuying

eBay,Flipkart,
Amazon,
Homeshop18

Fashion&You,
99lables,
Bagittoday

Irctc,MakeMyTrip,
Yatra,Bookmyshow,
Ticketplease

Snapdeal,
DealsandYou,
Mydala,

Indiamart,
TradeIndia,
Alibabba.com

Source:Edelweissresearch

Indiaecommercemarket
Introduction: Indianconsumerisahighlyresearchdrivenshopper.IndiasB2Cecommerce
saw a real pickup through the governments railway ticket booking portal (irctc.co.in) and
thegrowthinlowcostaircarriers.ThisbroughtarevolutionintheIndiantravelindustryand
createdawarenessthatgaveonlinecommerceamomentum.Followedbythetravelsegment,
ecommercecaughtthefancyofuserswithmultipleplayerseducatingthemarket,promising
greatdiscounts,userexperience,andadventofanewservicecategory.Wehaveabustlinge
commerce market where products are getting more accessible and cheaper and service
commerceisseeingawholenewrevolutionwithofflinecategoriesbeingrebornonline(e.g.
apparelsandlifestyleproducts,electronicsandmobilephones,andhealthservices).

Marketheavilydominatedbytravelindustry

Travelbroughtarevolutionin
Indiaecommercemarket

Currently,IndiasB2CmarketsizestandsatUSD10bnplus(totalvolumeoftransactions)and
is heavily dominated by the online travel industry (75%). Within the nontravel segment e
tailingisthelargestsegmentwithaboutUSD600mngrossrevenue.Thoughthenontravelling
marketisrising,itsgrowthisnotasfastastravellingindustrysgrowth.However,astherehas
been a surge in multi product ecommerce portals that provide goods and services in a
varietyofcategories,growthinthissegmentissettoaccelerate.

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IndiaInternet
Chart19:IndiasB2Cecommercemarket

379

400
320

(INRbn)

253
240
150

160
105
63

80
19

35

47

2008

2009

86

63

0
2007

2010

Nontravel

2011

Travel

Source:IAMAI

Totalecommerce

Jun11

May11

Apr11

50

Mar11

10

Feb11

55

Jan11

16

Dec10

60

Nov10

22

Oct10

65

Sep10

28

Aug10

70

Jul10

(mn)

Paceofecommerceusergrowth
hasaccelerated

34

(mn)

Chart20:Increasingactive,ecommerceuniqueusersinIndiaoverthelastoneyear
75
40

Activeonlineusers

Source:Vizisense

KeycatalystsOfflinepaintodriveonlinegain
Today,theIndianonlineuserisspendingmuchhighertimeonlineandisinvolvedindifferent
activitiescomparedtoayearbackindicatingthechangingusagepatternandonlineactivity.
Assecurepaymentinterfacesareprovidedbymostwebsitescoupledwiththeeaseofonline
purchase, the number of online transactions has picked up significantly. A combination of
customerpullandbusinesspushfactorsisclearlydrivingtheincreaseinthenumberofthe
transactingusersonline.Inadditiontothis,thekeytippingpointinIndianecommercehas
beentheCashOnDeliverymodeofpayment(alsoofferedintheChinesemarket).

KeyinflectionpointinIndiane
commercehasbeenthe
introductionofCashonDelivery
paymentmode

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IndiaInternet
Fig8:Keycatalystforecommercegrowth
Customerpull
factors
Convenienceofpurchaseonlineand
deliveryathome

Availabilityofcashondeliverypayment
mechanismamongmanyonlineportals

Timesavingticketbooking,online
seclections

Reducedtransactioncosts.Maturing
deliverycycle(payments,fraud
detectionandfulfillment).

Easeofusecomfortoforderingfrom
eitherhome/officeormobile

Lowentrybarrierofsettinganonline
storeanddefensivereactionto
competitorsofbeingavailableonline

Timingeaseoforderingatanytime
comparedtophysicalstores

Insistenceoflargebusinessesabout
theirclients/vendorslinktoe
commerce

BetterdealEasycomparisonamong
onlinestoresgivesbestprice
Businesspush
factors

Source:Edelweissresearch

Keychallenges
While there are enough catalysts to expand the online commerce, we highlight some
behavioralpatternandconcernsthatactasspeedbumps.

Challengestogetaddressedas
marketgrows

Fulfillmentissues:Duetolackofidentityofthecounterparty,issuessuchasdelayora
nondelivery of goods is always a key concern. It might take very less time to search,
bookandpayforproductsandservicesonline,butthedeliveryoftheproductmaytake
anunreasonableamountoftime.

Logisticsbottleneck:Atpresent,thereachofthelogisticscompaniesislimitedto2,000
10,000pincodesofmorethan150,000pincodesinIndia.Thustheareasnotservedby
logistics companies will not be able to participate in online commerce or else, e
commercecompanieswillhavetoextendtheirbackendforadditionalcoverage.

Table6:Representativedataofnationallevelcouriers
Nationalcourierserviceproviders
Pincodescovered
DTDC
10,000
FirstFlight
5,800
BlueDartExpress
NA

Employeestrength
13,000
10,000plus
6,900(June09)
Source:Edelweissresearch

Enablinginfrastructure:Thoughthestatusisimproving,atthemoment,themarkethas
low PC penetration among households and limited broadband reach. As each of these
plays an important role in developing the market, these are significant roadblocks to
overcome. Falling price of 3G data plans and expected launch of BWA in 2012 will
addresstheaccesschallenge.

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IndiaInternet

Apprehension of paying online: A majority of Internet users are still uncomfortable


when it comes to paying online. This is further limited by a low penetration of credit
cardsinthecountry.Increasingly,withwiderpaymentoptionsi.e.creditanddebitcard,
netbanking,cashondelivery,prepaidcards,thisisbecomingalesserhindrance.

Lack of touch and feel: Unless a standard known product with specific brand is being
bought,lackofabilitytotryaproductbeforebuyingactsasabarrierforsomeusers.In
addition,oftentheproductortheservicedelivereddiffersfromthestandardsdisplayed
on the website. The customer is not sure of the quality of the product unless it is
deliveredtoherandpostdeliveryoftheproduct,itissometimesalengthyprocessto
getafaultyorunsuitableproductchangedwhichputsoffanonlinebuyer.Probablythis
isoneofthereasonsforbooksandticketingbeingmoresuccessfulthanapparelswhile
shoppingonline.

Chinaecommerce
Chinas ecommerce market at USD83bn (CY11) has seen a scorching growth of 90% CAGR over the past five years (200611).
Growth in number of transacting users and increasing per capita online spending led to this significant growth as key enabling
factorslikepayments,fulfillmentandsafetyfellinplace.Overthisperiod,onlinesalesasapercentoftotalretailsalesincreased
from0.4%to5%in2011.Taobao(Alibabagroup)and360buyaremajorplayerswitha40%marketshareandtherestisscattered
acrossmultipleplayers.Thisindicatesthattherewillbemarketforlargenumberofplayers,butwemayseeemergenceofone/two
leaders.

Chart21:Chinasecommercerevenues
Chart22:Chinaecommercemarketshare

90

54
36

Others
55%

18

360buy
10%

0
2006

Taobao
31%

72

(USDbn)

2007

2008

2009

C2C

2010

2011E

B2C

Dangdang
2%

Amazon
China
(Joyo)
2%
Source:iResearch

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KeysuccessfactorsingrowthofChinasecommercemarket

FreeC2Ctransactionplatform:InC2C,transactioncostsareminimaloralmostnilunlikeintheWest.Mostrevenueisearned
byadvertisement.Taobao(C2Cleader)earned80%ofitsrevenuesfromadvertisingwhileonly20%camefromtransaction
charges. eBay on the other hand earns most of the revenue from transaction charges and that is the primary reason why
TaobaowasabletodriveEbayoutofChinaandkeepaheadofthecompetition.

Chatwithvendor:OneofthepopularfeaturesinChinaistheonlinechatthatausercanhavewithvendorwhichactsasan
enabler,aidinggreaterconversionrate.

High safety standards: Besides having a good consumer grievances system, high safety standards like 7day money back
guarantee(forelectronicsits30daywarranty)arefollowed.Indianecommercecompanieshavealsostartedthispractice.

Logistics network: Almost all top companies have their own logistic network including warehousing, even in Tier 2 and 3
citiesunlikeWesterncounterpartswhouselogisticcompanies.Thishelpsreducecostandtimeofdelivery.

Price comparison portals: A major similarity between Chinese and Indian consumer lies in price sensitivity. Emergence of
portalsthathelponlinepricecomparisonsforshoppershelpinonlinepurchases.

Payment method: AvailabilityofmostpaymentoptionslikeCC,DC,onlinetransfersandCODi.e.cashondeliverycomfort


Internetuserstobecomeecommerceusers.Anotherpopularmethodistheprepaidcashcard(Alipay)anditsavailabilityat
postofficesandretailshops.

Table7:MajorcategoriessoldonlineinChinesemarket
Items
Apparel,accessoriesandfootwear
Books,CDsandDVDs
Cosmetics
Electronics(Cameras,Mp3)
Rechargeablecardsforgamesandcellphones
Homedecorations
Cellphonesandelectronicaccessories
GiftsandToys
Computer,laptopsandhardware
Homeappliances
Jewelleries,watches,accessories,glasses
Foods
Materntyandbabyproducts
Whitegoods(Refrigerator,Washingmachine,Airconditioners)
Others

28

Purchasedby(%)ofonlinebuyers
57.1
46.0
40.6
35.4
32.1
29.2
27.4
24.7
23.0
22.1
20.3
19.7
11.5
2.9
2.0
Source:iResearch

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IndiaInternet

USecommerce(extravel)
Online retail gains while offline retail pains. Led by the key catalyst as discussed above, we note that US online retail sales have
grownatapaceof12.5%overCY0510(muchhigherthanthetotalretailsalesof1%).ItstotalretailsalesconstituteaboutUSD3.9trn
while the online retail sales stand at USD 155bn, implying a 4.3% share. Among major categories, IT, lifestyle products (apparels,
footwearandaccessories),appliancesandhomeimprovement,andconsumerelectronicsformmorethan50%ofonlinesales.

Chart23:USonlineretailsalesindustrystandsatUSD166bn
180
166 4.5
144
138 143

144

Other
7%
Food and
beverage
8%

3.6
2.7

93

(%)

(USDbn)

114
108
74
72

1.8

58
45

Onlineretailsales

CY10

CY09

CY08

CY07

CY06

CY05

0.0

CY04

CY03

0.9

CY02

36

Chart24:Categorywisebreakupofonlineretailsales

%oftotalretailsales

Consumer
electronics
12%

Appliances
and home
improvem
ent
19%

Computer,
hardware,
software
and
peripheral
s
27%

Apparel,
accessorie
s and
footwear
27%

Source:U.S.CensusBureau

Source:Forresterresearch

Table8:Onlineretailsaleshavegrownaheadoftotalretailsales
CAGR(%)
CY0810
CY0510
CY0210
Onlineretail
8.1 12.5 17.8
Totalretail
(0.7) 1.0 2.7
Source:U.S.CensusBureau

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IndiaInternet
Onlinetravel:Showingtheway
SuccessoftheonlinetravelmarketcanbeattributedtoIndianRailwayswhichlaunchedthe
online reservation system, giving users relief from long ticketing queues and offline agents
who added to the cost of ticket. Within a short time, it became a huge success as it
eliminated agents. Further, the launch of low cost air carriers like Air Deccan, Spice and
Sahara during 200405 led to a significant surge in the air travel market coupled with the
presence of online travel agents (OTA) like Yatra, Makemytrip and Cleartrip that led to
transformation of the whole booking process. Online travel segment in India is about
USD8.4bnintermsofgrossvalueofonlinebookingsCY11andshareofonlinetravelagentsis
likelyintherangeof35%.

Indianrailwayslaunchofonline
reservationwasthekeytriggerfor
onlinetravel

Chart25:TotalgrosstravelbookingsinIndia(USDbn)
25

23
20

20

18

(USDbn)

16
15
10
5
0
2009

2010

2011

2012

Source:IAMAI

Ticketing dominates: Ticketing dominates the travelling industry while other segment like
hotelbookingandpackagetourcombinedconstitutelessthan4%.Further,inticketing,low
end products like railway tickets and domestic flights are major contributors even as
internationalflightticketsremainlow.

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IndiaInternet
Chart26:Segmentwisebreakupoftravelindustry
Domesticticket
63%

TourPackage
andtravel
insurance
1%

Ticketbookingdominateswithin
thetravelindustry

Hotelbooking
2%
Busticket
2%
International
ticket
4%
Railwayticket
28%

Source:IAMAI

Chart27:ToptravelsitesinIndiaalongwithreachandaverageminuteusage
IndianRailways
YatraOnline
MakeMyTrip
Cleartrip.com
ExpediaInc
TravelAdNetwork
Indianrailinfo.com
MustseeIndia.com
Travelocity
Erail.in

7.5
6.9
5
4.2
3.6
2.1
2
1.7
1.5
0

IndianRailways
YatraOnline
MakeMyTrip
Cleartrip.com
ExpediaInc
TravelAdNetwork
Indianrailinfo.com
MustseeIndia.com
Travelocity
Erail.in

19.4

12
(%)

18

24

29.7
6.5
13
6.8
4.9
6.7
31.9
4
4.9
13.7
0

14

21

28

35

(minutes)
Source:comScoreMediaMetrix,March2011

Air ticket market key driver: Affordable prices, growing disposable incomes and growing
convenience of booking tickets online has driven the travel and tourism segment. There is
still huge potential in online travelling sector as just 20% of domestic tickets are booked
online(Source:GoogleIndia)andthepercentageisevenlowerforinternationalflights(just
2%). Tours and packages: Further, the hotels and packages segment has not seen healthy
growthandremainsamere3%ofonlinetravelindustry.Keyreasonbehindthisispreference
of consumers to meet in person and understand package details rather than fully deal
digitallyascost,resourcesandtimeinvolvedarehuge.BusinesseslikeMakemytrip.comand
Yatra.comhavesetupofflineofficesfortourpackages.Hotelbookings:Hotelbookingisalso
ontherisewithwebsitesofferingdiscountswhichsometimesgoupto70%;also,noweven
lowendhotelscanbebookedonline.Hotelbookingaddstothevaluechainofonlineticket
agents.Thus,theypromotethemheavilyandofferdiscounts.Busticketandhotelbooking
revenuetorise:Onlinebusticketmarketisatanascentstageandtrendforonlinebustickets
is yet to take off. However, we believe recent popularity of Redbus.in and entry of
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Makemytrip.comintothissegmentwillsurelyhelpthebusticketmarketexpand.Currently,
thisisstillunexploited.

Casestudy:MakeMyTrip
Setupin2000asanonlinetravelbookingdestination,MakemytripprimarilycateredtothenonresidentIndianmarketintheUS.It
launched its Indian website in September 2005. During the initial years of operation, the company invested significant capital in
infrastructure as well as in sales and marketing efforts to build brand and gain recognition. Listed in August 2010 on Nasdaq, the
companysrevenueposted55%CAGR(overFY0911)toUSD61mninFY11andimproveditsoperatingmargin(EBITDAmargin)to
10%inFY11.ThecompanyhasguidedfornetrevenueofUSD8689mnForFY12(YoYgrowthof4146%).Ithadanaverageofover
3.9mnuniquevisitorspermonthinFY11and3.6mntransactionswereexecutedthroughitswebsite.

What made the company so successful While the key tipping point for online travel taking off was low cost carriers, comfort on
paymentsfromlaunchofrailwayticketingbytheIndiangovernmentactedaskeyenablerforgrowthofonlinetravelmarket.MMYTs
earlyinvestmentincreatingabroaddistributionnetwork(9,300+travelagentsacross700+cities)hasstrengtheneditspositioningin
thisspacewithmarketshareof48%.Further,MakeMyTripsholisticapproachi.e.,throughonline,offline(throughtravelshops)and
callcentrespropelledittoleadershippositionintheonlinetravelagents(OTA)segment.Apartfromitsonlinewebsitesithastravel
stores in 20 cities in India and call centers which provide multiple touch points for end users. This, backed by a complete suite of
booking services for air tickets, hotels, packages, rail tickets, bus tickets, car hire and ancillary travel requirements such as travel
insuranceandvisaprocessinghascreatedastrongbrandrecallforthecompany.

Currently,itderives78%ofrevenuefromairticketing(2.8bntransactions,40%CAGRoverFY0811).Itshotelandpackagesegment
(18%ofrevenue)toopostedsignificantgrowthastransactionsinthissegmenthavecrossed176mn(CAGRof68%overFY0811)and
hascoverageof4,700hotelsinIndia.

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etailing:Collectivethrustdrivinggrowth
etailing refers to the selling of retail goods and services electronically over the Internet
and businesstoconsumer (B2C) transactions. etail market at USD590mn (2011) is at
nascentstage;however,withcollectivethrustbymostplayersonmarketingandbranding,
theetailingbandwagonisbeingpushedinamajorwaybyonlinemerchants(supply)and
wellrespondedbyconsumers(demand).Also,intherecentpast,wehaveseenemergence
of multiproduct ecommerce sites that help quick price discovery and improve customer
experienceascompetitionincreasesandplayersstrivetodifferentiate.Whilethecurrent
onlinemarketisjustadropintheocean(0.12%)asproportionoftotalretailsalesinIndia,
inglobalmarketslikeChinaandUSitstandsatover4%.

So far, growth in the etail market has lagged growth in online travel market. We attribute
thistotheconsumercomfortandtrustonpaymentsandlackoftouchandfeelfactor.While
this segments growth is slow to start, the collective development of the whole ecosystem
willdrivehypergrowthasthesectorevolves.Thus,whiletheconsumerisreadytoadapt,the
ecosystemissuesarerealbottlenecksinthesegment.However,thesewebelievearebeing
addressedasmarketgrowthitselfispushingtheecosystempartners.

etailmarketsettogrowfaster
thanonlinetravel

Table9:Aglimpseofinternationalmarkets
2010market
Country
Remarks
size(USDbn)
US
166
8%globalretailmarket
51%ofAmericansbuyonline
ExpectedtogrowtoUSD279bn
by2015
Europe

267

China

55

40%Europeansbuyonline
70%ofonlinebuyersarefrom
UK,GermanyandFrance
Growthof67%in2010over2009
ProjectedtoreachUSD176bn
by2014
Source:Edelweissresearch,Eurostat

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IndiaInternet
Chart28:SizeofetailmarketinIndia
750
587

(USDmn)

600
448

450
320
300

225

231

CY07

CY08

150
0
CY09

CY10*

CY11*
Source:IAMAI

Togrow20xby2016toUSD12bn
Increaseintransactingusersand
percapitaonlinespenttodrive
marketgrowth

We expect the etail market to see a multifold growth over the next five years, reaching
USD12bnby2016fromcurrentUSD590mn(82%CAGRover201116).Thisimpliesthatabout
3.5% of the per capita income would be spent online by every transacting user, from less
than2%currently.However,theoverallmarketwouldstillbelessthan2%oftotalretailsales
inIndia.ThiswouldbelowerthanChinaandtheUSatover4%currently.

Chart29:IndiaetailmarkettobeUSD12bnby2016
15
11.8

(USDbn)

12
82%CAGR

6.7
6

4.3
2.5

3
0.3

0.3

0.4

2008

2009

2010

0.6

1.3

0
2011 2012E 2013E 2014E 2015E 2016E

Source:Edelweissresearch

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IndiaInternet
Chart30:Numberofnontraveltransactingusersaccelerating
20
17

(mn)

14
11
8

Jun11

May11

Apr11

Mar11

Feb11

Jan11

Dec10

Nov10

Oct10

Sep10

Aug10

Jul10

Source:ViziSense

Wearriveatthepotentialmarketsizebasedontheestimatesofgrowthintransactingusers
andtheaveragetransactionvalueperannualsession.Wehaveassumedtheaveragespend
per online user increasing from current USD 3035 to USD 85 in 2016. This compared to
ChinasUSD390(2010)andUSUSD980annualonlinespentpertransactinguser.

Customerretention:Theholygrailofetailing
Customer retention poses a significant challenge to etailers. The primary aim of every e
taileristoattractaprospectivecustomertohisetailsitewhichrequiressignificantresources
intermsofadspending.Naturally,therehasbeenasurgeinonlineadvertisingincountries
suchastheUSandChina.Onlineadspendinghasgrownsolargethatasmuchastwothirds
of the capital raised by online companies goes towards advertising. Ad spending by online
companies has grown so large that all savings achieved in real estate and inventory
managementaremorethanoffsetbyamanifoldincreaseinmarketingandpromotionalad
spending.

Tobeninetimesbetterthan
yournearestcompetitor,you
actuallyhavetobetenpercent
better
JeffBezos
Founder,Amazon.com

Afterlargeadspending,willcustomersremainloyaltoetailingsite?
The question still remains unanswered. Retaining an etail customer is an expensive
proposition.Theunderlyingreasonisthatintheonlineworld,customerloyaltydoesnotexist.
However,webelievedeliveryisbecomingadifferentiatorthatwillleadtoincreasingloyaltyif
restoftheparametersisintact.

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Table10:SomeofthemajorecommerceportalsinIndia
Portals
Ebay.in
Flipkart.com

FutureBazaar.com

Homeshop18.com

Quickdescription
eBayIndia(formerlyBaazee.com)waslaunchedinIndiain2000.Ithasacommunityofover2.5millionregistered
usersacrossover2,471townsinIndia.
Flipkartwentlivein2007withtheobjectiveofmakingbookseasilyavailable.Today,itpresentsproductsacross
variouscategoriesincludingmovies,music,games,mobiles,cameras,computers,healthcareandpersonal
products,homeappliancesandelectronics.
FutureBazaar.comistheecommercearmoftheFutureGroup.FutureBazaarprovidesanintegratedshoppingsite
whereconsumersareabletobuyproductsfromitsflagshipstoresincludingeZone,PantaloonsandBigBazaar
onlineandgethomedeliveryofproducts.FutureBazaardeliversacrossmorethan1,500citiesandtownsinIndia
covering16,000pincodes.FutureBazaarcarriesgenuineproductsandoffersmanufacturer'swarranty(as
opposedtoSeller'swarranty)whichmostothersitesoffer.FutureBazaaroffersproductswherethecomplete
supplychainismanagedbyFutureGroupentitiesunlikeothersitesthataremarketplaces.Bythevirtueofbeinga
partofFutureGroup,FutureBazaarisabletoofferawiderangeofgenuineproductsatverycompetitiveprices,
confidenceofbuyingfromatrustedsourceandtheconvenienceofreturninginphysicalstores.
HomeShop18istheonline&onairretailmarketinganddistributionventureofNetwork18Groupthatwas
launchedasIndiasfirst24hourHomeShoppingTVchannelinApril,2008.HomeShop18hasauserbaseof2.5
million.ItisaventureoftheNetwork18Group,thatoperatesbusinessnewstelevisionchannelslikeCNNIBN,
CNBCTV18andCNBCAwaaz.

Indiaplaza.com

Indiaplaza.in(earlierFabmall.com)pioneeredtheconceptofonlineshoppinginIndia.Since1999,Indiaplaza.in
hasservedmillionsofcustomersonlinewithaselectionofover7mnitemsbackedbylowpricesandreliable
operations.Today,Indiaplaza.inhasonlinestoresforbooks,music,videos,CDROMs,electronics,cameras,
mobilephones,appliances,apparel,flowers,chocolates,cakes,sweets,toys,handicrafts,watches,fooditems
andmanymore.Italsomanagestheloyaltyprogramsforleadingbrandsinthefinancialservices,FMCG,
hospitality,ITandairlineindustriesapartfrompoweringonlineshoppingsitesforleadingmediacompanies.

Letsbuy.com

Letsbuy.comaimstobeoneofthelargestInternetretailersofbrandedcomputertechnologyanddigitallifestyle
productswithmorethan5,000productsfromtopinternationalanddomesticbrands.Itsproductcategories
includerangeofcomputertechnologyproductslikedesktops,notebooks,printers,mobilephones,networking,
digitalcameras,software,storage,LCDTVs,MP3players,gamingandhomeelectronics.

Myntra.com

MyntrawasstartedbyagroupofIIT/IIMgraduatesinearly2007andisheadquarteredinBangalore.Inthelast3
years,Myntrahasbecomethemostpopulardestinationforpersonalizedproductsinthecountry.Buildingonthe
successofpersonalization,MyntraisexpandingintobroaderLifestyle/Fashionretailing.Thecompanyhasa
visionofbeingIndia'slargestonlinelifestyleproductsretaileravisionthatrevolvesaroundgivingthe
consumerthepowerandeasetotransformhowhe/shelooks.

Naaptol.com

LaunchedinJanuary2008,NaaptolhasgrowntobecomeIndia'sleadingcomparisonbasedsocialshopping
portal.TobeginwithNaaptoldoesnotselldirectly.Itinitiates'selling.Itsmotiveistoaidbuyerinselectingbest
productatmostreasonablepricegiventhatwithsuddenupsurgeofbrandsandstores,bothonlineandoffline,all
claimtosellthebestoftheproductsatthemostreasonableprices.

Shopping.indiatimes.com

Infibeam.com

Indiatimesshoppinghasthewidestrangeofconsumerelectronicitemsatlowestpricesrangingfromdigital
cameras,camcorders,handycams,mobilephonesandaccessoriesacrossvariousbrands,apparelsandother
accessorieslikeWatchesSunglasses,Bags,purses,shoesacrossbrands.
Launchedin2007,asanonlinebookstorethecompanyhasgraduallyincreaseditsportfoliotoincludeproducts
likemobiles,computers,apparel,healthequipment,watches,automobiles,etc.InJanuary,2010itlaunchedPi,
anebookreaderwhichsupportsover20Indianlanguages.FurtherinMay2011,itlaunchedBuildabazaar.com
whichempowersretailersandentrepreneurstocreatetheirownbrandedonlinestore.

Source:Edelweissresearch

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IndiaInternet
Chart31:OnlinesalesbreakupcategorywiseinIndia
Collectibles
12%

Electronics&lifestyleproducts
aremajorrevenuegrossersonline

Media
2%

Electronics
50%
Lifestyle
36%

Source:eBayCensus2011

Fig9:Screenshotsofproductecommercewebportals

Source:Company

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IndiaInternet
Casestudy:Amazon.comTheBigDaddyofonlineretailing

Tobeearth'smostcustomercentriccompany;tobuildaplacewherepeoplecancometofind
anddiscoveranythingtheymightwanttobuyonlineAmazon.comMissionStatement

Amazonhasstolenthethunderoutofitscompetitionfromthetimeitwentpublicin1997.Ithassustainedgrowth,muchaheadofits
older and larger peers. Over the past decade (CY20002010), its revenues have grown at a CAGR of ~30% vs 20% CAGR in US e
commerce(extravel)industry.Further,YTDCY11,ithasalreadygrown44%onalargerevenuebaseofUSD34bnin2010,creditable
besidesreinforcingthatitisdoingrightbydrivingtheconsumerfocusaheadofprofits.Thus,wetakeastepbackandbringoutthe
uniqueaspectsofitsbusinessmodelunlockingtheDNAofthecompany.

Chart32:Amazonscontinuestogrowat40%evenonUSD34bnrevenuebase
48

50
25% CAGR

458% CAGR

32% CAGR

40

34

(USDbn)

30

25
19

20

CY96

CY97

CY98

CY99

CY00

CY01

CY02

10

CY03

15

CY95

11

CY11E

CY10

CY09

CY08

CY07

CY06

CY05

CY04

Source:Company,Edelweissresearch

It is instructive to understand factors behind the rise of Amazon.com. We attribute this success and superior growth profile to its
philosophythatwediscussbelow:

a. Relentlessfocusoncustomerservice:AmazonhasrelentlesslyfocusedonservingcustomerswithJeffBezosobsessionofbuilding
an incredible web site with very little human intervention with customers making it fast, simple and intuitive. Everyone is a
publisher in an online world (says Jeff Bezos) hence the company has focused on keeping customers happy as an unhappy
customercouldspreadcomplaintsthroughsocialnetwork,blogs,chatroomsandnewsgroups.ItisinterestingtonotethatAmazon
doesnothaveacustomerservicenumberonitsportal.

b. Get Big Fast the early realization to establish pole position: In Internet businesses, being the first mover is a significant
advantageastheonewhocapturesthemarketsharefirstestablishespolepositionandisdifficulttosurpass.Webelievethatthe
key strategy of Jeff Bozos was prioritizing revenue growth and investing heavily in technology, people and newer market
opportunities,postgettingfundedfromKleinerPerkinsCaufield&Byers(KPCB)in1996.Inadditiontothis,postitsIPO(in1997)
Amazonslasheditspricesofabout300,000booktitlesbyupto40%inordertokeepthesuperstoresfrommakinginroadsonline.

c. Buildingstrongdistributionnetwork:Theservicechainthatbuildscustomerloyaltyincludesnotonlytheonlinediscounts,butalso
themasteryofdistributionchanneltoprovidesafeandquickdeliveryandminimizetheriskofsupplierfallouts(throughacquisition
orotherwise).Amazoninordertocontrolthecustomersatisfactionhasbuiltitsownnetworkofdistributioncentersandhandling
the order fulfillment inhouse while relying on UPS, FedEx, US postal services, etc for last mile deliveries. It currently has 62
distributioncenterswithfurtherexpansionplans.

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IndiaInternet
d.

Continued innovation: In Internet business, innovation is the name of the game. Amazon throughout its lifecycle has added
multiple,technologyledfeaturesthathavehelpedimprovecustomerexperienceonline.Wehighlightafewbelow

1click:Oneofthemostfamousandinfamouslypatentedsoftwareprogramme(grantedin1999)fromAmazonwasdrivenby
thecompanysobsessiontomaketheorderingsystemfrictionless.Thispatentpreventedcompetitorsfromaddingsingleclick
featureunlesstheypaidroyaltytoAmazon.ThiswaslicensedtoAppleaswellin2000toputthecapabilityonitsiTunesstore.

Building goodwill byunmatched usercontributed contentreviews: Byinvitingthereaderstooffertheirownreviews,and


importantlyallowingnegativereviewsontheportal,Amazonbuilttremendousgoodwill.Itwasdrivenbysimplephilosophy
thatitcandomorebusinessbyhelpingpeoplemakepurchasingdecisions.

Matchmaker recommendation capability: This unique feature gives repeated users specific suggestions based on their
previouslydemonstratedinterests.Italsoretrievestheearliervieweditemstheuservisitstheportalnext.

Look inside the book: One of the unique features that helps a user make a buying decision is by reading and searching
contentsofbooksinparts.

e.

Ensuring that Amazon remains the best way to find products: Amazons strategy of allowing competitors to sell through the
websiteandcompetewithproductsthatAmazonsoldwasamongthemostunconventionalmethods.However,wenotethatthis
strategywasaimedatmakingAmazonamarketplacewhereuserscouldfindalmostallproducts.

f.

Competitive pricing: Amazon has been known for its cutthroat pricing policy. This is also driven by its enormous influence on
publishers. It arm twists the publishers for lower pricing and has used tactics such as temporarily removing a publishers books
fromsite,removingthebuyoptionetc.ItsentryinIndia(nextyear)isseenasabigcompetitivethreattoexistinglocaletailers.

Chart33:Amazonpostedpositiveoperatingprofitsonlyintheeighthyearofoperation

2,000

(USDmn)

1,300
600
(100)
(800)

Netprofits

CY10

CY09

CY08

CY07

CY06

CY05

CY04

CY03

CY02

CY01

CY00

CY99

CY98

CY97

CY96

(1,500)

EBITDA

Source:Company,Edelweissresearch

Table11:CostandprofitstructureofAmazonacrossitslistedhistory
Commonsize(as%ofsales)
CY97 CY98 CY99 CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10
Costofgoodssold
80.5
78.1
82.3
76.3
74.4
74.8
76.1
76.9
76.0
77.1
77.4
77.7
77.4
77.7
Grossprofitmargin
19.5
21.9
17.7
23.7
25.6
25.2
23.9
23.1
24.0
22.9
22.6
22.3
22.6
22.3
Fulfillment
0.0
0.0
0.0
15.0
12.0
10.0
9.1
8.5
9.3
8.8
8.8
8.5
8.4
8.5
Marketing
27.4
21.8
25.2
6.5
4.4
3.2
2.3
2.3
2.3
2.5
2.3
2.5
2.8
3.0
Technologyandcontent
9.4
7.6
9.7
9.8
7.7
5.5
3.9
3.6
5.3
6.2
5.5
5.4
5.1
5.1
Generalandadminexpenses
4.7
2.6
4.3
3.9
2.9
2.0
1.7
1.6
2.0
1.8
1.6
1.5
1.3
1.4
Otheroperatingexpenses
0.0
7.9
15.5
19.8
11.8
2.9
1.7
(0.1)
0.0
0.0
0.0
0.0
0.4
0.3
Operatingincome(EBIT)
(22.1) (17.9) (36.9) (31.3) (13.2)
1.6
5.1
7.2
5.1
3.6
4.4
4.4
4.6
4.1
Netincome
(21.0) (20.4) (43.9) (51.1) (18.2) (3.8) 0.7 8.5 4.2 1.8 3.2 3.4 3.7 3.4

Source:Company,Edelweissresearch

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IndiaInternet
Casestudy:FlipkartGoingtheAmazonway
Thecompanywassetupin2007asanonlinebookretailstore.Initially,thecompanysmarketingstrategywaswordofmouthandit
used the social networking route to market itself through Facebook and Twitter. It posted revenue of INR25mn in FY09, which
increasedtoINR250mnFY10andbyendofFY11ithitrevenueofINR750mn.Weunderstandfromourdiscussionwithmanagement
andindustrysourcesthatforFY12itistargetingINR56bnrevenue.Itoffersover11.5mnbooktitles,hasover2mnregisteredusersand
sells30,000itemsperday.ItissaidtobeclockingUSD10mnsalespermonthwithover2mnregisteredusers.

What made the company so successful in short period? It was the easy and smooth payment system. Besides this, the company
focusedonfastdeliveryandofferedalargevarietyofbooksondiscount.In2010,thecompanystartedofferingcashondeliverywhich
becameahugesuccessasmuchas50%ofitssaleswerefromcashondeliveryoperation.Anotherkeysuccessfactorhasalsobeenits
migration from consignment model to warehousing model that ensures better consumer experience (80% of all deliveries today are
fromwarehouse).Itemploysover4,500withmajorityofthem(>2,500,inourview)inbluecollaredjobsi.e.,intowarehousemanagement
and logistics and the balance in customer support and technology. In the same year it expanded into other segments and started
offering DVDs, mobiles, games, electronics and cameras, and a host of other products. It has tied up with 3,000 distributors across
sevencities.However,bookscontinuetodominatetheoverallsaleswith50%share.ContinuousinnovationisthekeyandFlipkarthas
beendrivingthesamerecentlyitaddedewalletasnewpaymentoption.

Nowthecompanyoffersmorethan4mnlistedtitlesanddiscountof1535%oncoverpagewithfreehomedelivery(onorderabove
INR100). More than 50% of the orders are from metro cities. The company also ships 1,000 items every day through government
courierasmanyvillagesdonothavecourierfacilitiesandhenceithasrampedupitslogisticsworkforce.

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Resistanceofbuyingonlinebeingaddressed
Indians do not buy much online due to trust issues regarding fulfillment of transaction,
qualityofgoods&servicesdeliveredandsecurepaymentmethod.Whilemostportalshave
set24hourtollfreehelplines,offeringcashondeliveryoptionandtrialondeliveryarelikely
keygamechangers.Thelattertwooptionsareessentiallytoincreasetheconsumerdriveof
onlinebuyingandtheCODoptionhasalreadyprovedtobesuccessful.Livechatisalsooneof
themodesusedforaddressingresistanceofonlinepurchase.eBayhascomeupwitheBay
guaranteeinIndiawheretheycoverforcounterpartyrisk.Instrumentslikethese,whichare
acombinationofonlineandoffline,willeliminatetrustissuesandwillbecomepopularinthe
comingyears. Further,fromtheonlinestoreperspectiveaswellrejection ratesondelivery
forCODoptionsarelikelytobeakeyconcern.

Innovativewayswillberequired
topursuehighercustomer
conversion

Groupdiscountsitesgainingpopularity

Indianshopperslikebargains

Globally, especially in markets like China and Europe, group discount (where the website
offerstheproductatadiscountsubjecttominimumnumberofbuyersoptingforit)websites
arepopulargenerallyinserviceindustrieslikehotels,restaurants,etc.InIndia,afewgroup
discount websites like Snapdeal.com, Dealsandyou.com, and Mydala.com have gained
popularity.EarlierthisyearGroupOn(USbaselargedailydealsite)acquiredSosasta.comto
markitsentryintoIndianmarket.

Chart34:Top10couponsitesinIndiabynumberuniquevisitors
SnapDeal

5,185

Mydala

1,359

Crazeal

989

Dealsandyou

664

Koovs

Snapdealiswayaheadof
competition

491

Khojguru

239

Coupondunia

117

Sosasta

91

Deals2buy

86

Retailmenot

83
0

1,000

2,000

3,000
('000)

4,000

5,000

6,000

Source:ComScore(Nov2011),Edelweissresearch
*Sosasta,earlierthisyearwasacquiredbyGroupon

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Fig10:Homepagesofleadersingroupbuyingcategory

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IndiaInternet
Casestudy:Groupon(USbaseddailydealportal)
Grouponisadealofthedaywebsitethatfeaturesdiscountedgiftcouponsusableatlocal
or national companies. Launched in November 2008, it was an instant hitas it targeted
youngaudienceandofferedhighdiscounts.

Businessmodel:Thecompanyoffersone"Groupon"("group+coupon")perdayineachof
themarketsitserves.TheGrouponworksasanassurancecontract:ifacertainnumberof
people sign up for the offer, the deal becomes available to all. If the predetermined
minimum is not met, no one gets the deal that day. This reduces risk for retailers, who
can treat the coupons as quantity discounts as well as sales promotion tools. Groupon
monetizesbyretaininghalfthemoneythecustomerpaysforthecoupon.

Groupons2009revenuestoodatUSD15mn,risingtoUSD312mnin2010.Itisexpectedto
book over USD1bn in 2011 and valued at USD15bn on bourses. It will be the fastest
companytoreachUSD1bnrevenue.

Privatesales:Agrowingsubsector
Private sale sites are membersonly sites that invite members to shortterm sales. Many of
these sites are concentrated in the apparel vertical, though they include home furnishing,
electronics, and other products as well. These sites follow a fairly straightforward business
model featuring items from designers and boutique brands. It includes overstocked, excess
inventory or even discontinued design products at a discount. The sites then sell the
merchandisetocustomersatasharpdiscounttoretailprices.Itemsareoftenlaunchedon
thesitesataspecifictimeeachdayandfrequentlyselloutquickly,creatingarushsimilartoa
sample sale (with perhaps less physical violence). Additionally, some sites give shoppers a
limitedamountoftimetocompleteapurchaseafterplacinganitemintheircart.Webelieve
theseshoppingclubsarelikelytocontinuetoattracthighenddesigners,astheperceived
exclusivityofthesitesmaintainstheirluxurybrandimage.Conversely,discountretailers(e.g.,
LetsbuyandFlipkart)donothaveexclusivityandthusluxuryconnotation,andthusareless
abletoattractluxurybranddesigners.

Exclusivitygivesprivatesale
websitesluxurybrandimage

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Table12:Popularsitesintheprivatesalescategory
Name
Fashionandyou.com

Location
Gurgaon,
Haryana

Verticals
Apparel,Lifestyle
andHomeware

Othercomments
Siteadvertisesupto
80%discountto
retailprices
Offersupto90%off
labelpricesand
eventbasedsales
thatlast3to5days

99labels.com

NewDelhi

Apparels,Fashion
accessoriesand
Gifts

Baggittoday.com

Noida,UP

Apparels,Mobiles,
Accessoriesand
Footwear

Saleofproductsis
openforabrief
timespan

Source:Edelweissresearch

Fig11:Privatesalescompanyhomepages

Source:Companywebsite

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IndiaInternet

OnlinePayment
The payment system in India has seen unprecedented growth since the inception of
electronic payment mechanism. India is dominated by paperbased transactions; however,
electronictransactionsarequicklycatchingup.ThoughtheIndianpaymentsystemhascome
alongwayintermsofinnovativesystems,channels,andinstruments,itisnascentwhenit
comestocustomersadoptingelectronicmechanisms.ElectronicpaymentsinIndiahavebeen
growing at over 60% in the past three years. India has been one of the fastest growing
countries for payment cards in the AsiaPacific region. It has about 3540% of working
population with increasing disposable income YoY. Consumerism is set to add further
impetustogrowthinthecardbase.Indiacurrentlyhasabout260mndebitandcreditcardsin
circulationandtransactionsworthUSD24bninFY11.

Chart35:Proportionofpaperandelectronictransactions
throughoutrecentyears
100.0

Chart36:No.ofdebitandcreditcardsincirculation
300
243

80.0

240
196

(%)

(mn)

60.0

180

40.0

120

20.0

60
19

0.0
200708
Paper

200809

200910
201011
Electronic

18

0
July2010
Creditcards

July2011
Debitcards
Source:RBI,Edelweissresearch

Table13:Debitcardvolumeseesrapidincreasethoughvalueremainslower
Volumeofcreditanddebitcardtransactions
FY04
FY05
FY06
FY07
Creditcards 97.4 129.5 156.1 169.5
YoYGrowth(%)
32.9 20.6 8.6
Debitcards
86.4 41.5 45.7 60.2
YoYGrowth(%)
(51.9) 10.0 31.7

FY08
228.2
34.6
88.3
46.7

FY09
259.6
13.8
127.7
44.6

FY10
234.2
(9.8)
170.2
33.3

(mn)
FY11
265.1
13.2
237.1
39.3

Valueofcreditanddebitcardtransactions
(INRbn)
FY05
FY06
FY07
FY08
FY09
FY10
FY11
654
618
755
Creditcards
257
339
414
580
YoYGrowth(%)
31.9 22.1 40.1 12.8 (5.4) 22.1
Debitcards
54
59
82
125
185
264
357
YoYGrowth(%)
10.0 38.6 53.2 48.1 42.4 35.2
Source:RBI

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IndiaInternet
UsageofalternativepaymentmodestoincreasePrepaidcashcards,COD,wallets:Prepaid
cash card, cash on delivery and mobile wallets are fast emerging as alternative payment
modes to credit/debit cards due to higher perceived safety and it being offered by most
popularwebsites.Userswhoareneworscepticalaboutawebsitewillpreferthesepayment
modes incrementally. Further, RBIs move on one time secure password is also leading to
usersoptingforotherthancreditcardmodeofpayment.

Multiplepaymentoptionshave
emerged

Fig13:Differentpaymentmodesavailableforbuyers

Cards

Netbanking

Amex/Diners

Cashcards

Cashon
Delivery

Mwallets

Source:Edelweissresearch

Intermsofthemodeofelectronicpayment,debitcardsandnetbankingdominatetheonline
paymentmediumfollowedbycreditcardsandcashondelivery.

Chart37:Mostusedpaymentmethods
80.0
64.0

61
50

(%)

48.0
32.0

24

16.0

10
4

0.0
Debitcard& Creditcard
online
banking

Cashon Prepaidacsh Demand


delivery
cards
draft

Mobile
payment

Source:IAMAI

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IndiaInternet
Onlinebanking
Netbankingtoovertakecreditcards:Popularityofcreditcardsisdecreasingrapidlyandnetbankingisexpectedtoovertakecreditcard
transactions.Theuptickinnetbankingvisviscreditcardsisdrivenbyfactorsagainstcreditcardsuchashighoverheadcosts,interest
rates,andhiddencosts.Moreover,withtheinclusionofnetbankinginmostecommercesiteshasalsoledtohighervolumesthrough
netbanking.

InIndiaonlinebankingisgrowingatarapidpacebothatthewholesaleandretaillevels.ThemarketisregulatedbyRBIandthereare
twokindsofsystemsfollowedRTGS(realtimegrosssettlement)andRetailElectronicClearing.RealTimeGrossSettlement(RTGS)isfor
wholesale,primarilyitisforlargetransactionsminimumINR0.2mnplusandsettlementisrealtimeinRTGSbusinesshours.Whilefor
NationalElectronicsFundsTransfer(NEFT)itsinhourlybatches.

1,000

28

112

800

21

84

600

14

56

400

28

200

(mn)

(mn)

35

Chart39:NEFTtransactionsrise
140

0
FY06

FY07

Interbank

FY08

FY09

Customer

FY10

('000Cr)

Chart38:Customertransactionsoutpacesinterbank

FY06 FY07 FY08 FY09 FY10 FY11

Total

Value(RHS)

Volume

(Source:RBI)

BothNEFTandRTGSaregrowingrobustlyinvolumeandvalue.RTGSisprimarilycustomerdriven.Keygrowthdriversareawareness
amongconsumers.Also,itisnowcompulsorytohaveanonlineaccounttoapplyforIPOortradewhichhasaddedtoitspopularity.But
major barrier remains security. 15.3 million users were banking online and also users were equally divided among metros and non
metros(Source:Vizisense).Thesectorisexpectedtogrowasbroadbandpenetrationandtrustdevelop.Growthinonlinebankingwill
helpecommerceactivitiesandbanksreducetheiroperationalexpenses.

Mobile banking: Another interesting segment which is growing rapidly is mobile banking; currently, maximum limit per day for m
bankingisINR50,000perconsumer.InFebruary2011,0.7mntransactionsamountingtoINR610mnawaresettledviamobile.SBIisthe
leaderwith74.8%oftransactions(Source:MediaNama).

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Paymentgatewaysandplatforms:Importantlinksintheecosystem
The payment ecosystem comprises payment gateway, payment platform (authorizer) and
paymentsettlerandcardissuerincaseofcredit/debitcardbasedpayment.Asinanoffline
world, the payment gateway is equivalent of a pointofsale terminal that accepts the
paymenttype(e.g.,credit,debitcard)andtranslatesitintoaformatthatcanbeacceptedby
themerchantacquirer.Intheonlineworld,thegatewaygenerallyconnectsanecommerce
site with the merchant acquirer. The gateway encrypts the information so the transaction
remains secure. Payment gateway charges one time setting cost, some charge annual
maintenance cost and transaction based charges of 37% of the total amount. Some top
paymentgatewaysofIndiaareCCAvenue,EBS(AxisBank),Direcpay,ICICI,HDFC,etc.Online
documentationandsupportofawiderangeofdebitandcreditcardsarekeyconsideration
factorsinselectingapaymentgateway.

Table14:ComparisonofonlinepaymentgatewaysinIndia

CCAvenue

One Transaction
Annual
Time costs(Credit Transaction
Cost(Net
Maintenance
Setup
/Debit
banking)
Cost(AMC)
Fee
Cards)
(
)
7,500 7.0 4.0 1,200

Directpay.com

10,000 6.0 6.0 2,400

Visa,MasterCard,
Amex,Diners,JCB
Visa,MasterCard

EBS(AxisBank)

6,000 6.0 6.0 2,400

Visa,MasterCard,Diners

S.No. CompanyName

CreditCardssupported

BanksSupported

HDFC,ICICI,UTI,IDBI,CBoP,
Citibank,BoB,BoIetc
HDFC,ICICI,Kotak,YesBank,UTI,
IDBI,CBoP,Citibanketc
Axis,HDFC,Citibank,ICICI,J
&K,FederalBank

ICICIMerchant

30,000

3.04.0

Nil

Visa,MasterCard

HDFCBank

50,000

3.56.0 12,000

Visa,MasterCard

IndiaPay

6,000 5.0 3,600

TrillionPay

30,000 5.0 4,500

PaymentsGlobal

9,990 7.0 2,700

PaySignet

3,000** 5.0 5.0 1,500

10

Atom

20,000 3.0 3.0 5,000

11

CellPAY

15,000 4.5 4.5 2,500

12

iPayIN

13

PayyIndia

Visa,MasterCard,American
Ex,Diners,JCB,Discover

Visa,MasterCard,AMEX,Diner
s,HCBetc
Visa,MasterCard,Cashcards

SBI,HDFC,ICICI(total20banks)

15002500

Visa,MasterCard

Majorbanks

6,000 5.0 5.0 2,400

Visa,MasterCard

9Majorbanks

Nil 4.0 4.0

Majorbanks

Source:www.creditcardpaymentgateways.in,Edelweissresearch

Indian epayment processing market consists of a few large players like TechProcess and
BillDesk. While BillDesk is a pure play electronic transaction processing company,
TechProcess processes both paper and electronic payments. Other players in this market
include CC Avenues, Venture Infoteck and ABCP. These players are essentially focused on
cardbasedpaymentsandotherrelatedactivities.Withgrowingecommerceactivitiesthese
firmsareboundtoreapbenefits.PayPal(largeinternationalplayer)howevercurrentlydoes
not offer its services in INR and it is expensive to use. It is mostly used by websites which
have foreign customers; also, it has to follow RBI regulations e.g., payment of USD500 and
aboveistaxable.WithIndianecommerceontherise,thesegatewaysareboundtobenefit
andwithincreasingvolumeratesarelikelytodip.

Paymentplatformstendto
generatestickyrevenuestreams

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IndiaInternet
Increasing online payment usage driven by offline consumption and
onlinepayment
Understandingtheobjectivesdrivingonlinepaymentsiscritical.Wenotethattherearetwo
broad categories: (a) for services/products procured offline and payment made online (i.e.,
utility bill payments); and (b) for services/products procured online and paid for online (e
commercetransaction).Utilitycompanieslikeinsurance,electricity,telecompromoteonline
payments as it is cost effective as well as easy to process. Almost all telecom and power
companiesnowhavetheoptionofpayingbillsonline.Insurancecompaniesalsosavecostsif
clientspaypremiumsonlineorbuypoliciesonlineasiteliminatesagentcommissions.

Utilitypaymentshaveseena
massiveonlinepaymentadoption

Chart40:Onlinetractionobjectives
Online
transaction for
Financial
product
31%

Fund based
27%

insurance
42%

Source:IAMAI

Financialservices
Onlineaccessoffinancialservicesisthehighvalueaddanddrivessignificantefficiencyinthe
banking system. Reduction in transaction cost for the bank and transaction time for the
consumeristheresultofonlineaccessofbankingservicesprovidingawinwinproposition.
Thisbenefithasledtobankingandfinancialservicesembracingonlinemediummuchahead
ofotherindustries.Duetoavailabilityofnetbankingfacility,onlineconsumerservicessuch
asinvestments,utilitypaymentsandinsurancehavealsogatheredpaceandaregainingscale.

BFShasembracedonlinemedium
muchaheadofotherindustries

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IndiaInternet
Casestudy:Policybazaar,anaggregatormodel
Policybazaar, started as an online portal for comparison of insurance products, has
become a leading third party insurance seller on the internet. It offers massive
convenience forconsumersasitaddressesinformationasymmetryforinsurancepolicies
thatledtoitsinstantsuccess.Offlateithasalsostartedtakingownershipofthefulfillment
processofsellinginsuranceproducts.Thisistoprovideabetterconsumerexperienceand
gaininghighermarketshare.

It has all kinds of insurancecar, life, general etc.on its portal. It later expanded into
loansaswellasutilities(whereitofferscomparisonamongdifferentbroadband,DTHand
mobilesschemes).

The key pain point that Policybazaar addresses for the private insurance players is that it
provides the reach that would have been difficult due to LICs massive agent network
spreadacrossthenation.

Revenue model: It derives revenues through a) lead generation; b) advertisement on the


portal; and c) commission on loan products. In FY11, it generated revenues of INR108mn
(upfromINR50mninFY10).

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IndiaInternet

Onlineadvertisingmarketoverview

We believe that the online advertising market in India is at an inflection point. Digital
marketingstrategieshavebecomeimportantaspectinanyproductlaunchcampaigns.We
seetheonlineadproportionincreasingtodoubleitsshareoftotaladvertisingpieto8.5%
fromcurrent3.6%reachingaddressablemarketofUSD800mnby2016(currentUSD255mn
2011). The Indian advertising industry is in transition phase with rapid advances in
technology and ever growing base of empowered customers. Online medium is an
emergingplatformwhichhasbeengloballyacknowledgedasaninteractivemediumwith
high potential. Internet as an advertising medium has many unique benefits which have
pushedmarketerstolookuponthismedium.Flexibilityofcontrollingtheruntime,impact
measurement, cost effectiveness and dynamic customization are among key benefits of
online advertisement. Key to successful businesses built on advertising revenues is the
richnessofthecontentthatwillbeabletokeeptheuserengagedandloyalasInternethas
rapidcyclesofinnovation.

Ofthispotentialmarket,50%55%willbesearchadvertisingwhereGoogleisthedominant
playerandwillcontrolmajorshare.Howeverintheremaining4550%ofthemarket(display
advertisingaswellastextadvertising)weseemultipleplayersgettingafairshare.

Onlineadvertisingtosurgeto
USD800mnby2016fromcurrent
USD255mn

Chart42:Comparisonofinternetpenetrationrate
andshareofInternetadvertising
10.0

720

8.0

540

6.0

100

Internetpenetration(%)

800

(%)

(USDmn)

Chart41:Onlineadmarketpotentialsize

900

360

4.0

255

180

2.0

0.0
2011
Onlinead

2016
%oftotaladspend
Source:Edelweissresearch

80
60
40
20
0
0

10

15

20

Onlineadspend/totaladspent(%)

Source:PWCIndiaEntertainmentandMediaOutlook2011

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IndiaInternet
Indiaonlinemarketoverview
Atanascentstage
GrowthinonlineadvertisingforIndiahasbeenexponentialthoughcomingoffasmallerbase.
ThesizeofthisindustrycurrentlyisUSD255mn(2011)i.e.INR11.6bn,registeringagrowthof
28% over USD200mn in 2010 and at a CAGR of 44% over the past four years. But with the
expanding Internet user base, increasing time spent online and global reach, this market is
set to see the healthy growth continuing. Of the total advertising market of INR 32.2bn,
onlinemediumiscurrentlyonly3.6%.ThesamenumberforChinastandsat12%andforUS,
17%(onlineadspendsaspercentoftotaladspend).

Exponentialgrowth(CAGRof
44%)seeninonlineadvertising
over200711

Chart43:Onlineadvertisingseesa44%CAGRoverthepastfouryears
4.0

300
255

168

180

2.4

115

120
60

3.2

200

(%)

(USDmn)

240

1.6

60

0.8
0.0

0
2007

2008
2009
Onlineadvertising

2010
2011
%oftotaladspend

Source:eStatsIndia

The AsiaPacific market of online advertising is dominated by Japan, China and Australia.
India, as of now, has a very small share in this market. Though one of the fastest growing
marketsintheregion,itisnowhereclosetothesizeofthoseintheUSandtheUKaswellas
othermajorcountriesinAsiaPacific.

JapanandChinaleadAPAC
market;Indiastillatnascentstage

Table15:Marketsizecomparisonofkeycountries(USDmn)
Marketsize(2010)

Growth%(201115)

US

25,190

11.3

UK

5,799

5.9

China

3,428

25.7

Japan

8,795

8.2

Australia

2,085

9.4

255

25.5

India

Source:PwCGlobalEntertainment&MediaOutlook2011,eStatsIndia.com(June2010)
*2011forIndia

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IndiaInternet
Chart44:BreakupofadspendinginIndiaacrossvariousmediumsfor2010
Television
41%

Televisiondominatesadspend,
Internetcurrentlythesmallest
medium

Print
46%
OOH
6%
Internet
3%

Radio
4%

Source:ThePitchMadisonMediaAdvertisingOutlook2010

Chart 45: Goolge by far the sole leader in search market (unique users for July 2011
acrosstop5searchengines)
75
63
60

(mn)

45

30
14

15

12
5

0
Google Search Yahoo Search

Ask.com

Bing.com

Peeplo.com

Source:Vizisense

TopInternetadvertisers
TopthreeonlineadvertisersofIndiaaretravelsector,BFSIandonlinepublishersandallof
themspendmoreontextadvertisement(barringITwheretheyspendequally)whiletherest
spendsmoreondisplay.LessuseofdisplayadsamongtopadvertisersshowsthatInternetis
notbeingusedasamediumofbrandawareness.

Travel,bankingandthefinancialservicesindustry(BFSI),autoandtelecomsectorsremained
thelargestadvertisersin2010,accountingfor50%ofthetotaldisplayadvertisementmarket.
Asfortextadvertising,BFSI,travelandonlinepublishersweredominantsectors,constituting
60%ofthemarket.OnlineadshaveevolvedfromaCostPerImpression(CPI)orcostpermille
1000impressions(CPM)tocostperclick(CPC)tocostperacquisition(CPA).Advertiserssuch
asBFSI,autoandtravelaregraduallymovingtowardsCPAadvertising.

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IndiaInternet
Chart46:Indiatopadvertiser
2,000

670

510

800

330

230

330

Online
Publisher

BFSI

Travel

510
580

Text

390
170

340
100

250
160

260
130

FMCG

890

Education

900

Consumer
durables

400

370

Auto

1,200

IT

Travel,BFSIandonlinepublishers
arelargestspendersononline
advertisementwithpreference
fortextads

Telecom

(INRmn)

1,600

Display

Source:IAMAI

OnlineadvertisementmarketPrimer

Globally,Internetadvertisingisa
hugemarketwithrevenuesofover
USD63bn

Globally,InternetadvertisingisahugemarketwithrevenueofoverUSD63bn(2010)dueto
largeInternetuserbaseof2bnplus.Further,onlineadvertisementisperceivedasbestmedia
fordirectmarketing.Itessentiallyfallsinthreecategoriesviz.,search,displayorclassifiedads.
Globally,searchisthebiggestcategoryfollowedbydisplayandclassifiedads.

Table16:GlobalandUSInternetadrevenuesbyformat
GlobalInternetAdrevenue(USDmn)
Format
2005
2006
Paidsearch
7,833 10,610
Display
7,043 8,617
Classifieds
3,291 4,578
Total
18,167 23,805

2007
18,109
13,280
8,048
39,437

2008
23,298
16,433
9,739
49,470

2009
26,227
18,230
9,773
54,230

2010
31,059
21,435
10,554
63,048

USInternetAdrevenue(USDmn)
Format
2005
Search
5,142
Display
4,264
Classifieds
2,132
Leadgeneration
753
Email
251
Other

Total
12,542

2007
8,695
7,210
3,393
1,484
424

21,206

2008
10,552
7,503
3,283
1,641
469

23,448

2009
10,651
7,931
2,266
1,360
227
227
22,661

2010
12,004
9,906
2,597
1,339
195

26,041

2006
6,752
5,401
3,038
1,350
338

16,879

Source:Bloomberg

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IndiaInternet
Chart47:USInternetadvertisingrevenues
30
24

26

21

23 23

Lead
generation
5%

17

18

('000)

Chart48:Breakupofonlineadformats

Classifieds
10%

13
12

10
7

Digital
video Richmedia
5%
6%

Display/
banner
24%

Sponsorshi
p
3%
Email
1%

Search
46%

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

Source:Bloomberg

Source:InteractiveAdvertisingBureau(IAB),April2011

Searchadvertising
Search based advertising entails fees advertisers pay Internet companies to list and/or link
their company site domain name to a specific search word or phrase (includes paid search
revenues).Textadsareaformofsearchadsthatarefoundonsidepanelsoronwebpagesof
searchcompanies.Hereadvertisementsareautomaticallyselectedbasedonthecontentthe
userislookingformainlyintheformofhyperlink.

In general, graphical ads are less targeted than search ads since search ads are dictated by
theinterestoftheuserwhereasgraphicaladsaregenerallydeterminedbythecontentofthe
hostwebsite.Typically,webpagesaregroupedintotwocategoriespremiuminventoryand
nonpremiuminventory.Premiuminventoryismorefocusedonaspecificverticalofcontent
ordemographic.AnexampleofpremiuminventorywouldbetheYahoo!Financepage.Non
premium inventory includes very general untargeted pages. Examples of nonpremium
inventoryincludesocialnetworkingsitesandemail.

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IndiaInternet
The online search advertising market in India is at an early stage of growth driven by: a)
risingInternetpenetrationb)significantgrowthinwebsitesandpagesc)highersearchusage
(due to major mass of web content) and d) increasing awareness of using digital media for
marketingamongSMEsaswellasexistinglargebrands.

Advantagesofsearchadvertisingcanbehighlightedasbelow

Advertisements are targeted since a searcher enters a key word or phrase describing
theinformationhewouldliketoreceive.

Thesearcherisveryreceptivetolookingatadvertisementssinceinformationgathering
isthefocusofhisactivity.

Search advertisements have a significant reach given the large volume of searches
conducted.

Giventheautomatednatureofsearchadvertising,advertisersofallsizesandwithallad
budgetscaneasilytakeadvantageofthismarketingmethod.

Finally, advertisers need not pay to have the ad appear, but do so only when a
searcher clicks on their advertisement and is navigated to the website. Because an
actionisrequiredonthepartofthesearcher(clickingonthead)andadvertisersdonot
pay unless this action occurs, search advertising is considered a form of performance
basedadvertising.

Displayadvertising
Inthisformat, adsareplacedonwebsitesmainlyinthe formof images,banner,logosand
videos.Displayadvertisementsareseenasthesourceofbrandbuildinghencecostlierthan
textads.Thiscategorycanbefurtherdividedinto:

DisplaybanneradsTheseareadsdisplayedonastaticorhyperlinkedbannerorlogo
ononeormoreoftheInternetcompanypages.Suchadvertisingfaceschallengesinthe
formofpoortargetingcapabilitiesandlargeinventory.

Digital video These advertisements are TVlike that may appear as inpage video
commercialsorbefore,during,and/orafteravarietyofcontentinaplayerenvironment
includingstreamingvideo,animation,gamingandmusicvideocontent.

Rich media This media advertisement incorporates animation, sound, and/or


interactivityinanyformat.Thisisanextendedformofdigitalvideo.

SponsorshipUnderthisformofad,customcontentand/orexperiencescreatedforan
advertiserwhichmayormaynotincludeadelementssuchasdisplayadvertising,brand
logosandadvertorialvideo.

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IndiaInternet

WethinkthatlargecontentandconsumeraggregatorslikeGoogle,YahooandMicrosoftcan
emergeaswinnershereasscaleisnecessaryforbehavioraltargetingandcontentpackaging.

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IndiaInternet

ClassifiedrevenuesarefeesadvertiserspayInternetcompaniestolistspecificproducts
or services (e.g., online job boards and employment listings, real estate listings,
automotivelistings,auctionbasedlistings,yellowpages).

Classifiedadvertisements

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IndiaInternet
RevenuemodelCPM,CPCmostpopular

Multiplerevenuemodelsinonline
advertising,butCPMandCPC
widelyused

Revenueforgraphicaladvertisingcanbecostpermile/thousand(CPM),costperclick(CPC)
or costperaction (CPA). CPMbased advertising is the traditional TV model employed in
graphical advertising. In this model, advertisers negotiate a rate that will be paid for every
thousandtimestheadisdisplayed.Becausethelikelihoodofatargetmarketuserseeingthe
adismuchhigheronpremiuminventorythanonnonpremiuminventory(whereadvertisers
likely pay for many nontarget users to see the ad), the range of CPMs is wide. Premium
inventorycancarryCPMsnorthofINR2500whilenonpremiumCPMscanbeevenbelowINR
50.

CPCandCPAmodelsfallintothecategoryofperformancebasedadvertisingsinceanaction
by the user is required before the advertiser is charged for the advertisement. In CPC
advertisements,theadvertiserischargedperclickonthead.

Fig.12:Variousrevenuemodelsusedinonlineadvertising

Inthismodetheadvertiserpaysforeverymile
i.e.1,000impressionsoftheiradvertisements.

CostPerMile(CPM)

CostperClick(CPC)or
PayPerClick(PPC)

Inthismodeladvertisersonlypaywhenauseractually
clicksofadtovisitadvertisers'website.

Widelyused

HereCTRisobtainedbydividingthenumberofuserswho
clickedonanadbythenumberoftimestheadwasdelivered.

ClickThroughRate(CTR)

Thispaymentmodelinvolvesshowingtheadtotargeted
visitors,aswellasleadingthemtotheadvertiser'swebsite.

Costpervisitor/view(CPV)

Source:Edelweissresearch

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IndiaInternet

Socialnetworking/microblogging

The term social media refers to the use of webbased and mobile technologies to turn
communication into an interactive dialogue. It is further defined as "a group of Internet
based applications that build on the ideological and technological foundations of Web 2.0,
and that allow the creation and exchange of usergenerated content." Wikipedia defines
social media as a media for social interaction as a superset beyond social communication.
Twitter, Facebook, Orkut and Youtube collectively cater to about 90% of the users in the
socialmediaspace.

TheparadigmofsocialnetworkingcompletelychangedafterFacebookopenedmemberships
toeveryone.Peopleindulgeinactivitieslikechatting,playinggames,updatingstatusanduse
variedapplicationstofindandexpressthemselvesintheonlinespace.Gameshavebecome
animportantactivityonsocialnetworkingsites.Facebookhasthepopulationsizeofworlds
thirdlargestcountrywithanactiveuserbaseof800mn(July2011),upfrom100mnin2008.
Certainly, Indians are also not left behind in adoption of social networking at over 38mn
activeusers,becomingthethirdlargestFacebookusernation.

Companieshavebeenusingthismediumforadvertisementandtobeindirectcontactwith
customers.InIndiatoo,socialnetworkmarketingisonthoughithasbeenlimitedtobrand
buildingasofnow.FacebookdominateswhileOrkutislosingmarketshare.Ourdiscussions
with industry players suggest Facebook is earning revenues to the tune of USD5mn
USD10mnfromIndiacurrently.

Socialnetworking
metamorphosingthewaypeople
interact

Facebook,withactiveuserbaseof
800mn,isequivalenttoworlds
thirdlargestcountryintermsof
population

Fig13:SocialnetworkingscenarioinIndia

IndianSocialMediaScene

Facebook

Orkut

YouTube

Blogs

Microblogging
(Twitter)

Discussion
Forums

Political,Social,
Separatistgroups
Indianmicroblogging
siteslikesmsgupshup.com,
way2sms.com

Source:Edelweissresearch

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IndiaInternet
Table17:UsershavegrownonFacebook,butdeclinedonOrkut
Apr2011
May2011 June2011
July2011
Facebook
36.1
39.7
39.9
42.7
Orkut
13.1
12.8
12.2
11.1
Linkedin
4.2
5.0
5.1
5.8
Twitter
3.0
3.1
3.5
3.6
Bharatstudent
2.4
2.2
1.7
1.5

Facebookwayaheadof
competition

Aug2011
43.7
11.0
5.3
4.1
1.7

Source:Vizisense

Fig14:HomepageofaFacebookuser

Source:Company,Edelweissresearch

Anothermajorgrowthisbeingseenintheverticalofprofessionalnetworking.LinkedInhas
crossed 100mn users in India. However, we believe that LinkedIn revenue model is more
classifiedbasedhencewecoverthesameinalatersection.

MicrobloggingportalsOpportunitythroughpaidadvertising
Micro blogging (mB) is a place which allows a user to share short statements, images and
videolinkswithacharacterlimit.IthasbecomeverypopularincountrieslikeChinawhere
thisismoreacceptedthansocialnetworking.QQ(ChinesemBsite)isleadingsitewith160

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IndiaInternet
mn registered users. Globally, Twitter is another top website with 200mn registered users.
Micro blogging is growing at a rapid pace of over 200% YoY in India. Further, active
participation from many Bollywood (Hindi film industry) and sports personalities is also
inspiringmanyfollowers.

SMSnetworking
ThesearewebsiteswhichallowuserstocreategroupsandsendSMSmessagestorespective
groupsforfreeanywhereinIndiaandmakemoneysolelyfromonlineadvertising.Popularity
ofthesewebsitescanbegaugedbythatfactthatnearlytwobillionmessagesamonthare
being sent by smsgupshup while another major player, way2sms has developed a contact
baseof180mnmobilenumbersand10mnregisteredusers.Ourdiscussionswithparticipants
in this space indicate that companies like way2sms earn revenue of USD18mn and adds
25,000 users every day. Even though SMS packages are decreasing, the popularity of these
companieshasnotbeenaffected.We,however,remainskepticalaboutthescaleupofthese
businessesasthetariffforSMSservicesitselfcannotbeasustainablepremiseforgrowth.

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IndiaInternet

MobileadvertisingandVAS

Mobileadvertisingisapromisingbutnascentindustry.Withincreasingsmartphoneand3G
penetration,mobileadvertisingoffersalargeopportunity;however,themobileadvertising
in India will continue to remain small. Nevertheless, we expect VAS provides (content
developerandpublishers)toseehealthygrowth.Further,weexpecttheirshareofrevenue
pieincreasingasthetelecomoperatorwillhavetogiveawayhighershare.EvenintheUS,
themobileadvertisingmarketcontinuestobesmallat~USD750mnforCY10.

Increasingsmartphoneand3G
penetrationtobeaboonfor
mobileadvertising

Socialnetworks,topbrandedpublishersdriveusage
Currently only 14mn mobile users (of 487mn active mobile subscribers) surf the Internet
through their phones (based on a study by Juxt Consultants for 2011). However, since the
accessibilityisavailable24x7,thissegmentcanoffertheadvertiseranattractivemediumand
reachmoreandmore,oncesmartphoneusersgainscale.Webelievethattheriseinmobile
Internet has been spearheaded by social networking followed by content side search i.e.
restaurantsearch,ticketsearch,etc.

Mobileadvertising:Atanexperimentalstage
Whilethemobileadvertisinghasthepotentialtobecomebig,themobileInternetuserbase
maytakeatleast23yearstogainscale.Itmayalsotaketimesincemobileadvertisersare
forcedtodealwithavarietyofdeviceswithdiversecapabilities.SMSAdvertisingWethink
thatthemessageadvertisingisthelargestmediumformobileadvertisingastextmessaging
usage does not require high data speeds or advanced phone capabilities. Campaigns can
includeplacementintextmessages,directspendingonamessagecampaignandspendingon
promotionalcoverageofendusermessagingcosts.

Fig15:Typesofmobileadvertisements

Source:Edelweissresearch

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IndiaInternet
Chart49:Mobilemarketingrevenue
1.2

Mobilemarketingrevenuesetto
surge,butoverallsizetoremain
small
(INRbn)

1.0
0.7
0.5
0.2
0.0
2010

2011

2012

2013

2014

2015

Source:IAMAI

Casestudy:InMobi
InMobi is one of the leading players in the mobile ad network space providing
advertisersanopportunitytoruntheiradcampaignsthroughtheirtechnologyplatform.
Thecompanyfoundedin2007byMr.NaveenTewarialongwithtwofellowIITiansMr.
AbhaySinghalandMr.AmitGuptaasmKhojSolutionsPrivateLimitedandlaterchanged
itsnametoInMobiinAugust2009.Inaspanoffouryearsithasscaledupsignificantly,
evidentfromthefactthatthenumberofimpressionshassurgedfrom7.5bnto60.6bn
permonth,thiscoupledwithanextensivecoverageacross165countriesandconsumer
reachof340mn.ThecompanyrevenuestoodatINR45mninFY09,whichincreasedto
INR212mn in FY10. With the number of mobile Internet users expected to be 5bn
globallyby2014fromthecurrent1.6bn,this spaceprovides significantopportunityfor
the company to expand its reach. Recently it has launched SmartPay, its mobile
payments solution that offers mobile content publishers and app developers a global
solution for mobile payments and inapp monetization. As this product integrates with
mobileadnetwork,thecombinationhasenabledInMobitobecomeaonestopshopfor
appmonetization.

Differentiator:TheInMobiadvertisingplatformenablesadvertiserstotargettheiradsto
right users by providing various targeting options like country, city, demographics,
handsetetc.Thisensuresthatrightadsreachrightusers.Further,itprovidesreporting
and analytics service which helps measure the performance and return on investment
for a mobile advertising campaign. This is done by tracking the postclick campaign
againstobjectivesdefinedbytheadvertiserandtargetadinventorybasedonthedatato
improveROI.

The company is backed by funding from the likes of Kleiner Perkins Caufield & Byers,
Sherpalo Ventures, Mumbai Angels. It recently raised USD200mn from Softbank Corp.
Withthis,itplanstosignificantlyscaleupoperations.Itisonthelookoutforcompanies
that would give it a technological edge and help build capabilities. It also plans to
strengthenworkforceto1,000fromthecurrent350.

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IndiaInternet
DatarevenuehighlyskewedtowardsSMS,musicdownloads
Current share of data revenues for telecom companies stands at 11%12% of the total
revenuesamongthelowestinAsia.Further,mostofitcomesfromSMSfollowedbymusic
downloadwhileGPRScontributesjust8%.Comparingtocountriesaroundtheworld,wesee
thatIndiahasthelowestshareindatarevenueasapercentageoftotaltelecomrevenue,but
thiswouldchangesignificantlywiththeadoptionofhigherbroadband.

Chart50:Shareofdataservicesintotalrevenueofserviceproviders
60.0

56

48.0
40

Indiaamonglowestdataservice
revenuegenerators

36.0

(%)

28

24.0

27

18
13

12.0
0.0
Malaysia

Philippines

China

Singapore

Australia

India

Source:PWCMediaandEntertainmentOutlook,2011

Chart51:CompositionofdatarevenueinIndia

Other
32%

SMSandmusicdownload
dominate

SMS
36%

GPRS
8%
Music
24%

Source:PWCMediaandEntertainmentOutlook,2011

Thebiggestimpactfromtherolloutofmobilebroadbandserviceswouldbeondataservices
as it would attract new players, change role of existing players, transform existing revenue
sharingmodelsandproliferatenewservices.Thus,thewholeecosystemcomprisingcontent
aggregator, content owner, application and software developer and telecom operator will
see a major shift in business models. Mobile VAS at this time is heavily reliant on mobile
operatorsduetolackofreliablepaymentmechanismsthiswouldcertainlychangewiththe

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IndiaInternet
mobile broadband. At present, the VAS industry revenue is heavily skewed towards mobile
operators(70%vs30%forcontentproviders).Withmcommercebecomingpopular,wewill
seeconsumersmigratingdirectlytocontentproviders.

Chart52:ApproximaterevenueshareofVAS
2010F
Content
aggregator
,14%18%

2015E
Content
aggregator
,15%19%

Content
developer,
7%11%

Content
developer,
12%16%

Technology
Mobile

Operator,
70%75%

Technology

Mobile
operator,
63%67%

enabler,
2%5%

enabler,
2%6%

Source:PWCMobileBroadbandOutlook2015

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IndiaInternet

Onlineclassifieds

IndiasonlineclassifiedmarketgrowingataCAGRof55%
Classifiedadvertisingistakinggiantstrides,migratingonlinefromnewspapersandwethink
this represents a significant market share gain opportunity. The spending on classified
segments will see a further impetus with the Internet user base driving more businesses
online. Major categories here include jobs, search, entertainment, matrimony, real estate,
education,carsandothergeneralB2Cclassifieds.Mostofthecategoriesaredominatedby
localplayersandthepremiseofanyclassifiedmarketisbasedonthevirtuouscycleofuser
created content that drives more businesses to it which in turn drives additional users.
Commercialsituationwithascatteredsupplylendsitselfwelltotheopportunityofbuilding
anonlineclassifiedbusiness.

Onlineclassifiedsgrowingata
scorchingpace

ExpectedtotouchUSD700mninrevenueby2016
Globally,onlineclassifiedssegmentstandsatUSD10.5bn(17%ofglobalInternetadrevenues
thesmallestsegmentaswell).IntheUS,thismarketisthesmallestwitha10%shareand
revenues of USD2.6bn. Presently, the size of Indias online classified industry is about
INR11bn which we expect to grow to about INR31bn (USD670mn) by 2016 on a base case
basis,implyingaCAGRof22%.Wenotethatthegrowthpotentialinsegmentssuchasreal
estate, cars and general classified is ripe to be captured. However, the supply side is not
adequate to meet such large demand despite the readiness of users. Further, the online
classifiedindustryinIndiahasgrownthroughverticalsitesindifferentsegmentsunlikethe
US where the biggest classifieds site is Craiglist, a horizontal portal. Indian sites like
Quickr.comandClickindia.comaremodelsinthatdirection.

.expectedtogarnerUSD700mn
by2016

Fig.16:Variouscategoriesofonlineclassifiedsegment

Recruitment

Others

Matrimony

Online
classifieds
General

Automobiles

Education

Realestate

Source:Edelweissresearch

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IndiaInternet
Chart53:OnlineclassifiedmarketsizeinIndiaacrosscategories

Chart54:Onlineclassifiedsmarketbreakupcategorywise
(2009)
13

Entertainm
ent
35%

Jobs,40%

11.0

10
(INRbn)

Matrimony
/Dating,
15%
Real
Estate,Cars
9%
Others
1%

6.8

8
4.4

5
3

2.4

2.9

0
CY07

CY08

CY09

CY10E

CY11E

Source:IAMAI

Onlineclassifiedsmonetizeviasubscription;networkeffectremainskey
Revenuemodelforallonlineclassifiedbusinessesareintheformofeithercontentcreation
or content access. To cite an example of content creation is when a business advertises or
makes itself available on a platform like Justdail.com for driving demand towards it and
exampleofcontentaccessiswhencandidateaccessesadatabaseincaseofNaukri.com.Thus,
therevenuewouldbederivedintheformoflicensefeeorsubscriptionfeeorevenalisting
fee.

Onlineclassifiedstoaffectprintrevenues
Internationally, we have seen that the Internet has directly affected print media revenues
with people preferring online for a newspaper. Further, classifieds had a reason to move
online,especiallyinrealestate,jobsetcastheycouldreachcustomersmoreeffectivelyover
the Internet. This explains the drop in number of newspaper advertisers and therefore the
dippingcirculationlevels.TheonlineclassifiedindustryintheUShasalreadysurpassedprint
newspapers. Internet has emerged as the second best medium after television for
advertisement in USA (Source: Emarketer) while in China, too, Internet revenues are
expected to cross newspaper revenue in 2012 (Source: iReseach). However, in India we
believenewspaperrevenuewillcontinuetoseeincreaseduetolanguageandmassivereach.
NewspaperrevenuesindevelopedmarketslikeUSforthepasttenyearshavebeendeclining.
EveninIndia,newspapershaveseentheirsharedeclininginprintrevenuesharetototalads
revenuefrom44%to42%in2010(Source:PitchMaddison)

Onlineclassifiedstoeatintoprint
revenuepie

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IndiaInternet
Chart55:USANewspaperRevenue
50

(USDbn)

40
30
20
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source:IAB

SMBtoemergeasonlinespender:Thereare35mnSMBsofwhichjust0.2mnhaveonline
presence (Source: Google) and its only few that advertise as the maximum revenue is
generatedfromnearbylocality.Forthosewhodoadvertisingtheyrelyontraditionalsources
likenewspaper,telecalling,etc,butonlineadvertisingcanreallyhelpSMBsastheycaneasily
reachtheirtargetcustomeratfractionofcostandcouldmeasuretheirreturnoninvestment,
They are aware of the benefits of Internet. 71% of SME had used Internet to search for
vendors, suppliers etc (Source: Google). Just one in four firms with more than 1,000
employeeshasawebsiteinIndia.Thuslargepotentialmarketistherewithfactorslikehuge
benefitsofInternetadvertisement,lowcostofadvertisingonInternet,increasingawareness
about this sector, increasing global competition as well as opportunity of targeting global
market they will emerge as big spenders in near future. This is largely the potential for
classifiedmodelslikeJustdial.comandSulekha.com.

Majorclassifiedsegments

Newjobcreationand
replacementsactasacatalystfor
onlinerecruitmentgrowth

Online recruitment: Job search is among top five activities by any online user in India
hencerecruitmentisthelargestsegmentinclassifiedsection.Indiaseconomyhasbeen
growing at a healthy pace over the past five years and its long term outlook remains
positive. Driven by services and manufacturing sectors, activities in the job market i.e.
new job creation and replacements are bound to increase, driving up the recruitment
industry.Thisisfurtherpronouncedbythefactthatmanpowersupplyislimitedandskill
mismatchishigh.Inadditiontothis,Indiasworkforceparticipationisquitelowerat39%
ofthetotalpopulationcomparedto45%plusinothermajorcountries.Further,asper
theEconomistIntelligenceUnitForesight2020,mostnumberofnewjobcreationsin
theworldeconomyareexpectedinIndia.Inabsolutetermsfrom2005till2020,142mn
new jobs would be created, adding 30% to the world total. We also see large e
commerceopportunities,leadingtosignificantjobcreations.
Inourview,theonlinerecruitmentmarketislikelytogrowtoINR12bnfromthecurrent
INR4.4bn,implyingaCAGRof22%overthenextfiveyears(201116).Further,wenote
thatcompaniesthathavehightrafficsharewillalsobeabletodrivepricingpower,given
thespiralimpactofthebusinessmodel.

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IndiaInternet
Chart56: India'sworkforceas%ofpopulation
India

Table18:Newjobcreationintheworldeconomy

35.2

Italy

DevelopingAsia
China
India
LatinAmerica
US
EU25
Total

39.4

UK

48.1

Germany

48.3

US

48.4

Korea

48.4

Australia

49.7

Japan

50.2

Singapore

mn
315.5
65
142.4
45
12.5
8.4
471.3

%ofworldnetincrease
67
13.8
30.2
9.5
2.6
1.8
100

54.7
0

20

40

60

(%)

Source:IMF,Labourbureau,Edelweissresearch

Source:EconomistIntelligenceUnit

Entertainment:Thisincludesbuyingandsellingticketsonline,onlinevideosubscription
as well as CD and DVD rentals. Indian films derive 74% of the revenue domestically
through theatre screening (Source: FICCIKPMG Report 2011). The country has a very
largemovieaudiencebasewithmorethan3.6bnticketssoldannually(Source:Rediff).
Not only the audience but also the number of feature films released in India is among
thehighest,indicatingitshighpotential.Bookmyshowisoneoftheleadingonlinemovie
ticketing websites that sells more than 0.75mn tickets monthly (Source: Company).
ManymoviedistributorssuchasPVRandBigCinemadirectlyselltheirticketsonlineon
their respective websites. Specialized websites now have expanded their portfolio of
ticketstoeventslikeIPL,playsandconcerts.Withtheincreasingnumberofmultiplexes
coming up across India and the comfort that online booking provides, we see high
growth in this segment to continue. Though making profit will not be easy as
competitionisverystiffrightnow,thesecompanieschargeanextrapremiumperticket
fortherevenuewhichissharedbywebsites,paymentgatewaysandmultiplexes.Indian
film industry earns only 3% of revenue from home videos (prime reason being piracy).
ThisisunliketheUSwherehomevideoisabigmarket.Netflix.comaUSbasedDVD
rentalcompanygeneratesUSD2.2bninrevenues(15%EBITDAmargin),havinggrownat
a CAGR of 21% over CY0610. In India, BigFlix (from Reliance ADAG group) follows a
similarbusinessmodelofferingmovierentalandvideoondemandthoughweseepiracy
asakeyhurdletogrowth.Thus,intheentertainmentsegment,wethinkmovieticketing
wouldbethelargestsegmentfollowedbyadvertisement.

MatrimonyTheonlinematrimonialmarkethasgrownfromINR1.7bnin2009tonearly
INR2.22.5bnin2011.Infact,Indiasmatrimonymarketismoreregionandcommunity
specific. Despite the platform advantage, matrimonial portals are very niche and may

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IndiaInternet
notofferagrowthpotentialasanyotherclassifiedsegment.Asalogicalnextstep(ofthe
matrimony market), major players in this segment have been opening offline centers
thatprovidepersonalisedaccesstopeoplewhoarenotInternetsavvyandthosewhodo
nothaveenoughpatiencetosearchandbrowsethroughmanyprofiles.Companiesearn
revenue through subscription. Top matrimonial sites are Bhartmatrimony.com (over
20mnmembers)andShaadi.com(over10mnmembers).

Realestate,automobiles:Bothindustriesareinanascentstagerightnowwithamarket
sizeofjustINR1bneach.Websitesinbothsegmentsallowyoutopostadsforfreeand
haveacustomizedsearchenginebesidesserviceslikenews,discussion,comparison,etc.
Therevenuemodelisvialistingsontheportal.Onecangetcontactdetailsevenwithout
registeringonwebsitesunlikematrimonialhencethemarkethashighpotentialtoscale
up.Keyobservationsonrealestate:Thesegmenthasfailedtotakeoffmainlybecauseof
theculturalbarrierofusingpropertydealers(offline).Evenifyouwanttoavoidthem,
most listings are posted by dealers. Secondly, unlike in the US where real estate deals
are largely dominated by sale of existing houses, Indias real estate is seeing new
projects that prefer marketing mediums other than websites. The leader, 99acres.com
(partofInfoEdgegroupandaleadingrealestateportalintermsoftraffic)stillremains
verysmallinsize(FY11revenuesofUSD5.1mn).

Onlinerealestateandautomobile
segmentatanascentstage

Automobile industry: Due to its massive installed base and growing new car sales
offers a healthy market place for online product comparison and selection. Further,
listings for used car market will also attract multiple users that could drive paid listing
alongwithadvertisingrevenues.

Generalclassifiedsportalshave
nottakenoffsofarduetoleaders
inindividual(vertical)categories

Education: Within the education segment there is a huge demandsupply gap. This
potentially can be addressed effectively using internet as a medium and scaling of e
learning.WhileelearningintheUSisabigmarket,inIndiaelearningremainsasmall
market (<USD50mn). However, the content side of the equation is scaling online with
CareerlauncherandIMSforgingahead.However,itisimperativeatthistimetohavean
offline presence to push the online model. Pureplay online models may take time to
gainpopularityandscale.Shiksha.com(InfoEdgeseducationportal)aimsatpartnering
withvariouseducationalinstitutesaggregatingofflinecontenttoprovideuserthesearch
convenienceandgeneratingleadforinstitutes.

General classifieds portals These are multisegment classified portals the success of
which is yet to be seen, as in India these are at nascent stage. The key advantage of
theseportalsisthatitaddressessegmentsthatdonothaveindividualcompetition(like
officesupplies,pestcontrol,etc).WebelievethatIndiabeingavastmarketwithleaders
in individual categories like recruitment, real estate, matrimony etc, these general
portals may not make a significant impact. Some popular horizontal classifieds are
Quikr.com,Sulekha.comandOlx.in.

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IndiaInternet
Table19:Keyportalswithmonthlyuniquevisitorcount(August2011)
JobSearch
UU
B2CClassifieds
Naukri.com
6,237,293
Quikr.com
Timesjobs.com
4,812,490
Sulekha.com
Monsterindia.com
4,000,560
Olx.in
Shine.com
2,460,143
Clickindia.com
Freejobalert.com
1,109,623
Asklaila.com

7,268,091
5,206,005
4,036,955
2,369,039
2,063,656

Entranceexam.net
Indiastudychannel.com
icai.org
Successcds.net
Infinitecourses.com

1,931,625
1,138,419
964,552
902,746
812,119

Entertainment
Yahoo!Movies
Imdb.com

UU
5,840,000
1,942,962

Matrimony
Shaadi.com
Bharatmatrimony

UU
3,380,419
2,530,000

Music
Songs.pk
Beemp3.com

UU
6,460,142
3,259,436

Zimbio.com
Santabanta.com
Bharatmovies.com

1,401,271
1,110,014
905,414

Jeevansathi.com
Communitymatrimony.com
Simplymarry.com

1,145,560
770,685
418,675

Mp3raid.com
Raaga.com
Smashits.com

2,642,147
1,621,162
1,393,408

RealEstate
Magicbricks.com
99acres.com
Makaan.com
Indiaproperty.com
Indiahousing.com

UU
1,189,791
985,958
870,285
549,929
220,107

Auto
Carwale.com
Cardekho.com
Zigwheels.com
Gaadi.com
Tatamotors.com

UU
1,184,541
1,117,372
768,535
746,707
441,901

UU

Education

UU

Source:Edelweissresearch,Vizisense

Indiancategorysearchscenario
UnlikeChinaandRussiawherelocalsearchenginesdominate(BaiduandSinainChinaand
YandexinRussia),IndiansearchmarketiscontrolledbyinternationalplayerslikeGoogle
(90%,marketshare),YahooandBing(Source:ComScore).However,withinsearch,there
are local players focusing on select classifieds segment like Naukri.com (job search),
Justdial.com(localsearch),Guruji.com(coresearch),Mapmyindia.com(direction)butthey
are unlikely to make any significant cut in the hegemony of Google. Presently, these
portalshavelessthan1%ofthemarketshare.Thiswebelieveisacombinationoflackof
ebrand awareness, services offered and superior technology of foreign players. We,
however,believethatthereisapotentialforsomelocalverticalsearchengines(Engines
whichlookattheonlyspecificneedslikejobs,phonenos,etc.)tobecomebigwherethe
databasecreationhasbecomeasignificantcompetitiveadvantage.

Table20:TopIndianclassifiedssearch
Searchengine
Naukri.com
MapmyIndia.com
Guruji.com
asklaila.com
Justdial.com

Type
Jobsearch
Direction,localsearch,GPS
Coresearch
Classifiedsearch
Localinformationsearch

Source:Edelweissresearch

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IndiaInternet

Onlinegaming

The Indian gaming industry is valued at INR10bn of which mobile and online gaming
accounts for INR4.2bn and console market for INR5.8bn. Mobile and online gaming is
expected to increase by six fold to INR24bn by 2015 and overtaking the console market,
growing at 40% plus CAGR (CY1015). Gaming platforms are fast gaining attention among
online users. Innovation in technological devices such as tablets, increased usage of social
networks,availabilityof3Gnetworkalongwithfavourabledemographicsarelikelytosetoff
higher interest. Revenues from mobile gaming have already doubled in the past twoyears.
Onlineandmobilegamingbeingalowticket,massmarketproducthasasignificantpotential.
Gaming platforms monetize through advertisements and subscription fees. Chinas online
gamingmarketisoverUSD4.5bnduetohighinterestinhardcoregamingwheretherevenue
generationisessentiallyfromwithingameservices.

Mobileandonlinegamingto
surge6xtoINR24bnby2015from
INR4bncurrently

Chart57:Indiangamingmarket:Mobilegamingtoovertakeconsolemarketby2013
40
6.7

32
5.2

Mobilegamingtosurpassconsole
marketby2013

(bn)

24

17.4

3.9
14.3

16

2.8
2.1

8
0

0.8
0.9
2.7

1
1.4
4.1

2007 2008
Console

1.2
1.8
4.9

2009

1.5
2.8

5.8

7.0

9.2

6.2

8.4

10.1

12.0

14.2

2010 2011E 2012E 2013E 2014E 2015E


Mobile
PCandOnlineGaming

Source:FICCIKPMGReport2011

We believe that India may see a scale up in local online gaming platforms like
Indiagames.com, Zapak.com and Ibibo.com that provide a large collection of casual games
(games which are easy to understand and do not require long time commitments) versus
hardcore games (complex and higher time commitment). Also, due to the constraint of
broadbandspeed,onlinehardcoregamesarelesslikelytobepopular.

Gamesdevelopersasacaseinpoint
Zynga:USsocialgamedeveloperexperiencedamajorscaleupafteritpartneredwith
FacebookandsawgameslikeCityVille,FarmVilleandTexasHoldEmPokerbecomingbig
hits;itgeneratedrevenueofUSD850mninCY10.
AngryBird:DevelopedbyFinnishgamedeveloper,RovioMobile,thisisamongthemost
populargamescurrentlywith600mndownloadsandvalueofoverUSD1bn.Itisexpected
togarnerUSD100mnrevenuesin2011,upfromUSD10mnin2010.

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IndiaInternet
Fig.17:OnlinegameplayingthroughPC

Source:Edelweissresearch

Fig.18:Onlinegameplayingthroughmobile

Source:Edelweissresearch

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IndiaInternet
Chinagamingmarket
ChinaistheworldslargestonlinegamingmarketatoverUSD4.5bn(CY10)inrevenues.Hitherto,Koreangamedevelopersusedto
dominatetheChinesegamemarket,butrestrictionsbytheChinesegovernmentonKoreanandforeigngamedevelopersledtothe
emergenceoflocalplayersinthesegment,inspiringcompanieslikeTencent,NetEaseandShandaGamesamongothers.

Keygrowthdrivers

Localised content which users could associate with acted as an ingredient for instant success. Top online Chinese games are
basedonlocalnovelsandfablesthathavepredominantlyChinesecharactersasplayers.

Culturalacceptance:Playinggamesisamongtopthreeactivitiesonline.IntheUSandIndia,topactivityisemailwhileinJapan,it
isreadingnews.InIndia,playinggamesisnoteveninthetopfive.

Free:AlmostalltoponlinegamesinChinaarefreecontrarytotheWestwherethereisamonthlysubscriptionfeeforpopular
gameslikeWorldofWarcraft.Withingames,serviceslikebetterweaponoranicegamingavatararemainsourcesofrevenue.
Playerscanbuycashcardsatcybercafsorpayonlinetoavailthem.

Popularityof multiplayergames:Inhardcoregames,itiseasytoearnrevenueastheseareaddictive.ARPUismuchhigherin
hardcore games compared to casual gamming where the user may not like to pay much (and advertising is the main revenue
source). This is the problem that Indian developers are facing as mass multiplayer online games are not very popular so the
revenuegeneratedislowwhichrestrictsfurtherdevelopment.

Table21:Chinaonlinegamingmarket
Marketsize(USDmn)
2006
Multiplayer
728
Growth(%)
Casual
132
Growth(%)
Total
860
Growth(%)

2007
1,257
72.7
217
64.4
1,474
71.4

2008
2,201
75.1
377
73.7
2,578
74.9

2009E
3,016
37.0
537
42.4
3,553
37.8

2010E
4,014
33.1
671
25.0
4,685
31.9

2011E
5,159
28.5
817
21.8
5,976
27.6

2012E
6,278
21.7
995
21.8
7,273
21.7

Source:iResearch

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IndiaInternet

Onlineportals

Though popular and dominant initially, horizontal web portals have been losing share of
userattentionoveraperiodoftime,leadingtofragmentedaudiencewhichmadethetask
of addressing specific audience difficult for advertisers. It has been witnessed in the US
marketthatYahoo!,AOLandMicrosofthaveaccountedforlessthan25%ofminutesspent
online,downfromover40%fiveyearsback.Whilethisdoesnotimplyadeclineinabsolute
minutesspentonlineontheseportals,highpopularityofsocialnetworkingandgaminghas
gainedincrementalshareoftheonlinetimespent.

Horizontal web portals provide a variety of content that includes email, news, finance,
entertainment,sports,videos,andastrologyamongothersandaimtoprovideonestopfor
information across varied segments. The revenue model is advertisement based hence
contentrelevanceandconstantupdatingarekeyindrivinghigherusertraffic,whichinturn
ensureshigheradrevenuepotential.Increaseintrafficontheportalishalfthebattleasthe
increase in page views and minutes spend is a tougher task since it determines the
effectivenessofads.

Horizontalportalslosingthepieto
socialnetworking,gamingplayers

Rediff.comTheonlylargelocalplayeramonghorizontals
Indiaisavastmarketandhighlyscatteredintermsofonlinesupplymeaningnosingleplayer
islargeenoughtodominatethemarket.AmongIndianplayerspresentinthissegmentare
Rediff.com, In.com, Sify.com and Indiatimes.com with the largest being Rediff with 13mn
monthly unique visitors and a revenue size of USD22mn. Further up, trends in the
internationalmarketindicates thatastheInternetmarketgrows, therewillalwaysbeone
two large horizontal players. In the US, it was Yahoo! and AOL while in China, it has been
Sohu.comandSina.com.

Whileatpresent,Yahooisstrugglingtoretainitscompetitivepositioning,italsopresentsa
large market place for a horizontal player. While Yahoo may still continue to dominate the
Indianmarket,wemayseeIndianplayersemergingtoscaleinthissegment.However,these
players will need to have a key value proposition for example mails like Rediff.com or
In.com,microblogginglikeSina.comandgaminglikeSohu.com.

Rediff,thoughlarge,needstopick
upmomentum

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IndiaInternet
Chart58:TophorizontalportalsinIndiabasedonmonthlyuniquevisitors
50
42
40

(mn)

30
20

15

10

Msn.com

In.com

Indiatimes.com

0
Yahoo.com

Rediff.com

Source:Edelweissresearch,Vizisense

Chart59:Uniquevisitorchartformajorportals

rediff.comin.yahoo.com indiatimes.com

Source:GoogleTrends

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IndiaInternet

Casestudy:FacebookvsYahoo!

Vs.

Beforethepopularityofsocialnetworking(Facebook),horizontalwebportals(Yahoo!)weretoponlineadpublishers.Withtherise
ofFacebook,asubstantialportionofonlineadspendismovingfromYahooonanincrementalbasis.Facebookhasemergedasthe
topadpublishingsiteindevelopedmarketslikeUS,UKandGermany.

YahoorevenuesstagnatewhileFacebookgrowsmultifold;AOLlosesout
Over20062010(whensocialnetworkinggainedsignificantpopularity),whentheglobaldisplayadspendgrewataCAGRof26%and
USataCAGRof16%,YahoosrevenuesremainedflatatUSD6.2bn.Ontheotherhand,FacebookrevenuegrewfromUSD57mnto
USD2.2bn(CY10)andmaytouchUSD4.3bn(CY11).AOL,anotherscaleplayerinthehorizontalportalspace,hasseenitsrevenues
shrinkingfromUSD7.8bntoUSD2.4bn.

Chart60:Revenuecomparisonover200611

Chart61:Comparisonofdailyreach

8.0

(USDbn)

6.4
4.8
3.2
1.6
0.0

2006

2007

2008

2009

2010

2011

Yahoo!

AOL

Facebook

Source:Companies,Alexa,Edelweissresearch

Chart62:TrafficsharecomparisonofFacebookandYahoo!

facebook,yahoo

Source:Googletrends

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IndiaInternet
Verticalwebportals
Large segments that drive high user interest will always see the emergence of dedicated
players.Further,ineachcategory,weexpectonelargeplayergrossingmajorityofthetraffic
share and therefore revenues. Below, we highlight some of the popular vertical categories
alongwithmajorportalsandtheiruniqueusercount.

Sports: In India, sports is dominated by cricket. Most websites present live cricket
updates,news,expertviewsandhistoricaldata.Thissegmentwillcontinuetogrowwith
anincreaseinpenetration.

Stockandfinanceinformation:Asthedepthofthecapitalmarketincreasesandmore
investors participate in stock trading, this segment will continue to see an upsurge.
Need for live price quotes and company related information may see higher demand.
However,portalsinthissegmentarelikelytobepartofthevaluechainlikebrokingor
media (i.e Moneycontrol.com, Sharekhan, Icicidirect.com). Yahoo Finance and Rediff
Moneyhaveahealthyfollowing.

Entertainment and music: This is likely to be a part of horizontal portal itself. At


present,therearenotmanypopularwebsitesinthissegment,butglobally,portalslike
Tv.com and Imdb.com are very popular. Availability of movies and TV show content
onlinealsopullshighusertraffic.

Table22:Topverticalportalswithmonthlyuniqueusercount
Stocks/Finance
UU
Music
YahooFinance
3,300,000
Songs.pk
Moneycontrol.com
2,969,244
Beemp3.com
Nsdl.com
2,230,000
Mp3raid.com
RediffMoney
1,800,000
Raaga.com
Bseindia.com
1,133,024
Smashits.com

UU
6,460,142
3,259,436
2,642,147
1,621,162
1,393,408

Sports
Yahoo!Cricket
Espncricinfo.com
RediffCricket
cricbuzz.com
espnstar.com

UU
5,840,000
1,942,962
1,401,271
1,110,014
905,414

Email
Gmail
Yahoo!Mail
Rediffmail
WindowsLiveMail

UU
4,780,000
2,115,362
1,020,000
440,791
346,743

Entertainment
Yahoo!Movies
Imdb.com
Zimbio.com
Santabanta.com
Bharatmovies.com

UU
36,600,000
25,400,000
8,080,000
6,290,000

Source:Edelweissresearch,Vizisense

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IndiaInternet

Enterpriseopportunities

Inthissection,wediscusskeysegmentsthatwillwitnessmajordemandtrends,derivingfrom
businessesbriefedabove.Allbusinessopportunitiesdiscussedinsectionsbeforearedriven
byconsumerInternettrendswhichinturnwillalsodriveasignificantB2Bdemandinvaried
categories.

Expansionof3Gandwireless
broadbandtoprovideafillipto
datarevenue

Datarevenuesfortelecomoperators

Hardwaredatacenters,routers,switches

Websitehostinganddigitalecommerceplatform

IPTVandsmartTV

Datarevenuesfortelecomcompanies
ThedataopportunityforoperatorsinIndiawiththelaunchof3Gservicesearlythisyearand
wireless broadband services (likely next year) seems immense. Presently, we estimate 3G
subscriberbaseinIndiaatover10mnthoughtheactiveuserbaseishardlylessthan5mn.We
believethatthecurrentcoverageof3GnetworksisstillnotoptimalwithBharti,thelargest,
beingpresentinonly15%ofits2Gsites.However,weestimatethatBhartiwouldhaveabout
25mn3GsubscribersandrevenuesofUSD2bnbyFY15.HerewenotethatChinaMobilehas
seenasurgeinInternetaccesstrafficfrom2.2bnMBin2006to53.1bnMBin2010andVAS
revenueofRMB69bnandRMB151bnfortherespectiveperiods.

Table23:ChinaMobiledatastatistics
2006
Vasrevenues(RMBbn)
Handsetinternetaccesstrafficvolume(bnMB)

69.3
2.2

2007

2008

2009

2010

91.6 113.3 131.4 151.4


5.3

13.3

35

53.1

Source:Company

DatarevenuehighlyskewedtowardsSMS,musicdownloads
CurrentshareofdatarevenueforIndiantelecomcompaniesstandsat11%12%ofthetotal
revenueamongthelowestinAsia.Further,mostofitcomesfromSMSfollowedbymusic
downloadwhileGPRScontributesjust8%.Comparedtocountriesaroundtheworld,wesee
thatIndiahasthelowestshareindatarevenueasapercentageofthetotaltelecomrevenue,
butthiswillchangesignificantlyinthecomingyearswiththehigherbroadbandadoption.

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IndiaInternet
Chart63:Shareofdataservicesintotalrevenueofserviceproviders
60.0

56

48.0
40
36.0

(%)

28

24.0

27

18
13

12.0
0.0
Malaysia

Philippines

China

Singapore

Australia

India

Chart64:CompositionofdatarevenueinIndia

Other
32%

SMS
36%

GPRS
8%
Music
24%

Source:PWCMediaandEntertainmentOutlook,2011

Hardwaredevices:Datacenters,routers,switches
Datacenters:Withthegrowinguserbase,theneedforcontinuousstorageandbackupwill
go up significantly, giving rise to captive as well as third party data center providers. This
could be a significantly large opportunity over the next five years as Indian Internet firms
rapidlyexpand,leadingtogenerationofhugevolumeofuserdata.

TulipTelecomacquireda0.9mnsqftdatacenter(DC)facilityinBengaluruviaacquisitionof
100%sharesofSADAITParks(SADA)forINR2.3bninJanuary2011.Itnowhasatotaldata
center space of ~1mn sq ft. It received an order for 30,000 sq. ft. from HewlettPackard
GlobalDataCentreteamwiththedeliveryofthefirsttrancheof10,000sq.ft.inQ3FY12.It
alsowonacolocationorderfromIBMfor5,000sq.ft.inQ2FY12.

RCOMwonthelargestDCoutsourcingdealinIndiafromHDFCBankworthINR1.4bn.Itwill
build and operate the 60,000 sq.ft. DC for the bank for a minimum contract period of 15

Withgrowinguserbase,needfor
storageandbackuptodrive
demandfordatacenterproviders

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IndiaInternet
years.InordertomeetthehugedemandofDCspace,RCOMisbuildinganew350,000sqft
facilityinMumbai.ThephaseI(of100,000sqft)willbereadyin12monthswhilethewhole
centrewouldbecompletein24months.Currently,ithas650,000sq.ft.ofhostingspace.

Router: A router is a device that forwards data packets across computer networks. On the
Internet,routersperformthedata"trafficdirecting"functions.Themarketsizeforroutersin
FY10wasINR33bn,growingat49%.TheYoYgrowthdriversweredemandforethernet,3G
andfasterInternetaccess.Ciscoisthelargestplayerinthissegmentwithalmost50%market
share followed by Juniper. Key trend emerging in the router market is the demand for
multifunctionalroutersthatcanprovidesecurityandvalueaddedservicesofcarryingvoice
anddata.

Future: The market will continue to grow at an exponential pace due to the increasing
demandforbroadbandconnection.Demandforrouterscapableofcarryinghighbandwidth
and easy upgrades will continue to increase while wireless routers are expected to see a
tremendousgrowthasmostdeviceswoulduseWIFI(mobile,laptopandPC).

Chart65:Routermarketsizeover

Chart66:Routermarketshare

40

Others
29%

(INR bn)

32

24

Cisco
49%

16

Dax
1%
Huawei
6%

0
FY07

FY08

FY09

FY10

Jupiter
15%

Source:CyberMediaResearch

Source:CyberMediaResearch

Switchisacomputernetworkingdevicethatconnectsnetworksegments.Thetotalmarket
size is estimated to be around INR45bn with an impressive growth rate of 91.5%. Large
investments by IT companies, egovernance projects, increasing broadband and IPTV
connectionsarekeygrowthdrivers.Ciscoistheleaderinswitchsegmentwithamarketshare
of49%followedbyHP.

Future:Atrendthatisemergingistheuseofgreentechnologyaswitchthatsavesenergyis
gainingpopularityamongvendors.Indiahaswitnessedanexponentialgrowthintheswitch
segmentlastyearatarateof91.5%.Thismomentumwillcontinueasfundamentalsofkey
drivers(likebroadband,IPTVandinvestmentbycompanies)remainhealthy.

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IndiaInternet
Chart67:SwitchmarketinIndia

Chart67:Switchmarketshare

50

(INRbn)

40

Others
37%

30

Cisco
49%

20
Dax
1%
Nortel HP
5%
8%

10
0
FY04

FY05

FY06

FY07

FY08

FY09

FY10

Source:CyberMediaResearch

Websitehosting,digitalecommerceplatforms
Primary requisite for setting up an online store is digital ecommerce platform. With an
increase in the number of ecommerce transactions and Indian brick and mortar stores
expanding online for marketing as well as sales, the need for a quick setup online will
increase.Webelieveoverthenexttwothreeyears,wemayseeascaleupincompaniesthat
can build and manage ecommerce stores (technology platform with integrated payments,
logisticsandcustomeracquisitionsolutions).

The Internet tide and growing online demand will unleash a host of opportunities for
technologycompaniesthatoffersoftwareservicesondemand(fore.g.JobviteSaasbased
recruitersoftware).

Onlineshiftfrombrickandmortar
modelstoprovidesignificant
opportunitiesfortechnology
companies

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IndiaInternet
MartJackAcaseinpoint
MartJack is a multichannel retailing solution developed by Reasoning Global that is
readytouse, cloud hosted, software as a service platform with a comprehensive set of
features that help retailers in establishing and running their ecommerce businesses. It
has integrated marketing solutions, payment solutions and logistics. MartJack helps
retailersbuildtheirowndigitalstoresacrossmultiplechannelsincludingInternet,mobile
and social media. Its clientele includes Videocon, Ddamas, Gati, Odyssey, Gili among
others. Transactions on online stores powered by MartJack have recently crossed
INR1bn.

IPTVandSmartTV:ConvergenceofTVandInternet
Smart TV: WeseetheconvergencethemegainingmomentumasthedemandforsmartTV
would witness a firm growth going forward. Smart TV allows the user to connect to the
Internetforbrowsing,chatting,streamingonlinevideosamongotheractivitiesinadditionto
watching television. Major consumer electronics companies have already launched their
smartTVsintheIndianmarketgiventhehighpotential.Whilethecurrenthighpricingmay
seelowvolume,goingforward,thissegmentislikelytoseehealthygrowthprospectsasthe
content on the Internet will drive sales of such products. IPTV: Internet Protocol Television
(IPTV) is a system through which Internet television services are delivered using the
architecture and networking methods of the IP Suite over a packetswitched network
infrastructure i.e. broadband Internet access networks instead of the traditional radio
frequencybroadcast,satellitesignalandcabletelevisionformats.Highbroadbandbandwidth
andlowtariffplanswillbetriggersfortheriseinIPTVsegmentthatotherwiseremainsniche
atpresent.

Fig19:SmartTVandMTNLsIPTVplan

Source:Edelweissresearch

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IndiaInternet

Keychallenges

Comfortinpaymentsonline
The ultimate promise of ecommerce has been one of lower prices and/or better selection
with the tradeoff that many purchases may have to be made sightunseen. The threat of
fraud remains present and structures that insure buyers against fraud should help smooth
operationsinanecommerceenvironmentthatisnotyetfullymatured.AnexampleiseBays
PayPalwhichhasoverthecourseofthepastyearaugmentedtheleveloffraudprotectionin
theUStoUSD2,000pertransaction.PayPalusessuchprotectiontocreatebuyerconfidence.
ThetransactionlossrateforPayPalis~30bpsofthetotalpaymentvolumemanaged.

Developingtrustfactorforonlinestores
According to a survey by the Indian Internet and Mobile Association, 70% users feel that
onlineinformationismisrepresentedandinaccurate.Lowentrybarrierintheonlineretailing
industry has created a great number of online sellers who trade in genuine products but
thesesellersarenotofficiallyendorsedbyoriginalmanufacturers.Manycompaniescompete
to sell the same to these unauthorized online stores leading to price battles. Moreover,
stories about credit card information thefts have left users concerned about using cards
online.Stepstocombatthislackoftrustareimportantforthesmoothfunctioningofonline
paymentdependentcompanies.

Rampupoflogisticsinfrastructure,lastmileconnectivity
Logistics plays an important role in establishing and maintaining the last mile of online
businesses. Timely and reliable delivery of products is a key aspect for ensuring customer
satisfaction. The reach of logistics companies is limited to 2,00010,000 pin codes (of more
than 150,000 pin codes in India). Thus, areas not served by logistics companies will not be
abletoparticipateinecommerceunlesscompaniesextendtheirbackendfortheadditional
coverage. However, we note that due to complementary pin codes, covered by logistics
companies,thereispotentialtocoverover1,000townsandcities.

Weakeningfundingenvironment
Among the most important factors for the development of an ecommerce market is the
availability of continued investment for transaction oriented firms. Warehousing, logistics
and inventory are some of the key areas where heavy capital investments are required. As
mostoftheecommercecompaniesatthisstageareincurringcashlosses,positivefunding
statusiscriticalforsustainingthebusiness.Amazon,thelargestecommercecompanyinthe
US,reporteditsfirstnetprofitin2002,eightyearsafteritstartedoperations.

Monetisationofwebtrafficcritical
Afirmshouldhavearevenuemodelthroughwhichitcanmonetizetheconsumertrafficand
earnrevenueelseitisdifficulttosurvive.Aperfectexamplewillbethepopularwebhosting
site,Geosites.YahoopurchasedGeocitiesin1999forawhoopingUSD3.57bnbutYahoohad
toshutdownthesamein2009asitfailedtomonetize.

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IndiaInternet
RapidChanges
In the Internet business, rapid changes take place overnight hence firms need to innovate
andadapttochangesquickly.Orkutwasanundisputedleaderinsocialnetworkingspacein
India with the largest user base till 2009 but was unable to keep up its dominant position
withtheentryofFacebook.

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IndiaInternet

COMPANYSECTION

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IndiaInternet

THISPAGEISINTENTIONALLYLEFTBLANK

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COMPANYUPDATE

IndiaInternet

INFOEDGE
Sowingecommerce,reapingclassifieds
IndiaEquityResearch|Internet

Companydescription
Info Edge (IEL) is amongst Indias leading online classified companies with presence in
online recruitment, matrimony, real estate, education and offline executive search. It
pioneered the online recruitment business under its flagship brand Naukri.com and
operatesofflinerecruitmentbusinessundertheQuadranglebrand.Thecompanysonline
matrimony and real estate divisions operate under Jeevansathi.com and 99acres.com
domains, respectively, and are currently in investment mode. New launches include
Firstnaukri.com (fresher recruitment site), Brijj.com (professional networking site),
asknaukri.com(careerguidancewebsite),andshiksha.com(educationinformationportal).

Businessmodelandvalueproposition
Naukri.comistheleaderwithalmost60%marketshareinonlinerecruitment(muchahead
ofpeerslikeMonster.comandTimesjob.com).With26mncandidateresumesand40,000
plusuniqueclients,ithascreatedavirtuouscyclethatcontinuestogeneratehealthycash
flows. Revenue stream includes two major sources viz., (a) job listings and employer
branding and visibility; and (b) resume database access for recruiters (corporate and
recruitmentconsultants).99acres.com,therealestateportal,isleaderinitssegment,but
peer like magicbricks.com is competing closely and hence relevant marketing spends to
createdealernetworkswillbecriticaltomaintainandexpandthelead.Whilethecurrent
revenue base is low, this segment is likely to become large. Matrimony and education
segmentsareyettoprovetheirleadership.
IELascorporateinvestor:Healthycashbalance,inflowfromrecruitmentbusinessand
to participate in the rising ecommerce space IEL has been investing small sums
(collectively ~USD 13mn) across multiple ventures. These include Meritnation.com
(assessment based learning), Policybazaar.com (financial products), Zomato.com
(online food and restaurant guide), Mydala.com (online group deal), 99labels.com
(online private sales); and Ynotshare.com (online information sharing). These are all
initialstageventuresandcouldyieldsignificantvalueifitscalessuccessfully.
We like IELs business model and strong management background; however, due to
moderating hiring outlook and benefit from investments accruing only in the long
term,wemaintainourREDUCErating.
Financials
YeartoMarch
FY10
FY11
FY12E
FY13E
Revenues(INRmn)
2,322 2,936 3,768 4,467
Rev.growth(%)
(5.3) 26.4 28.3 18.6
EBITDA(INRmn)
666 977 1,397 1,653
Netprofit(INRmn)
598 840 1,131 1,316
Sharesoutstanding(mn)
58 55 54.7 54.8
DilutedEPS(INR)
10.3 15.4 20.7 24.0
EPSgrowth(%)
(3.7) 49.8 34.4 16.1
DilutedPE(x)
56.6 37.8 28.1 24.2
EV/EBITDA(x)
44.8 27.7 18.5 14.8
ROAE(%)
18.1 19.5 23.0 21.5
EdelweissResearchisalsoavailableonwww.edelresearch.com,
89
BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset.

EDELWEISS4DRATING

AbsoluteRating

REDUCE

MARKETDATA(R:INED.BO,B:INFOEIN)
CMP
: INR581
TargetPrice
: INR600
52weekrange(INR)
: 772/460
Shareinissue(mn)
: 54.6
Mcap(INRbn/USDmn)
: 32/602
Avg.DailyVol.BSE/NSE(000) : 26.1

SHAREHOLDINGPATTERN(%)

Others
10.9%

FIIs
26.5%

Promoters*
53.9%

MFs,FIs&
Banks
8.7%
* Promoters pledged shares
(% of share in issue)

NIL

PRICEPERFORMANCE(%)

1month
3months
12months

Stock

(13.4)
(16.2)
(5.7)

Nifty

(7.4)
(11.6)
(23.6)

EWTechnology
Index
3.4
7.7
(6.4)

KunalSangoi
+912266233370
kunal.sangoi@edelcap.com

GaneshDuvvuri
+912240407586
ganesh.duvvuri@edelcap.com

OmkarHadkar
+912266203147
omkar.hadkar@edelcap.com

December22,2011
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IndiaInternet
Webpagescreenshot

Table1:Managementteam
Name
SanjeevBikhchandani

AmbarishRaghuvanshi GroupPresidentFinanceand CA,PGDBMXLRI


CFO

Background/Previouslywith
HeldpositionsinLintasandGlaxoSmithKlinein
thesmalltenureof6yrsintheserivce
WorkedasaRegionalPlanningandDistribution
ManagerfortheIceCreamDivisionofHindustan
Unileverfor4yrs
AssociatedwithBankofAmerica&HSBCintheir
corporateandinvestmentbankingdepartment

V.Suresh

EVPandNationalHeadSales B.E.(Instr.&Control),Mastersin
Naukri
Management

Xerox

SudhirBhargava

EVPCorporateFinance

B.E.,MBA(FMS,DelhiUniversity)

HSBC,ICICIBank

VineetSingh

EVPandBusinessHead
99acres,Naurkigulf

PGDBA,IPM

PreviouslywithXerox

VivekKhare

EVPCorporateDevelopment M.Sc(Physics)IITKanpur.PGDBA

HarveenBedi

Sr.VPQuadrangle

PGDBA,BirlaInstituteof
ManagementTechnology

VibhoreSharma

EVPTechnologyand
ProductDevelopment
Naukri,Firstnaukri

B.ScIGNOU

HehasworkedwiththewebdivisionofPioneer
newspaperpriortojoiningnaukri

DeepaliSingh

Sr.VPFirstnaukri

BachelorofScience,LawDegree,
DelhiUniversity.PGDBA,IPM

Aptech

SharmeenKhalid

Sr.VPHumanResources

MBAIRMA

ShalabhNigam

EVPTechnology99acres,
Jeevansathi,Shiksha,Brijj

BTechIITKanpur

Morethan12yearsofexperienceintheentire
gamutofHRfunctions.PreviouslywithPolaris
andParsecTechnologies
Baypackets

HiteshOberoi

Designation
FounderandExecutiveVice
Chairman
ManagingDirectorandCEO

Qualification
BAEcon.St.Stephens.PGDMIIMA
B.TechIITDelhi,PGDMIIMB

HelpedNaukri.comtoadoptnewwebplatform,
whichreducestheturnaroundtimeforprojects
alongwiththecapitalcost
Nestle

Source:Company

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Table2:Operatingmetrics(RecruitmentSolutions)
NAUKRI
No.ofresumesonNaukri(INRmn)
YoY/QoQgrowth
YoYgrowth
No.ofuniquecustomers(consultants+corporates)
YoY/QoQgrowth
YoYgrowth
IT&Softwareservices(%)
IT&Softwareservices(INRmn)
YoY/QoQgrowth
YoYgrowth
Avg.resumeregistrationdaily(Gross)
YoY/QoQgrowth
Avg.no.ofresumemodifieddaily
YoY/QoQgrowth
Totalrecruitmentrevenues
YoY/QoQgrowth
YoYgrowth
Revenueperuniquecustomer
YoY/QoQgrowth
YoYgrowth

FY07
9.0

FY08
13.0
44.4

FY09
17.0
30.8

FY10
20.7
21.8

FY11
25.0
20.8

27,824
39.9

32,681
17.5

34,000
4.0

35,500
4.4

42,000
18.3

32.0
446.6
58.9

29.7
650.2
45.6

26.0 26.0 26.0


637.4 603.8 763.4
(2.0) (5.3) 26.4

10,200
23.7
22,000
1,276
43.9

12,380
21.4
36,500
65.9
1,964
53.9

14,000
13.1
42,000
15.1
2,117
7.8

11,000
(21.4)
59,000
40.5
1,954
(7.7)

45,860
2.8

60,096
31.0

62,265
3.6

55,042 57,738
(11.6) 4.9

12,000
9.1
72,000
22.0
2,425
24.1

Q112
26.0
4.0
18.2

22,900
0.9
9.6
25.0
216.6
6.4
21.8

12,000
9.1
79,000
8.2
700.0
4.9
27.7

30,568
4.0
16.6

Q212
27.0
3.8
17.4

23,500
2.6
11.4
25.0
227.7
5.1
23.0

12,000

99,000
25.3
747.0
6.7
26.6

31,787
4.0
13.7

Source:Company

Table3:RevenueandEBITDAbreakupforrecruitmentandnonrecruitmentbusinesses
Revenues
FY07
FY08
FY09
FY10
Companytotal
1,396 2,189 2,458 2,322
RecruitmentsolutionsNaukri
1,276 1,964 2,117 1,954
Others
120 225 341 368
Jeevansathi
170 199
99acres
139 133
Shiksha;Brijj;Allcheckdeals
25 37

FY11
2,936
2,425
511
221
228
63

EBITDA
Companytotal
RecruitmentsolutionsNaukri
Others
Jeevansathi
99acres
Shiksha;Brijj;Allcheckdeals

FY11
977
1,098
(121)
(41)
4
(83)

FY07
FY08
FY09
366 635 644
456 815 921
(90) (180) (277)
(47)
(95)
(128)

FY10
666
803
(137)
(1)
(38)
(98)

(INRmn)
Q112
Q212
867 911
700.0 747.0
166.6 164.0

Q112
Q212
316 322
343.0 363.0
(26.8) (40.6)

Source:Company

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FinancialStatementsStandalone
Incomestatement
YeartoMarch
Revenues
Costofrevenues
Grossprofit
S&Mexpenses
G&Aexpenses
TotalSG&Aexpenses
EBITDA
Depreciation&Amortization
EBIT
Interestexpense
Otherincome
Profitbeforetax
Tax
Coreprofit
Extraordinaryincome/(loss)
Profitaftertax
Minorityint.andotherspaid/(recd.)
Netprofitafterminorityinterest
Sharesoutstanding(mn)
EPS(INR)basic
Dilutedshares(mn)
EPS(INR)diluted
CEPS(INR)
Dividendpershare
Dividend(%)
Dividendpayout(%)

FY09
2,452
1,024
1,427
433
342
775
652
71
581

286
868
270
597

597
12
585
54.6
10.7
54.9
10.7
12.0
0.4
3.7
3.5

FY10
2,322
960
1,362
374
322
696
666
61
605
1
320
925
317
607
(38)
569
(28)
598
58.2
10.3
58.2
10.3
12.0
0.4
3.5
3.4

FY11
2,936
1,233
1,704
380
347
727
977
71
906
1
283
1,188
400
788
52
840

840
54.6
15.4
54.6
15.4
15.7
0.8
7.5
4.9

FY12E
3,768
1,460
2,308
532
379
911
1,397
85
1,312

336
1,648
517
1,131

1,131

1,131
54.7
20.7
54.7
20.7
22.2
1.0
10.0
4.8

(INRmn)
FY13E
4,467
1,689
2,778
581
545
1,126
1,653
130
1,523

441
1,964
648
1,316

1,316

1,316
54.8
24.0
54.8
24.0
26.4
1.0
10.0
4.2

Commonsizemetricsas%ofrevenues
YeartoMarch
Costofrevenues
Grossmargin
G&Aexpenses
S&Mexpenses
SG&Aexpenses
EBITDAmargin
EBITmargin
Netprofitmargins

FY09
41.8
58.2
13.9
17.7
31.6
26.6
23.7
24.4

FY10
41.4
58.6
13.9
16.1
30.0
28.7
26.0
26.1

FY11
42.0
58.0
11.8
13.0
24.8
33.3
30.8
26.8

FY12E
38.8
61.2
10.1
14.1
24.2
37.1
34.8
30.0

FY13E
37.8
62.2
12.2
13.0
25.2
37.0
34.1
29.5

Growthmetrics(%)
YeartoMarch
Revenues
EBITDA
EBIT
PBT
Netprofit
DilutedEPS

FY09
12.0
2.8
0.3
10.4
5.5
5.0

FY10
(5.3)
2.1
4.1
6.6
2.1
(3.7)

FY11
26.4
46.7
49.7
28.5
40.5
49.8

FY12E
28.3
43.0
44.9
38.7
34.7
34.4

FY13E
18.6
18.3
16.0
19.1
16.3
16.1

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Balancesheet
Ason31stMarch
Equitysharecapital
Sharepremiumaccount
Reserves
Totalshareholdersfunds
Borrowings
Minorityinterest
Sourcesoffunds
GoodwillandOtherIntangibleAsset
Grossfixedassets
Less:Accumulateddepreciation
Netfixedassets
CapitalWIP
Investments
Deferredtaxasset
Cash&bankbalances
Debtors
Loansandadvances
Totalcurrentassets
Sundrycreditors
Provisions
Totalcurrentliabilities
Workingcapital
Applicationoffunds
Bookvaluepershare(BV)(INR)

FY09
273
28
2,966
3,268
3

3,271
0
527
225
301
83
211
19
3,218
38
166
3,422
705
61
766
2,655
3,271
60

FY10
273
28
3,445
3,746
6

3,752
0
581
287
294
69
1,162
34
2,791
80
219
3,090
812
84
896
2,194
3,752
64

FY11
546
31
3,774
4,351
7
16
4,374
29
890
332
557
154
2,641
59
2,076
149
200
2,426
1,358
135
1,493
933
4,374
80

FY12E
547
31
4,898
5,476

16
5,491
29
1,140
423
716
175
3,214
59
2,665
62
250
2,977
1,562
117
1,678
1,299
5,491
100

(INRmn)
FY13E
548
31
6,211
6,790

16
6,806
29
1,240
554
686
200
4,014
59
3,373
73
290
3,736
1,796
122
1,918
1,819
6,806
124

Freecashflow
YeartoMarch
Netprofit
Depreciation
Others
Grosscashflow
Less:Changesinworkingcapital
Operatingcashflow
Less:Capex
Freecashflow

FY09
585
71
(218)
438
240
198
86
112

FY10
598
61
(304)
355
(22)
376
44
332

FY11
840
71
(413)
498
(540)
1,038
429
609

FY12E
1,131
85
(336)
880
(223)
1,103
271
832

(INRmn)
FY13E
1,316
130
(441)
1,005
(188)
1,193
125
1,068

93

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Cashflowstatement
YeartoMarch
Cashflowfromoperations
Cashforworkingcapital
Operatingcashflow(A)
Netpurchaseoffixedassets
Netpurchaseofinvestments
Others
Investmentscashflow(B)
Dividends
Proceedsfromissueofequity
ProceedsfromLTB/STB
Interestpaid&otheritems
Financingcashflow(C)
Changeincash(A+B+C)+(D)

FY09
438
(240)
198
(86)
2,642
7
2,563
(24)

(1)
(0)
(26)
2,735

FY10
355
22
376
(44)
(998)
258
(784)
(24)

3
(1)
(22)
(430)

FY11
498
540
1,038
(429)
(1,465)
165
(1,728)
(24)

1
(1)
(24)
(714)

FY12E
880
223
1,103
(271)
(572)
336
(507)
(62)
61
(7)

(7)
588

(INRmn)
FY13E
1,005
188
1,193
(125)
(800)
441
(484)
(62)
61

(1)
708

Ratios
YeartoMarch
ROAE(%)
ROACE(%)
Debtors(days)
Payable(days)
Cashconversioncycle
Currentratio
Fixedassetsturnover(x)
Totalassetturnover(x)
Equityturnover(x)

FY09
19.7
38
5
125
(120)
4.5
7.9
0.8
0.8

FY10
18.1
21.4
9
119
(110)
3.4
7.8
0.7
0.7

FY11
19.5
41.9
14
135
(121)
1.6
6.9
0.7
0.7

FY12E
23.0
65.4
10
141
(131)
1.8
5.9
0.8
0.8

FY13E
21.5
60.1
6
137
(132)
1.9
6.4
0.7
0.7

Valuationparameters
YeartoMarch
DilutedEPS(INR)
YoYgrowth(%)
CEPS(INR)
DilutedP/E(x)
Price/BV(x)
EV/Revenues(x)
Mcap/Revenues(x)
EV/EBITDA(x)
EV/EBITDA(x)+1yrforward
Dividendyield(%)

FY09
10.7
5.0
12.0
54.5
9.7
11.5
12.9
43.4
42.5
0.1

FY10
10.3
(3.7)
12.0
56.6
9.0
12.9
14.6
44.8
30.6
0.1

FY11
15.4
49.8
15.7
37.8
7.3
9.2
10.8
27.7
19.3
0.1

FY12E
20.7
34.4
22.2
28.1
5.8
6.9
8.4
18.5
15.7
0.2

FY13E
24.0
16.1
26.4
24.2
4.7
5.5
7.1
14.8

94

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COMPANYPROFILE

IndiaInternet

BILLDESK.COM
Enablingonlinepayments
IndiaEquityResearch|Internet

Companydescription
BillDesk.com(BillDesk),apropertyofIndiaIdeas,waspromotedin2000bythreeexArthur
Andersen professionals. The company offers universal electronic bill presentment and
paymentservices,whichallowsuserstoreceive,review,payandorganizebillsonline.Over
the years, the company has added a host of organisations to its portfoliofrom utility
vendors, mobile operators, mutual funds, insurance, gas agencies, charity organizations,
magazines,etc.Itsclientbaseincludes45banksandfinancialinstitutionsandover350large
billers
(all major telecom operators, ~20 electricity companies, 30 insurance companies,
mutualfunds,travelcompaniesandlargepureplayecommerceplatforms).

Businessmodelandvalueproposition
Enablingpaymentconvenience:BillDeskservesasthesinglepointofinteractionbetween
multiple banks and institutions across the country. Entities availing the services of the
companyjoinasaMemberBankorasaMemberOrganizationofitspaymentplatformand
thereafterareabletoofferelectronicpaymentservicestotheircustomer.

WhileBillDeskisnotapaymentgateway,itoffersitsplatformtoenablethetransferoffunds
fromcustomeraccounttomerchantaccount.Itearnsrevenueonpercentageoftransaction
value which is in the 0.53.0% range. Due to the proven processing capability and online
paymenttransactiongrowingatafastclip(50%plus),BillDeskisataninterestingjunction
for scale up. Further, payments in the nonecommerce side provide high stickiness and
recurrencecomparedtoecommerceplatformsthatwitnesshighdropoutrates.Also,due
toplatformagnosticcapabilityitcanscaleacrosscategorieslikemobile,onlineandIVR.

BillDeskprocessespaymentsoverINR500bnannually.ItsFY10revenuestoodatINR693mn,
EBITDAmarginat21%andPATatINR106mn.

Quicksnapshot
Companynameandlocation
IndiaIdeas.com
Keymangementperson
Mr.MNSrinivasu,Mr.AjayKaushal,Mr.Karthik
Ganpathy

Othergroupwebsites
NA
Revenues
INR693mn(FY10)
NA
Employeecount
Keyinvestors
Indiawebsiteranking

BankofBaroda,SIDBIVentureCapital,SBIand
ClearstoneVentures
Alexa:119,Vizisense:46

EdelweissResearchisalsoavailableonwww.edelresearch.com,
95
BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset.

KunalSangoi
+912266233370
kunal.sangoi@edelcap.com

GaneshDuvvuri
+912240407586
ganesh.duvvuri@edelcap.com

OmkarHadkar
+912266203147
omkar.hadkar@edelcap.com

December22,2011
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Webpagescreenshot

Table1:Managementteam
Name
Designation
MNSrinivasu
Director
AjayKaushal
Director
KarthikGanpathy VPIT
PVenkatesh
CFO

Qualification

Background

B.Com,PGDM

ArthurAndersen

B.Tech,PGDM

ArthurAndersen

B.Tech,PGDM
B.Com,Mastersin
Finance&control,
AICWA,ACS

ArthurAndersen
RealImageMedia
technologies
Source:Company

Keyinvestorsandownership
ThecompanyhasraisedstrategicinvestmentsfirstfromBankofBarodaandSIDBIVentureCapital
andlaterfromSBIandCaliforniabasedventurefundClearstoneVentures.

Table2:Fundinghistory
Year
Name
2000
BankofBarodaandSIDBIVentureCapital
2006
SBIandClearstoneVentures

Amount
NA
USD7.5mn
Source:Company,Mediasources

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Table3:Keyfinancials

(INRmn)
FY09
FY10
Billdeskandothertechnologyrelatedservices
389 569
YoYgrowth
46.1
Saleofsubsrciptionsandtopupproducts

87
YoYgrowth
NM
Otherservices
33 37
YoYgrowth
12.3
Revenues
422 693
YoYgrowth
64.0
BillDeskservicecharges
161 265
YoYgrowth
65.2
As%ofrevenue
38.3
Purchaseofsubscriptionvouchers&topupproducts
86
YoYgrowth
NM
As%ofrevenue
12.4
Data&communicationexpenses
10 9
YoYgrowth
(10.5)
As%ofrevenue
1.3
Verificationexpenses
10 10
YoYgrowth
5.5
As%ofrevenue
1.5
Totalemployeecost
103 111
YoYgrowth
8.0
As%ofrevenue
24.3 16.0
Gen&Adminexpenses
63.3
65.3
YoYgrowth
3.2
As%ofrevenue
15.0 9.4
Operatingexpenditure
347 547
57.8
YoYgrowth

As%ofrevenue
82.1 79.0
EBIDTA
75.6 145.2
YoYgrowth
92.0
EBIDTAmargin
17.9 21.0
Depreciation
11.3
14.9
YoYgrowth
31.7
EBIT
64.4
130.3
YoYgrowth
102.5
EBITmargin
15.2 18.8
Totalotherincome
34.3
31.2
YoYgrowth
(9.0)
Profitbeforetax
98.67
161.6
YoYgrowth
63.8
As%ofrevenue
23.4 23.3
Incometaxes
34.4
53.4
Reportednetprofit
74.4 106.4
YoYgrowth
43.0
As%ofrevenue
17.6 15.4
Dividends
27.3 8.1
Source:Company

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THISPAGEISINTENTIONALLYLEFTBLANK

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COMPANYPROFILE

IndiaInternet

CONSIMINFO
Goingalloutonmatrimony
IndiaEquityResearch|Internet

Companydescription
Consim is an online classifieds company with presence across multiple segments like
matrimony, real estate, jobs and automobiles. BharatMatrimony.com is the companys
flagshipportalprovidingonlinematrimonialservices.Foundedwaybackin1997byMr.
MurugavelJanakiramanithasconstantlyinnovatedovertheyearstobecomeadominant
playerintheonlinematrimonialspace.Overtheyears,ithasdonecarefulsegmentationof
itstargetmarketsandbuiltaseparateportalforeachofthesesegments.Thecompanyhas
extended
its services tocater to the NRIcommunity by setting up operations in the US,
DubaiandmorerecentlyinCanada.Ithasalsosetupofflinecenters(over100)cateringto
people not comfortable with using the Internet. Recently, it also launched
Matrimonygifts.com,aportalofferingweddingrelatedgifts.

Businessmodelandvalueproposition
Consimiswellpoisedintheonlineclassifiedsspacewithleadinthematrimonysegment
and presence across multiple segments. Its segmentation of profiles in various
communitiesandcategoriesistheprimereasonbehinditgainingmindshareamongusers.
However, in the other than matrimony category it still lags peers and hence significant
marketingandcontentimprovementmayberequiredtocapturehighershare.Further,we
notethattheonlinematrimonymarketisINR1.65bnin2009(asperIAMAI)andaboutINR
2.22.5bn(2011),thuspresentingscalabilitychallengeandhencefasterscaleupofitsother
segmentsiscritical.

Recently, Yahoo sold its 12% stake in the company for INR1bn, implying the company
valuationatINR9bn(USD190mn).

Quicksnapshot
Companynameandlocation ConsimInfogroup,Chennai
Mr.MurugavelJanakiraman
Keymangementperson
Othergroupwebsites
MatrimonyGifts.com,IndiaProperty.com,

IndiaList.com,ClickJobs.com,
IndiaAutomobiles.com,Loanwala.com
Revenues

NA

Employeecount

NA

Keyinvestors

Yahoo,CanaanPartnersandMayfieldFund

Indiawebsiteranking

Alexa:245,Vizisense:145

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KunalSangoi
+912266233370
kunal.sangoi@edelcap.com

GaneshDuvvuri
+912240407586
ganesh.duvvuri@edelcap.com

OmkarHadkar
+912266203147
omkar.hadkar@edelcap.com

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Webpagescreenshot

Table1:Managementteam
Name
Designation
Murugavel
Founder&CEO
Janakiraman
SaichithraS
HeadTechnology
Rajaraman
VPECommerce
Sundaresan

Qualification
MastersinComputer
Science

Background
Earlierwrokedwith
NucleusSoftware

MastersinComputer
Mobius,DrikTech,
USAandInfotech
Enterprises,USA.
Source:Company

Keyinvestorsandownership
The company has raised strategic investments from Yahoo, Canaan Partners and Mayfield
fund.

Table2:Fundinghistory
Year
Name
2006
Yahoo!andCanaanPartners
2008
MayfieldFund,Yahoo!andCanaanPartners

Amount(USDmn)
8.7
11.8
Source:Mediasources

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COMPANYPROFILE

IndiaInternet

FLIPKART.COM
IndiasAmazon
IndiaEquityResearch|Internet

Companydescription
Flipkart.com(Flipkart)isanonlineshoppingportalwhereinuserscanchoosefromarangeof
productsand services like books, mobile phones, gaming consoles, electronics,music and
movies. Founded in 2007 by Mr. Sachin Bansal and Mr. Binny Bansal (both exAmazon),
FlipkartwaslaunchedasanonlinebookstoreforIndia.WithintwoyearsitwasintheTop
100 Indian sites and was credited for being India's largest online bookseller (80% market
shareinonlinebooks).Itoffersover11.5mnbooktitles,hasover2mnregisteredusers
andsells30,000itemsperday.

Flipkart, from just being an online book store, has been adding new categories like
mobile phones, music, personal and healthcare products, among others.
electronics,
However,booksstillaccountforover50%ofrevenue.Itemploysover4,500withmajority
ofthem(>2,500,inourview)inbluecollaredjobs(warehousesandlogistics).Ithasseena
phenomenalscaleupofrevenuesfromafewlakhsinFY08toINR25mninFY09,INR250
mninFY10andINR750mninFY11.ItexpectstocloseFY12withoverUSD100mnrevenue
(valueofgoodssold).

Businessmodelandvalueproposition
Flipkartoffersthebestpriceonbooks(1535%discountoncoverprice)andcomprehensive
setofbooktitles.However,whataidedgrowthwastheintroductionofthecashondelivery
option(in2010)andfreehomedelivery(onordersaboveINR100)thatenabledtoexpand
itsreachbeyonduserpossessingcreditanddebitcards.Whilethenetrevenuemarginin
bookscouldgross30%,itislikelytobedilutedasothercategoriessuchaselectronicsandIT
productscontributeahighershare.Ithasrecentlyaddedewallettoitspaymentoption.

Customer experience and retention is the key: Flipkart has been investing in logistics to
providetimelydeliverytocustomers.Itisfurtherinvestinginsupplychainwithplanned1
mnsqftforwarehousing.Whileitworkswithmostnationallevelcouriercompanies,in27
citiesithasitsowndeliverynetwork.

Quicksnapshot
Companynameandlocation Flipkart,Bangalore
Keymangementperson
Mr.SachinBansalandMr.BinnyBansal
Othergroupwebsites
NA
INR750mn(FY11)
Revenues
Employeecount
~2,500

Keyinvestors
TigerGlobalandAccelPartners
Indiawebsiteranking
Alexa:29,Vizisense:126
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101
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KunalSangoi
+912266233370
kunal.sangoi@edelcap.com

GaneshDuvvuri
+912240407586
ganesh.duvvuri@edelcap.com

OmkarHadkar
+912266203147
omkar.hadkar@edelcap.com

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Webpagescreenshot

Table1:Managementteam
Name
Designation
Sachin
Cofounder&CEO
Bansal
BinnyBansal

Cofounder&COO

Qualification
BachelorofTechnology,
ComputerScience,IIT
Delhi

Background
Earlierworkedwith
Amazon.com

Bachelors,Computer
Scienceand
Enginnering,IITDelhi

Earlierworkedwith
Amazon.com
Source:Company

Keyinvestorsandownership
ThecompanyhasraisedthreeroundsofstrategicinvestmentsfromNewYorkbasedhedge
fundTigerGlobalandCaliforniabasedAccelPartners.

Table2:Fundinghistory
Year
Name
2010
TigerGlobal
2009
TigerGlobal
2007
AccelPartrners

Amount
USD20mn
USD20mn
NA
Source:Mediasources

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COMPANYPROFILE

IndiaInternet

INDIAMART.COM

Slowmover
IndiaEquityResearch|Internet

Companydescription
Indiamart.com(IndiaMart)isanecommercewebsiteintheB2Bsegment.Foundedin1996
byMr.DineshAgarwal,itoffersaplatformtoover1mnsupplierstogeneratebusinessleads
from over 5mn buyers. The site offers products that enable small and medium size
businessesgeneratebusinessleads(onlinecatalogs/storefronts),establishtheircredibility
(thirdpartyverifiedtrustprofile)andusebusinessinformation(finance,news,tradeshows,
tenders)fortheirbusinesspromotion.

The company reported revenue of INR600mn in FY10 and crossed the INR1bn mark
recently.Ithasover4,500employeeslocatedacross90officesinthecountry.

Businessmodelandvalueproposition
IndiaMart derives revenue through subscription based packages for services like website
designingandhosting,offeringhigherlistingontheportalandsearchengineoptimization
(SEO). Also, it generates revenue from listing fees for services like top listing, premium
listing, banner advertisements for relevant categories and special listing on product
searches.Thehostofservicesenablesuppliers,specificallySMEs,togettheirbusinesseson
thecompanysportal.Further,thecompanywantstomovefromthelistingfeebasedmodel
topayperleadmodelwhichwouldenticemoresupplierstogettheirbusinessesontheweb
platform.

The company has the highest traffic share compared to its other B2B players like
Alibaba.com (Chinese and largest B2B player), TradeIndia.com, MadeinChina.com and
Hotfrog.in.

WenotethatwhileIndiaMartscustomerbasehasgrownatahealthypaceto~45,000,it
a B2B market place and charging via listing fees the revenue growth has lagged
being
customergrowth.

Quicksnapshot
Companynameandlocation IndiaMARTInterMESHLimited,Noida
Keymangementperson
Mr.DineshAgarwal
NA
Othergroupwebsites
Revenues
INR600mn(FY10)

Employeecount
~4,500
Keyinvestors
IntelCapitalandBennett,Coleman&Co.Ltd
Indiawebsiteranking

Alexa:81,Vizisense:72

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103
BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset.

KunalSangoi
+912266233370
kunal.sangoi@edelcap.com

GaneshDuvvuri
+912240407586
ganesh.duvvuri@edelcap.com

OmkarHadkar
+912266203147
omkar.hadkar@edelcap.com

December22,2011
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Table1:Managementteam
Name
Designation
DineshAgarwal
Founder&
CEO

BrijeshAgarwal

COO

Qualification
B.Tech,Computer
Science&Engg.

Background/Previouslywith
EarlierworkedwithHCL
Technologies,HCLAmerica
Inc.andCDOTAlcatel
ResearchCentre

MBA,Universityof
Lucknow

Earlierworkedwith
MiebachLogisticsGmbH
Source:Company

Keyinvestorsandownership
ThecompanyhasraisedstrategicinvestmentsfromIntelCapitalandBennett,Coleman&Co.Ltd.

Table2:Fundinghistory
Year
Name
2008
IntelCapital
2007
Bennett,Coleman&Co

Amount(USDmn)
20.0
3.5
Source:Mediasources

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COMPANYPROFILE

IndiaInternet

JUSTDIAL.COM
Leadingthelocalsearch
IndiaEquityResearch|Internet

Companydescription
(Just Dial) is an Internet classifieds search company. Incorporated as A&M
JustDial.com
Communicationsin1993andlaterrenamedasJustDial(2006),itinitiallyofferedafixedline
voicebasedservicedispensinginformationonwhateverauserneededtolocate.Itprovides
localservicesforIndiathroughmultipleplatformssuchastheInternet,mobileInternet,over
the telephone (voice) and text (SMS). Its Internet and mobile Internet services were
launchedin2007.

InFY11,thecompanyrespondedtoover180mnsearchqueriesfromusersacrossvarious
platforms. As of June 30, 2011, the company is running ~139,500 campaigns for paid
advertisers.ForFY11,thecompanyreportedrevenueandPATofINR1.9bn(40%CAGRover
FY0711)andINR286mn(104%CAGRoverFY0711),respectively.Itoperatesat25%EBITDA
margin.
Businessmodelandvalueproposition
Being a classifieds model, Just Dial derives revenue through paid listings by various
businessesanddispensesfreeinformationtoseekers.ThisislikeaNaukri.commodelthat
creates a virtuous cycle between listings and visitors. Thus, higher the number of users,
higher is the motivation for businesses to get themselves listed on the portal. The
companyalsorunscampaignsforalistingtobefeaturedonprioritybasis(differentlevels
ofprioritiesinsearchresultsavailable).

Key value proposition: (a) it offers a cost effective platform for SMEs to promote their
business; (b) timely information to users on need basis; and (c) healthy database of local
marketsthatprovidesconsistentusersatisfaction.

WebelieveJustDialoffersastrongbusinessmodelandhascreatedentrybarriersforother
players with the buildup of its robust database. Further, its RedHat Enterprise Linux
platformenablesfast,efficient,anduserfriendlyinformationservicetousers.Inaddition,
the companys business model offers high annuity revenue with healthy cash generation
(duetoadvancepayments).

Quicksnapshot
JustDial,Mumbai
Companynameandlocation

Keymangementperson
Mr.V.S.S.Mani
Othergroupwebsites
NA
INR1,863mn(FY11)
Revenues
Employeecount
4,868(FY11)

Keyinvestors
SAIFPartners,TigerGlobal,SAPVentures,EGCS

InvestmentHoldingsandSequoiaCapital
Indiawebsiteranking

Alexa:49,Vizisense:45

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105
BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset.

SHAREHOLDINGPATTERN(%)
Promoters
:
TigerGlobal
:
SAIFPartners
:
Sequoia
:
Employeesandothers
:

42.8
21.8
21.6
10.4
3.4

KunalSangoi
+912266233370
kunal.sangoi@edelcap.com

GaneshDuvvuri
+912240407586
ganesh.duvvuri@edelcap.com

OmkarHadkar
+912266203147
omkar.hadkar@edelcap.com

December22,2011
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Webpagescreenshot

Table1:Managementteam
Name
Designation
V.S.S.Mani
MDandCEO

Qualification

Background
EarlierworkedwithUnitedDatabaseIndia
PrivateLimited

V.Krishnan

Director&COO

Ramkumar
Krishnamachari

CFO

CA,ICWA,CPA,CFA

EarlierworkedwithRoyalSundaramGeneral
InsuranceAlliedCompanyLimited

Sandipan
Chattopadhyay

ChiefTechnologyOfficer

B.Sc(Stats),PGIIMKolkata

EarlierworkedwithEDotSolutionsIndia
PrivateLimited.

KooraSrinivas

DeputyCFO&SVPHuman
Resources

B.Com,MBA,Marathwada
University

ShreosRoy
Chowdhury

ChiefTechnicalArchitect

M.Sc(Physics),IITkanpur

PriorexperiencewithRelianceBig
EntertainmentPrivateLimited.

SachinJain

CompanySecretaryand
ComplianceOfficer

C.S.

EarlierworkedwithDBHospitalityPrivate
Limited.

Source:Company

Keyinvestorsandownership
ThecompanyhasraisedfourroundsofstrategicinvestmentsfromHongKongbasedSAIFpartners,
California based venture fund Sequoia Capital, New York based Hedge Fund Tiger Global and
CaliforniabasedSAPVentures.

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Table2:Fundinghistory
Year

Name

June05
June05

SAIFPartners
TigerGlobalFourHoldingsandTigerGlobalPrincipals
SAIFPartners
SAPVentures
EGCSInvestmentHoldings
SequoiaCapitalGlobalEquitiesandSAPVentures

July05

Amount(INR
mn)
547
40
8
167
167
USD10mn

Source:Company,Mediasources

Table3:Operatingmetrics
FY07 FY08
FY09
Searches(mn)
0.4 9.8 80.0
Internetsearches(mn)
0.4 9.8 27.9
Mobileinternetsearches(mn)
Voicesearches(mn)
52.1
Smssearches(mn)

FY10
133.3
57.1
4.7
71.5
0.0

FY11
180.7
77.2
9.6
93.9
0.0

Q1FY12
57.4
26.0
3.9
27.4
0.1

Campaigns(nos.)

61,500

120,200

139,500

70
30

70
30

3,763

4,868

40,500

VoiceSearches
CompanySearch(%)
Categorysearch(%)
Employees

2,914

3,058

Source:Company

107

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Table4:Keyfinancials

(INRmn)
FY07
FY08
FY09
FY10
FY11
484 696 859 1,309 1,863
43.7 23.5 52.4 42.3
299 421 523 669 942

40.6 24.3 27.9 40.9


61.8 60.4 60.8 51.1 50.6
148.1
232.6
255.1
339.0
460.5

57.0 9.7 32.9 35.8


30.6 33.4 29.7 25.9 24.7
447 653 778 1,008 1,403

46.0 19.1 29.6 39.2


92.4 93.9 90.5 77.0 75.3
37.0 42.8 81.3 301.2 459.7

15.5 90.2 270.3 52.6


7.6 6.1 9.5 23.0 24.7
15.2
26.7
40.8
52.5
70.3

75.2 53.1 28.7 33.7


21.8
16.1
40.5
248.7
389.5

(26.2) 151.7 513.6 56.6


4.5 2.3 4.7 19.0 20.9
18.2
20.2
58.9
38.6
36.5

10.8 192.3 (34.6) (5.3)


55.7 70.8 62.8 13.6 8.7
7.4
7.8
5.6
4.2
5.0
32.6
28.5
93.8
283.1
421.0

(12.7) 229.4 201.7 48.7


6.7 4.1 10.9 21.6 22.6
34.4
41.9
35.2
0.0
119.3
(20.5)
(33.3)
(13.7)
98.8
15.5
2.4
2.8
2.9
0.0
0.0
49.7 40.0 26.0 34.9 32.0
16.4 17.1 69.4 184.3 286.2
0.0
0.0
0.0
0.1
0.0
16.4
17.1
69.4
184.3
286.2

4.1 305.8 165.6 55.2


3.4 2.5 8.1 14.1 15.4
10.0 2.2

1.4 0.4

5.0 14.5 69.4 184.3 286.2


69.6 15.2

Revenues
YoYgrowth
Totalemployeecost
YoYgrowth
As%ofrevenue
Gen&adminexpenses
YoYgrowth
As%ofrevenue
Operatingexpenditure
YoYgrowth
As%ofrevenue
EBIDTA
YoYgrowth
EBIDTAmargin
Depreciation
YoYgrowth
EBIT
YoYgrowth
EBITmargin
Totalotherincome
YoYgrowth
As%ofPBT
Interestexpense
Profitbeforetax
YoYgrowth
As%ofrevenue
Incometaxes
Deferredtax
FBT
Effectivetaxrate
Reportednetprofit
Minorityinterest
Profitafterminorityinterest
YoYgrowth
As%ofrevenue
Dividends
Dividendtax
Retainedearnings
Dividendpayout(%)

Source:Company

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COMPANYPROFILE

IndiaInternet

MAKEMYTRIP.COM

Sustainingleadintravel
IndiaEquityResearch|Internet

Companydescription
MakeMyTrip (MMYT), founded by Mr. Deep Kalra in 2000, provides online booking of
travelrelatedproductsandservices.Forthefirstfiveyearsthecompanyfocusedonthe
nonresident Indian market in the US, servicing their USIndia requirements. In 2005, it
startedIndiaoperationsbylaunchingtheirIndianwebsite.Sincethenithasflourishedinto
a onestoptravelshop that offers online users with a broad selection of travel products
andservicesinIndiaincludinghotelbookings&holidaypackages,rail&busbookings,car
hiring, etc. According to comScore, Makemytrip.com was the second most visited travel
websiteinIndia(aftertheIndianRailwayswebsite)ineachoftheyearsfrom2009to2011
andhadanaverageofover3.9mnuniquevisitorspermonthin2011.Ithasadedicated
24x7customersupportandofficesin20citiesacrossIndiaandtwoofficesinNewYorkand
SanFrancisco.

ListedonNasdaqinAugust2010,MMYTreportednetrevenueofUSD61mninFY11(55%
CAGR over FY0811) and net profit of USD5mn in FY11. For FY12 it has guided for net
revenueofUSD8689mn.

Businessmodelandvalueproposition
ThekeytriggerforthismarkettotakeoffwasthelaunchoflowcostaircarrierslikeAir
Deccan,SpiceandSaharaduring200405whichspurredmoretravelerstochooseairtravel
over traditional rail travel. MMYTs early investment in creating a broad distribution
network(9,300+travelagentsacross700+cities)hasstrengtheneditspositioninginthis
spacewithmarketshareof48%.Italsoexpandeditssuiteofbookingservicesforhotels,
tour
packages, rail tickets, bus tickets, car hire and ancillary travel requirements such as
travel insurance and visa processing which has created a strong brand recall for the
company. Its closest competitor Yatra.com had half its market share. Further, MMYTs
timely
expansionintohotel and packagedtours segment (higher marginsegment) will
leadtonetrevenuemarginimprovement.Itscurrentrevenue(FY11)compositionis:(a)
78%airticketing;(b)18%hotels&packages;and(c)balanceemergingsegments(rail&bus
ticketing,carhire,travelinsuranceandwebpageads).
Quicksnapshot
Companynameandlocation MakeMyTripLimited,Gurgaon
Mr.DeepKalra,Mr.KeyurJoshiandMr.Rajesh
Keymangementperson
Magow
Othergroupwebsites
iXiGO.com,myguesthouse.net,luxury.com.sg
Revenues
USD61mn(FY11)
Employeecount
757(FY10)
SAIF,HelionVenture,SierraVenturesandTiger
Keyinvestors
Global
Indiawebsiteranking
Alexa:61,Vizisense:50
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MARKETDATA(R:MMYT.O,B:MMYTUS)
CMP
: USD24
52weekrange(USD)
: 34/16
Shareinissue(mn)
: 36.9
Mcap(USDmn)
: 896
Avg.DailyVol.(000)
: 129

KunalSangoi
+912266233370
kunal.sangoi@edelcap.com

GaneshDuvvuri
+912240407586
ganesh.duvvuri@edelcap.com

OmkarHadkar
+912266203147
omkar.hadkar@edelcap.com

December22,2011
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Webpagescreenshot

Table1:Managementteam
Name
Designation
DeepKalra
CoFounderandCEO

Qualification
B.Economics,PGDM,IIMA

Background/Previouslywith
EarlierworkedwithGECapital,AMF
BowlingInc.andABNAMROBank
PreviouslyworkedwithTataMotors

KeyurJoshi

CoFounder&COO

B.Sc(Chemistry),MBA,CityUniversity
NewYork

RajeshMagow

CoFounderandCFO

C.A.

Earlierworkedwithebookers/Cendant
(nowTravelport),Aptech,Quantumand
Voltas

MohitGupta

ChiefMarketingOfficer

B.Tech(MechanicalEngg.),MBA,IIMC

PreviouslyworkedwithPepsiFoods,
Voltas

RajnishKapur

ChiefInnovationOfficer

B.E.(ComputerScience),Bachelorsin
Economics

AmitSomani

ChiefProductsOfficer

B.TechinComputerScience,M.S.
(ComputerScience),Universityof
Wisconsin,USA

EarlierworkedwithKaleConsultants,
Cognosys.Alsocofounded
eTravelIndia.com
EarlierworkedwithGoogleandIBM

AmitSaberwal

SVPHotels&International HotelManagementgraduate,Post
Earlier,heworkedwithTheParkHotelsin
Markets
GraduateDiplomainSales&
BangaloreandNewDelhi.
Marketing,NationalInstituteforSales,

MohitKabra

SVPFinance

C.A,CostAccountant

Previouslyworkedwithcompanieslike
Seagrams,ColgatePalmoliveNagarjuna
FertilizersandITC

AnandKandadai SVPOutboundTours

B.Sc,PGDM(Systems)

PriortoMakeMyTrip,heworkedwith
travelcompaniesSOTC,ThomasCook
andCox&Kings.

RohitHasteer

B.Com,PGDM(HR),IMTGhaziabad

PreviouslyworkedinSamsung,
CitiFinancialandAvivaLifeInsurance

VicePresidentHuman
Resources

Source:Company

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Keyinvestorsandownership
ThecompanyhasraisedstrategicinvestmentsfromSAIFPartners,HelionVenturePartners,Sierra
VenturesandTigerGlobalpartners

Table2:Fundinghistory
Year
Name
2007
SAIF,HelionVenture,SierraVenturesandTiger
GlobalPrivateInvestmentPartnersIV,L.P.
2008

Amount(USDmn)
15.0

SAIF,HelionVenture,SierraVenturesandTiger
GlobalPrivateInvestmentPartnersV,L.P.

15.0

Source:Company,Mediasources

Table3:Operatingmetrics
FY08
Numberoftransactions('000)
Airticketing
Hotelsandpackages
Grossbookings(USDmn)
Airticketing
Hotelsandpackages
Revenuelessservicecost(USDmn)
Airticketing
Hotelsandpackages
Otherrevenue
Total
Netrevenuemargins(%)
Airticketing
Hotelsandpackages

FY10

FY11

Q1FY12

Q2FY12

1,029
37

1,251
81

1,767
110

2,825
176

904
73

996
74

198.8
26.5

260.9
52.4

408.6
57.3

647.8
94.6

218.8
45.3

213.7
31.2

14.1
2.4
0.1
16.5

Employees
Division/Function
Management
Productdevelopment
Salesandmarketing
Technologydevelopmentandtechnologysupport
Others
Total
Location
India
UnitedStates
Total

FY09

18.7
5.6
0.7
25.0

31.1
8.0
1.2
40.3

7.1
8.9

7.2
10.6

7.6
14.0

5
11
519
72
312
919

7
22
433
95
204
761

7
20
442
111
177
757

917
2
919

758
3
761

754
3
757

47.6
10.9
2.5
61.1
7.4
11.5

14.4
5.9
0.8
21.1
6.6
13.1

16.6
3.8
0.9
21.3
7.8
12.1

Source:Company

111

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Keyfinancials

Incomestatement
YeartoMarch
Revenues
Costofrevenues
Grossprofit
OperatingExpenses
EBITDA
Depreciation&amortization
EBIT
Interestexpense
Otherincome
Profitbeforetax
Tax
Coreprofit
Sharesoutstanding(mn)
EPS(INR)basic
Dilutedshares(mn)
EPS(INR)diluted

FY09
25
10
16
24
(9)
2
(10)
3
6
(7)
0
(7)
17
(0.4)
20
(0.3)

FY10
40
17
24
28
(4)
2
(6)
2
2
(6)
0
(6)
18
(0.4)
18
(0.4)

Commonsizemetricsas%ofrevenues
YeartoMarch
Costofrevenues
Grossmargin
OperatingExpenses
EBITDAmargin
EBITmargin
Netprofitmargins

FY09
38.0
62.0
95.6
(33.6)
(39.7)
(27.1)

FY10
41.1
58.9
69.9
(11.0)
(14.9)
(15.4)

112

(USDmn)
FY11
61
14
47
41
6
2
4
4
2
2
(3)
5
28
0.2
35
0.1

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FY11
23.6
76.4
66.6
9.8
6.7
7.9

IndiaInternet
Balancesheet
Ason31stMarch
Sharepremiumaccount
Reserves
Totalshareholdersfunds
Othernoncurrentliabilities
Sourcesoffunds
GoodwillandOtherIntangibleAsset
Netfixedassets
Investments
Cash&bankbalances
Debtors
Loansandadvances
Inventories
Others
Totalcurrentassets
Sundrycreditors
Otherliabilities
Totalcurrentliabilities
Workingcapital
Applicationoffunds
Bookvaluepershare(BV)(INR)

FY09
11
(38)
(27)
3
(24)
2
3
8
5
5
8
1
5
25
13
48
62
(37)
(24)
(2)

FY10
11
(36)
(25)
3
(22)
2
4
1
9
12
13
0
8
43
26
46
73
(29)
(22)
(1)

(USDmn)
FY11
112
(35)
76
1
78
3
4
1
52
13
16
0
22
103
30
6
35
67
75
3

Freecashflow
YeartoMarch
Netprofit
Depreciation
Others
Grosscashflow
Less:Changesinworkingcapital
Operatingcashflow
Less:Capex
Freecashflow

FY09
(7)
2
(3)
(9)
(5)
(3)
1
(4)

FY10
(6)
2
7
3
(3)
5
1
4

FY11
5
2
(3)
3
10
(6)
3
(9)

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Cashflowstatement
YeartoMarch
Cashflowfromoperations
Cashforworkingcapital
Operatingcashflow(A)
Netpurchaseoffixedassets
Netpurchaseofinvestments
Others
Investmentscashflow(B)
Dividends
Proceedsfromissueofequity
Proceedsfromissueofpreferredstock
ProceedsfromLTB/STB
Interestpaid&otheritems
Financingcashflow(C)
Freecashflow
Exchangeratedifferences(D)
Changeincash(A+B+C)+(D)

FY09
(9)
5
(3.1)
(1)
(11)
1
(11.8)

FY10
3
3
5
(1)
4
1
3

FY11
3
(10)
(6)
(3)
(3)
2
(3)

0
15
(0)
(1)
14.3
(4)
1
(0)

0
0
0
(0)
(0)
4
(1)
8

53
0
(1)
(1)
52
(9)
(0)
42

Ratios
YeartoMarch
ROAE(%)
ROACE(%)
Debtors(days)
Payable(days)
Cashconversioncycle
Currentratio
Fixedassetsturnover(x)
Totalassetturnover(x)
Equityturnover(x)

FY09
50.7
63.8
39
96
(57)
0.4
14.7
(2.1)
(1.9)

FY10
23.8
21.8
81
181
(100)
0.6
11.2
(1.7)
(1.5)

FY11
18.8
16.0
76
168
(92)
2.9
16.3
2.3
2.4

Valuationparameters
YeartoMarch
DilutedEPS(INR)
YoYgrowth(%)
CEPS(INR)
DilutedP/E(x)
Price/BV(x)
EV/Revenues(x)

FY09
(0.3)
(68.8)
(0.3)
NM
(15.6)
16.2

FY10
(0.4)
4.6
(0.3)
NM
(17.1)
10.4

FY11
0.1
(139.0)
0.2
176.0
9.0
10.4

114

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COMPANYPROFILE

IndiaInternet

QUIKR.COM
Playoncommunityclassified
IndiaEquityResearch|Internet

Companydescription
Quikr.com(Quikr)isacommunityclassifiedscompanythatprovideswebandmobilebased
platformenablingawidevarietyoflocalcommerceneeds.Itenablesmemberstradeand
findgoodsandservicesinavarietyofcategoriessuchaselectronics,realestate,cars,bikes,
services, jobs, education and entertainment, among others. Over the past six months,
uniquevisitorstoQuikrhaverisenfrom5mnpermonthtoover7mncurrently.

Businessmodelandvalueproposition
Quikr derives revenue through three defined revenue streamsadvertising, premium
listingandprovidingleadgenerationforsmallscalebusinesses.Withauserbaseofover
10mnpermonthitprovidesanonlinemarketplaceforindividualbuyersandsellersand
businesses to get their products and services listed on the companys platform, thus
creatingavirtuouscyclebetweenlistingsandvisitors.

Competition: Quikr competes with other free online classifieds businesses such as
Sulekha.com,Olx.inandClickIndia,amongothers.

Quicksnapshot
Companynameandlocation Quikr,Mumbai
Keymangementperson

Mr.PranayChuletandMr.JibyThomas

Othergroupwebsites

NA

Revenues

NA

Employeecount

NA

Keyinvestors

MatrixPartnersIndia,OmidyarNetwork,Norwest
VenturePartners,NokiaGrowthPartnersandeBay
Inc.
Alexa:40,Vizisense:20

Indiawebsiteranking

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115
BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset.

KunalSangoi
+912266233370
kunal.sangoi@edelcap.com

GaneshDuvvuri
+912240407586
ganesh.duvvuri@edelcap.com

OmkarHadkar
+912266203147
omkar.hadkar@edelcap.com

December22,2011
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IndiaInternet
Webpagescreenshot

Table1:Managementteam
Name
Designation
PranayChulet
Founder&Ceo
JibyThomas

Qualification Background
IIT&IIM
Booz&Co,Mitchell&Madison
Group

CoFounderandVice
PresidentofMarketing
Source:Company

Keyinvestorsandownership
ThecompanyhasraisedstrategicinvestmentsfromOmidyarNetwork,NorwestVenturePartners,
MatrixPartnersandeBayinc.

Table2:Fundinghistory
Year
Name
2009
OmidyarNetwork

Amount
INR200mn

2010

NorwestVenturePartners(NVP),OmidyarNetwork,Matrix
PartnersIndiaandeBayInc

USD6mn

2011

NokiaGrowthPartners(NGP),NorwestVenturePartnersand
eBayInc.

USD8mn

Source:Mediasources

116

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COMPANYPROFILE

IndiaInternet

REDIFF.COM

Needssheen

IndiaEquityResearch|Internet

Companydescription
Rediff.com is a horizontal web portal providing news, information, communication,
entertainment and shopping services to online users. It was founded in 1996 by Mr. Ajit
Balakrishnan as online provider of news and search engine. The company was listed on
Nasdaqin1998.Overtheyearsithasevolvedfrombeingjustanewsandsearchengineand
has ventured into various services such as email and instant messaging, news and
information channels, music, photo and video sharing platforms, and mobile valueadded
servicesandonlineshoppingservices.

MARKETDATA(R:REDF.O,B:REDIFFUS)
CMP
: USD8
52weekrange(USD)
: 18/4
Shareinissue(mn)
: 27.2
Mcap(USDmn)
: 206
Avg.DailyVol.(000)
: 683

ForFY11,thecompanyreportedrevenueandnetlossofUSD21.8mn(growthof16%over
FY10)andUSD6.6mn,respectively,andhadaregistereduserbaseof101mnatFY11end.
Rediff.comisranked9thamongthetopvisitedsitesinIndiawithmonthlyuniquevisitorsof
~15mn.

Businessmodelandvalueproposition
Thecompanyderivesrevenuethroughonlineadvertisingandfeebasedrevenues.Rediffis
among the largest players in the online nonsearch advertisement category along with
Yahoo India and Web18 group. While theres a high growth potential in online
advertisement,webelieveRediffhasfallenbehinddespitesignificantleadinscaling.Ithasa
user base of over 100mn and monthly unique visitors of close to 15mn, presenting a
significant opportunity tomonetize. This canhappenifitisable to execute some ofits
stated strategy of launching paid mobile mail, strengthening its news content and
providingitonnewmediachannels.

Rediffskeyvaluepropositionhasbeennewsandmailthathasalwayspulledvisitorsto
itsportal.Now,boththesepropositionsarenotfetchingnewusers,inourview.Rising
competition(printmedianowonline)andGooglemail&Gtalk,arechallengingRediff.
Thus, the company will have to redefine its value proposition or else there could be
higherchallengestoscale.

Quicksnapshot
Companynameandlocation Rediff.comIndiaLtd.
Keymangementperson

Mr.AjitBalakrishnan

Othergroupwebsites

tachyon.in,eternoinfotech.com,imere.com,
Fintact.com

Revenues

USD22mn(FY11)

Employeecount

335

Keyinvestors

NA

Indiawebsiteranking

Alexa:10,Vizisense:9

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117
BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset.

KunalSangoi
+912266233370
kunal.sangoi@edelcap.com

GaneshDuvvuri
+912240407586
ganesh.duvvuri@edelcap.com

OmkarHadkar
+912266203147
omkar.hadkar@edelcap.com

December22,2011
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Webpagescreenshot

Table1:Managementteam
Name
Designation
Ajit
Founder,Chairmanand
Balakrishnan
ManagingDirector
Jayesh
Sanghrajka

VicePresidentFinance

Qualification
PGDM,IIMC

Background
Earlierworkedwith
Levers

CA,ICWA

Infosys,KPMGand
TishmanSpeyer
Source:Company

Table2:Operatingmetrics
Field
Revenue
IndiaOnline
USPublishing
Assets
IndiaOnlineBusiness
U.S.PublishingBusiness
PhoneCardBusiness

FY05
12.6
6.6
6.1
25.7
16.3
9.2
0.2

FY06
18.7
12.2
6.5
74.1
64.4
9.6
0.1

FY07
28.7
20.8
7.9
86.9
75.8
11.1
0.1

FY08
32.3
23.7
8.6
101.9
88.9
12.9
0.1

FY09
25.4
19.7
5.7
70.2
62.7
7.5
0.1

FY10
18.8
14.7
4.1
67.6
61.6
6.0
0.1

(USDmn)
FY11
21.8
17.9
3.9

Source:Company

118

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Keyfinancials
Incomestatement
YeartoMarch
Revenues
Costofrevenues
Grossprofit
Operatingexpenses
EBITDA
Depreciation&amortization
EBIT
Otherincome
Profitbeforetax
Tax
Coreprofit
Sharesoutstanding(mn)
EPS(INR)basic
Dilutedshares(mn)
EPS(INR)diluted

FY07
29
5
23
17
6
3
3
4
7
0
7
29
0.2
29
0.2

FY08
32
6
26
22
4
6
(2)
7
5
0
5
29
0.2
29
0.2

FY09
25
6
19
21
(2)
6
(8)
(3)
(11)
0
(11)
29
(0.4)
29
(0.4)

FY10
19
10
9
15
(7)
5
(12)
4
(8)
0
(8)
29
(0.3)
29
(0.3)

(USDmn)
FY11
22
11
11
16
(5)
4
(9)
2
(7)
0
(7)
28
(0.2)
28
(0.2)

Commonsizemetricsas%ofrevenues
YeartoMarch
Grossmargin
OperatingExpenses
EBITDAmargin
EBITmargin
Netprofitmargins

FY07
81.1
59.6
21.5
10.7
24.3

FY08
81.4
67.8
13.6
(4.7)
15.2

FY09
75.2
81.2
(6.0)
(30.6)
(44.3)

FY10
46.3
81.5
(35.2)
(61.7)
(42.6)

FY11
50.5
72.4
(21.9)
(39.3)
(30.2)

Balancesheet
Ason31stMarch
Equitysharecapital
Reserves
Totalshareholdersfunds
Borrowings
Treasuryshares
Sourcesoffunds
GoodwillandOtherIntangibleAsset
Netfixedassets
Otherlongtermassets
Investments
Cash&bankbalances
Debtors
Others
Totalcurrentassets
Sundrycreditors
Otherliabilities
Totalcurrentliabilities
Workingcapital
Applicationoffunds
Bookvaluepershare(BV)(INR)

FY07
126
(48)
77
0
0
78
0
10
10
1
54
11
2
66
8
1
9
57
78
3

FY08
128
(37)
90
1
0
91
0
14
12
1
59
12
4
75
9
2
11
64
91
3

FY09
129
(65)
64
1
0
65
0
8
8
2
46
6
2
54
6
1
7
47
65
2

FY10
130
(66)
64
1
(3)
61
0
5
10
2
45
6
2
52
1
7
8
44
61
2

(USDmn)
FY11
131
(72)
59
1
(4)
55
5
6
5
2
37
7
2
46
7
2
9
37
55
2

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Freecashflow
YeartoMarch
Netprofit
Depreciation
Others
Grosscashflow
Less:Changesinworkingcapital
Operatingcashflow
Less:Capex
Freecashflow
Cashflowstatement
YeartoMarch
Cashflowfromoperations
Cashforworkingcapital
Operatingcashflow(A)
Netpurchaseoffixedassets
Netpurchaseofinvestments
Others
Investmentscashflow(B)
Dividends
Proceedsfromissueofequity
ProceedsfromLTB/STB
Interestpaid&otheritems
Financingcashflow(C)
Freecashflow
Exchangeratedifferences(D)
Changeincash(A+B+C)+(D)

FY07
7
3
1
11
4
7
8
(1)

FY08
5
6
(1)
9
1
8
10
(2)

FY09
(11)
6
9
4
(1)
5
5
(0)

FY10
(8)
5
1
(2)
(3)
1
(0)
1

FY11
(7)
4
2
(1)
(1)
0
7
(7)

FY07
11
(4)
7
(8)
0
(0)
(8)
0
0
0
2
2
(1)

FY08
9
(1)
8
(10)
0
2
(9)
0
0
0
6
6
(2)

FY09
4
1
5
(5)
(2)

FY11
(1)
1
0
(7)
(0)
0
(7)

(14)

FY10
(2)
3
1
0
0
(4)
(4)
0
(3)
0
5
2
1
0
(1)

Ratios
YeartoMarch
ROAE(%)
ROACE(%)
Debtors(days)
Payable(days)
Cashconversioncycle
Currentratio
Fixedassetsturnover(x)
Totalassetturnover(x)
Equityturnover(x)
Valuationparameters
YeartoMarch
DilutedEPS(INR)
YoYgrowth(%)
CEPS(INR)
DilutedP/E(x)
Price/BV(x)
EV/Revenues(x)

(7)
0
0
0
(12)
(12)
(0)

(1)
0
0
(1)
(7)
0
(8)

FY07
9.7
4.3
102
85
17
7.4
3.7
0.4
0.4

FY08
5.9
(1.8)
129
96
33
6.8
2.6
0.4
0.4

FY09
(14.6)
(10.2)
132
110
22
7.5
2.3
0.3
0.3

FY10
(12.6)
(19.0)
118
68
50
6.4
2.8
0.3
0.3

FY11
(10.7)
(15.2)
109
69
40
5.2
3.8
0.4
0.4

FY07
0.2
443.3
0.3
31.7
2.9
5.8

FY08
0.2
(29.8)
0.4
45.2
2.5
5.1

FY09
(0.4)
(329.2)
(0.2)
NM
3.5
6.9

FY10
(0.3)
(28.3)
(0.1)
NM
3.5
9.3

FY11
(0.2)
(13.7)
(0.1)
NM
3.6
7.9

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COMPANYPROFILE

IndiaInternet

SNAPDEAL.COM

Thesuperfastscalingdealsite
IndiaEquityResearch|Internet

Companydescription
SnapDeal.com(SnapDeal)isadailydealwebsitethatoffersupto90%discountsondining,
healthandbeautyservices,brandedproducts,travelandmore.Thecompanyfoundedby
Mr.KunalBahlandMr.RohitBansalinFebruary2010hasscaleduprapidly,evidentfrom
fact that it has added 11mn subscribers in a short span of time. Started as a pure
the
discount couponing site i.e., deals on services, it has expanded into products. Currently,
SnapDealoperatesacross50citiesinIndiawithanemployeeforceofover700andintends
toincreasepresenceto100citiesandemployeestrengthupto1,000plusby2011end.It
emulatesGroupons(USbaseddealsite)businessmodelthatrecentlywentpublicandis
valuedatUSD15bnplus.

Businessmodelandvalueproposition
Thecompanytiesupwithlocalmerchantstosourcebulkdealsandoffersittoregistered
usersatadiscount.Thus,whileforthemerchantitcreatesdemandofperishableaswellas
nonperishable inventory; the user gets discounted deals. The company charges a
marketingfeeof2030%fromthemerchantoneveryvouchersoldthroughitsplatform.
WhileitemulatesGroupon,whichacquiredSosasta.com(inJanuary2011)tomarkitsIndia
entry,SnalpDealhascontinuedtomaintainitslead.

Currently,SnapDealhasmorethan50,000merchanttieupsandwiththesuccessofthe
business model, 50% of the merchant tieups are now through inbound requests
(credible,inourview).Further,withsuchlargenumberofmerchanttieupsitalsohasa
deal inventory for the next two months which is critical. It expects to close FY12 with
revenueofINR1.5bnandINR5billioninFY13.Interestingly,SnapDealderives45%ofits
sales from tier2 cities, implying demand due offline access issues and availability of
aspiration brands. With its recent foray in products ecommerce, Snapdeal is now
leveraging its large base of 11 million registered users. It currently has catalogue of
productsinvariouslifestylecategoriessuchaspersonalcare,watches,sunglasses,jewelry,
among others. Far ahead of competition: As per comScore in November 2011,
Snapdeal.comledcouponcategorywith5.2mnuniquevisitors,followedbyMyDala.com
(1.4mnvisitors)andCrazeal(989,000visitors).
Quicksnapshot
Companynameandlocation JasperInfotechLtd,NewDelhi
Mr.KunalBahlandMr.RohitBansal
Keymangementperson
Othergroupwebsites
Snapdeal.com
Revenues
INR25mn(FY10)
Employeecount
NA

BessemerVenturePartnersNexusVenturePartners
Keyinvestors
andIndoUSVenturePartners
Indiawebsiteranking
Alexa:54,Vizisense:15
EdelweissResearchisalsoavailableonwww.edelresearch.com,
121
BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset.

KunalSangoi
+912266233370
kunal.sangoi@edelcap.com

GaneshDuvvuri
+912240407586
ganesh.duvvuri@edelcap.com

OmkarHadkar
+912266203147
omkar.hadkar@edelcap.com

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Webpagescreenshot

Table1:Managementteam
Name
Designation Qualification
KunalBahl CEO
B.E,Businessdegree
WhartonSchoolandKellogg
SchoolofManagement
RohitBansal Founder

M.Tech,IITDelhi

Background
MicrosoftandDeloitte
Consulting
EarlierworkedwithUS
basedCapitalOne
Source:Company

Keyinvestorsandownership
ThecompanyhasraisedstrategicinvestmentsfromBessemerVenturePartners,NexusVenture
PartnersandIndoUSVenturePartners.

Table2:Fundinghistory
Year
Name
July,2011
BessemerVenturePartnersNexusVenturePartnersand
IndoUSVenturePartners
January,2011 NexusVenturePartnersandIndoUSVenturePartners

Investment
USD40mn
USD12mn

Source:Mediasources

Table3:Keyfinancials
JasperInfotech
Revenues
Expenditure
EBITDA
Depreciation
EBIT
Otherincome
Provisionfortax
Profit/(Loss)fortheyear

(INRmn)
FY08
0.0
0.3
(0.3)
0.0
(0.3)
0.0
0.2
(0.4)

FY09
6.1
11.1
(5.1)
0.4
(5.5)
0.2
(1.8)
(3.6)

FY10
25.0
30.8
(5.8)
0.4
(6.2)
1.2
2.2
(7.2)
Source:Company

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COMPANYPROFILE

IndiaInternet

ZAPAK.COM

Scalingtheonlinegaming

IndiaEquityResearch|Internet

Companydescription
Zapak.com (Zapak) is an online gaming portal promoted by the Anil Dhirubhai Ambani
Group'ssubsidiarycompanyRelianceBigEntertainment.Sinceitslaunchin2006ithasbuild
aportfolioofover1,000gamesinsingleplayer,multiplayeranddownloadcategories.Ithas
8mnregisteredusers,makingitthelargestgamingportalinIndia.Thecompanyhassetupa
chainofover100gamingcafesviz.ZapakGameplexesacross40citiesinIndia,whichoffer
over165games.ZapakisalsothebiggestpublisherofMassivelyMultiplayerOnlineGames
(MMOG)inIndiaandhaslaunchedsomeoftheworldsmostpopularMMOGtitlessuchas
CrazyKart(inpartnershipwithShanda,ChinaslargestgamingcompanyMcapUSD3bn)
andRunescape(worldssecondlargestMMOwithover8mnsubscribers,inpartnership
withJagexGamesStudio).

ForFY10,thecompanyreportedrevenueofINR402mn(growthof54%overFY09).InFY10,
it derived 53% of revenue (INR230mn) from gaming services and the balance from its
licensingandmerchandisingbusiness.

Businessmodelandvalueproposition
Thecompanyhasbuiltastrongcaseforitselfbyprovidinggamingservicesthroughitsweb
portal and chain of cafes. It derives major share of its gaming revenues from online
advertising and sponsorship (61% of gaming revenue) and subscription (24% of gaming
revenue). Recently, it launched a new subscription service called ZapakPlus which will
provideusers120and200gamesatamonthlyfeeofINR99andINR149,respectively.

WebelievewithIndiaatthecuspofaninternetrevolutionalongwithhigherproportionof
usersinthe1535agegroup,onlinegamingplatformsprovidingcasualgamesarelikelyto
benefitincludingZapak.com.

Quicksnapshot
Companynameandlocation ZapakDigitalEntertainment,Mumbai

KunalSangoi

Revenues

INR402mn(FY10)

+912266233370
kunal.sangoi@edelcap.com

GaneshDuvvuri
+912240407586
ganesh.duvvuri@edelcap.com

Employeecount

NA

OmkarHadkar

Keyinvestors

NA

Indiawebsiteranking

Alexa:478,Vizisense:167

Keymangementperson

Mr.RohitSharma

Othergroupwebsites

NA

EdelweissResearchisalsoavailableonwww.edelresearch.com,
123
BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset.

+912266203147
omkar.hadkar@edelcap.com

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IndiaInternet
Webpagescreenshot

Table1:Managementteam
Name
Designation Qualification
RohitSharma CEO
MBA,MSc

NarendraK

CFO

CA

Background/Previouslywith
EarlierworkedwithTimesInternet,
BennettColeman&CoandCyberMedia
India
EarlerworkedwithLevelUpNetwork
India,TataTeleservices,HughesTelecom
andGTL
Source:Mediasources

Table2:Keyfinancials(Revenuebreakup)
Onlineadvertisement&sponsorship
YoYgrowth
Franchisefees
YoYgrowth
Subscription
YoYgrowth
Massivelymultiplayeronlinegames
YoYgrowth
Less:Servicetax
YoYgrowth
Services
Merchandising
YoYgrowth
Food&Beverage
YoYgrowth
Casualgames
YoYgrowth
Sales
Totalrevenues
YoYgrowth

FY08
108
4,256.8

NM
13
NM

NM
13
6,753.6
108
11
NM
0
NM
0
NM
12
120
5,130.6

FY09
119
9.5
18
NM
41
227.4
1
NM
18
35.8
161
94
7.2
5
9.8
0
(0.1)
100
261
117.9

(INRmn)
FY10
153
29.1
32
75.1
61
48.8
5
255.9
22
20.0
230
164
0.7
9
0.6
0
(0.3)
173
402
54.0

Source:Company

124

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IndiaInternet
Table3:Keyfinancials
Expenditure
Operatingcost
YoYgrowth
As%ofrevenue
Employeecost
YoYgrowth
As%ofrevenue
G&A
YoYgrowth
As%ofrevenue
S&M
YoYgrowth
As%ofrevenue
Operatingexpenditure
YoYgrowth
As%ofrevenue
EBIDTA
YoYgrowth
EBIDTAmargin
Depreciation
YoYgrowth
EBIT
YoYgrowth
EBITmargin
Totalotherincome
YoYgrowth
As%ofPBT
Interestexpense
Priorperiodadjustments
Profitbeforetax
YoYgrowth
As%ofrevenue
Incometaxes
Deferredtax
FBT
Reportednetprofit

(INRmn)
FY08

FY09

76
387.7
63.7
208
452.7
173.3
70
318.3
58.5
201
156.9
167.3
555
274.6
462.9
(435.0)
198.3
(362.9)
27.3
422.0
(462.4)
206.1
(385.7)
0.0
NM
(0.0)
31.2
(0.2)
(493.3)
217.2
(411.6)

160
109.5
61.3
204
(1.6)
78.2
140
100.0
53.7
148
(26.4)
56.5
652
17.6
249.8
(391.2)
(10.1)
(149.8)
61.1
123.6
(452.3)
(2.2)
(173.2)
5.1
110.9
(1.1)
2.6

FY10

200
25.2
49.8
184
(10.1)
45.7
123
(12.5)
30.5
120
(18.6)
29.9
627
(3.9)
155.8
(224.7)
(42.6)
(55.8)
107.7
76.2
(332.4)
(26.5)
(82.6)
1.8
(0.7)
(0.5)
9.8
1.1
(449.8)
(341.5)
(8.8) (24.1)
(172.2) (84.9)
0.7
0.7

1.4
4.4
(494.7) (454.9) (342.3)
Source:Company

125

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APPENDIX

126

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125
92

29,342
4,404
2,197
514
1,050
48,854
11,594
43
1,590
90
73

29,321
6,325
2,417
243
914
34,204
9,156
36
313
61
22
71
154

36,476
4,558
2,099
824
1,084
65,291
13,685
44
2,277

553
328
1,332
500
918
1,233

445
279
1,136
460
828
1,070

327
202
834
365
666
844

408
182
259

342
119
140

5,794

1,073

224
77
57

4,456

Diversifiedgroup(QQ.com,QQ 2,903
Instantmessenger,SoSo,PaiPai,
Tenpay)

Tencent

Soufun
Realestate
RenrenInc
Socialnetworking
Youku.comInc
Videosharing
Onlinegame
Changyou
Games
GiantInteractive Games
NetEase.com
Games
PerfectWorld
Games
ShandaGames
Games
ShandaInteractive Games
USInternetcompanies
Google
Search
Yahoo
Horizontalportal
AOL
Horizontalportal
LinkedIn
Professionalnetworking
Monster
Jobs
Amazon
eCommerce
eBay
eCommerce
Jobstreet
Jobs
Groupon
Onlinedeals
IndiaInternetcompanies
MakeMyTrip
Travel
Rediff
Horizontalportal
InfoEdge
Classifieds
Sify
Horizontalportal

850

613

Searchengine&gaming
(Changyou)

Sohu.com

127
51.6
15.7
41.1
3.8

24.0
(2.1)
(25.5)
102.4
1.0
39.6
4.9
38.8
2,052.3

22.3
5.7
51.6
16.3
(5.4)
10.0

76.7
63.9
154.4

59.4

18.9

37.9
44.8
79.6
57.7
49.9
30.0
12.3

3.0

47.7

0.1
(30.4)
(9.1)
111.5
14.9
42.8
26.6
17.4
408.1

36.1
38.0
36.2
26.1
24.4
26.7

52.3
56.0
145.3

53.5

38.7

30.0
23.6
92.4
52.9
27.2
46.3
18.0

26.1

38.8

24.3
3.5
(4.5)
60.2
3.2
33.6
18.0
1.9
43.2

24.3
17.8
17.3
8.5
10.9
15.2

19.2
52.2
84.2

30.0

26.3

21.6
11.2
55.1
29.5
25.0
23.1
25.4

Revenuegrowth(YoY)
10/09
11/10
12/11

2,103

317

74
339
1,305
17
205
315
36

2,683

382

95
349
1,970
24
237
386
86

15,956
1,617
367
79
175
2,192
3,746
19
(110)

265
180
570
176
282
170

6 13
(5)
18 23
5

11,777
1,513
701
39
25
1,974
2,837
16
(204)

210
126
421
144
242
224

29

23

19,394
1,664
306
144
201
3,011
4,399
18
318

318
203
671
174
309
217

81 151 174
15 (1) 7
(10) (12) 7

1,534

257

46
259
650
11
171
171
113

EBITDA(USDmn)
2010
2011
2012

47.2

37.3

36.6
33.4
58.0
16.1
37.0
41.7
7.6

54.4
36.7
16.7
15.4
16.6
4.5
32.3
43.5
(6.9)

59.5
64.5
50.2
38.2
34.1
15.9

9.8 13.9
(21.9)
25.8 31.2
3.4

40.2
23.9
29.0
16.1
2.7
5.8
31.0
45.0
(65.3)

64.1
62.2
50.4
39.5
36.4
26.6

36.0 44.2
19.2 (0.6)
(17.3) (8.3)

52.8

41.9

29.2
31.5
55.6
16.8
39.1
33.2
28.1

105.9
52.7
131.1
40.0
57.3
361.5
99.0

19.7
20.8
(35.0)
360.4
(67.9)
31.0
23.1
58.0
20,382.3

25.0
(5.0)
32.5
(14.3)
(14.4)
(34.6)

27.6

20.4

27.2
2.8
50.9
42.5
15.2
22.4
138.9

35.5
6.9
(47.7)
101.7
595.9
11.0
32.0
13.7
(46.0)

26.4
43.2
35.5
22.0
16.5
(24.4)

Source:Companies,Bloomberg

26.9

82.2

21.5
2.9
(16.6)
82.2
15.2
37.4
17.4
(2.5)
(388.5)

20.0
12.8
17.8
(1.2)
9.4
27.9

86.9 14.9
(104.5) (1,142.4)

37.1

18.3 (234.5) 110.0


(27.9)
31.4 37.7 24.8
81.4

53.2
36.5
14.6
17.5
18.6
4.6
32.1
41.7
14.0

57.4
61.8
50.4
34.8
33.6
17.6

42.6 63.1
3.8 533.1
2.7

46.3 63.4

23.6

62.8
30.9
100.8
46.5
20.3
84.2
(68.1)

EBITDAgrowth(YoY)
10/09
11/10
12/11

35.6 15.3

38.3
30.9
56.4
17.8
34.1
41.5
14.5

EBITDAmargin(%)
2010 2011 2012

Table1:FinancialsandvaluationsofglobalandIndianInternetcompanies
Revenue(USDmn)
2010
2011
2012
ChinaInternetcompanies
InternetandMedia
51jobJOBS
Jobs
156 203 247
Alibaba
Diversifiedgroup
821 1,015 1,128
Baidu
Searchengine
1,170 2,250 3,490
Bitauto
Automobile
68 104 134
Ctrip
Travel
437 555 694
FocusMedia
Onlineadvertising
516 755 930
SinaCorp.
MediaandMobileVAS,Social
403 475 596
networking(Weibo.com)

IndiaInternet

AppendixI:FinancialsandvaluationsofInternetcompanies

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4.9
0.8
4.4
3.1
0.9
1.7

202,695
19,832
1,470
6,185
1,007
79,286
39,167
234
14,765

896
206
601
760

USInternetcompanies
Google
Search
Yahoo
Horizontalportal
AOL
Horizontalportal
LinkedIn
Professionalnetworking
Monster
Jobs
Amazon
eCommerce
eBay
eCommerce
Jobstreet
Jobs
Groupon
Onlinedeals

IndiaInternetcompanies
MakeMyTrip
Travel
Rediff
Horizontalportal
InfoEdge
Classifieds
Sify
Horizontalportal

128

866
169
510
798

163,448
17,142
1,139
5,799
908
74,857
37,698
207
14,520

36.9
0.8
0.7
0.3
0.4
2.3
2.0
0.0
(0.3)

0.2 0.2
(0.2)
0.3 0.3
(0.2)

26.3
0.9
(7.3)
0.1
(0.3)
2.5
1.4
0.0
(1.3)

4.0
0.6
3.9
3.0
0.8
1.0

1,181
946
5,794
561
1,201
2,254

Onlinegame
Changyou
Games
GiantInteractive Games
NetEase.com
Games
PerfectWorld
Games
ShandaGames
Games
ShandaInteractive Games
3.3
0.5
2.6
2.3
0.7
1.5

22.3
9.6

1.1 29.5
1.7 19.6
(0.0)

(0.1)

756
646
3,921
339
839
1,582

10.1

166.6
35.6

0.4

21.6
22.3
4.8

51.3
18.0
19.1

0.5

44.0
0.9
0.7
0.5
0.5
3.2
2.3
0.0
0.3

6.7
7.6
17.6
4.2
6.1
21.4

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32.5

114.2

16.9
19.1
22.9
229.2
19.6
76.3
15.2
15.2

5.6
6.3
11.6
3.8
5.4
39.6

20.3
17.9
37.7
20.6
15.9
11.5
56.3

P/E(x)
2011

11.9

33.3
21.3
75.0
10.3
18.6
17.0
30.2

2.7
0.1
4.6
0.3
1.6
2.2
1.4

5.6

2010

2012

Table2:FinancialsandvaluationsofglobalandIndianInternetcompanies(Contd.)
EPS(USD)
MCap
EV
(USDmn) (USDmn)
2010
2011
ChinaInternetcompanies
InternetandMedia
51jobJOBS
Jobs
1,203 902 1.3 2.1
Alibaba
Diversifiedgroup
4,981 3,557 0.0 0.1
Baidu
Searchengine
39,328 37,580 1.5 3.0
Bitauto
Automobile
165 47 (5.7) 0.2
Ctrip
Travel
3,233 2,618 1.1 1.4
FocusMedia
Onlineadvertising
2,796 2,222 1.3 1.7
SinaCorp.
MediaandMobileVAS,
3,432 2,696 (0.3) 0.9
Socialnetworking
(Weibo.com)
Sohu.com
Searchengine&gaming
1,850 1,311 3.6 4.8
(Changyou)
Tencent
Diversifiedgroup
36,909 34,974 0.6 0.9
Soufun
Realestate
1,027 1,058 0.2 1.4
RenrenInc
Socialnetworking
1,729 1,336 (0.3) (0.0)
Youku.comInc
Videosharing
1,953 1,361 (1.2) (0.2)

26.5

50.4

14.2
17.3
22.7
121.5
14.3
54.0
13.1
15.2
81.4

4.6
5.3
10.2
3.6
4.8
22.9

17.8
7.9

8.6

15.8
17.0
24.8
15.8
14.3
9.2
36.7

2012

24.1

138.1

12.5
10.5
1.7

9.5
31.1
11.4
13.2

3.6
5.2
9.8
2.1
3.5
7.1

21.7
14.1

5.1

21.5
12.7
56.5
3.8
15.0
11.4
23.9

3.4

9.5
10.2
19.1
2.0
11.1
5.8
31.3

22.4

69.1

10.2
10.6
3.1
73.5
5.2
34.2
10.1
11.1

2.9
3.6
6.9
1.9
3.0
9.3

17.7

37.9

8.4
10.3
3.7
40.3
4.5
24.9
8.6
11.4
45.6

2.4
3.2
5.8
2.0
2.7
7.3

16.6 13.0
7.0 6.1
193.3
195.9

4.1

12.1
10.5
28.8
2.8
12.7
7.1
74.7

EdelweissSecuritiesLimited

14.7
9.4
8.5
4.9

6.9
3.1
0.6
25.4
1.1
2.3
4.3
6.4
47.2

3.6
4.7
6.9
1.5
1.8
2.7

12.7
4.6
22.6
34.1

3.0

7.7
6.1
33.6
2.4
7.4
5.4
8.5

8.3

9.9

6.9
4.5
0.7
12.0
1.0
1.6
3.4
5.5
9.3

2.7
3.4
5.1
1.2
1.5
2.1

8.3
3.0
14.5
13.9

2.2

5.9
4.9
17.5
1.6
5.8
3.7
7.2

6.6

7.2

5.6
4.4
0.7
7.5
0.9
1.2
2.9
5.4
6.5

2.1
2.9
4.3
1.1
1.3
1.8

6.4
2.5
9.5
7.6

1.7

4.9
4.4
11.3
1.2
4.7
3.0
5.8

MCap/Revenues(x)
2010
2011
2012

Source:Companies,Bloomberg

EV/EBITDA(x)
2010
2011
2012

IndiaInternet

IndiaInternet

AppendixII

TopChinesewebsites

Thecompanyfoundedin2000
byRobinLi,istheleading
Chinesesearchengine.Apart
fromitsbasicsearch
functionalityitprovidesother
featureslikemapsearch,video
search,newssearch,etcboth
oninternetandmobiles.Apart
fromcateringtoindividual
usersitalsoservesbusinesses
bydisplayingadvertisements
throughitsownandaffiliated
websites.Baiduisoftencalled
theGoogleofChina.
Revenue:USD2.2bn(CY11E)

Alibaba.comisaB2Be
commercecompanyand
flagshipportalofAlibaba
Group.TheCompanyprovides
aplatformconnectingsmall
andmediumsizebuyersand
suppliersfromaroundthe
worldthroughitsthreeportals
alibaba.com,1688.comand
aliexpress.com.AsofJune
2011,ithasaregistereduser
baseof68.9mnusers.

Revenue:USD1.0bn(CY11E)

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IndiaInternet

Launchedin2003,Taobaoisthe
largestonlineretailwebsitein
China(partofAlibabagroup),
offeringbothC2CandB2C
shoppingplatformsaswellasa
varietyoffeaturesandservices
aimedatcreatingaholistic
shoppingexperience.Itcurrently
hasmorethan800mnproduct
listingsandservesmorethan
370mnregisteredusers.Taobao
Marketplacereceivesmorethan
50mnuniquevisitorsdailyand
featuresintheworldstop20
mostvisitedwebsites.

Revenue:NA

LaunchedinApril2008,Taobao
Mall(www.tmall.com)isthe
onlineshoppingportalofAlibaba
groupwith48.5%shareofthe
countrysbusinesstoconsumer
(B2C)onlineretailmarket.Taobao
Mallcurrentlyfeaturesmorethan
70,000majormultinationaland
Chinesebrands.Itoffersseveral
productverticalswithcustomized
customerservices,including
consumerelectronics,home
furnishing,designerfootwear,
importedgoods,etc.

Revenue:NA

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IndiaInternet

360Buy.comisanonlineportal,
launchedin2004byMr.
QiangdongLiu,providinge
commerceservicestoB2C
market.AlsoknownasJingdong
mall,ithasatpresent25mn
registeredusersand6,000
suppliersaroundChina,selling
qualityproductscovering
altogether11categories,namely,
homeappliances,digitaldevices,
computers,generalmerchandise,
clothing,booksandfood,etc.and
morethan50mnpageviewsdaily.

Revenue:NA

163.comistheonlinegaming
portalofNetEaseGroupand
focusesonofferingmassively
multiplayeronlineroleplaying
games(MMORPGs)totheChinese
market.Currentportfolioof
MMORPGsincludeFantasy
WestwardJourney,Westward
JourneyOnlineII,Westward
JourneyOnlineIII,TianxiaIIand
Datang,aswellasthelicensed
gameWorldofWarcraft.InCY10,
onlinegamingcontributed87%
(USD749mn)totheNetEase
Group'srevenues(USD858mn.)

Revenue:Onlinegaming
revenuesUSD749mn(CY10)

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IndiaInternet
SohugroupisaleadingChinese
onlinemedia,search,gaming,
communityandmobileservice
groupandhasacomprehensive
portfolioofChineselanguageweb
properties.Itgeneratesmajor
portionofrevenuesfrombrand
advertising(USD212mn,35%of
revenuesinCY10)andonline
gamebusinessthroughits
majorityownedsubsidiary
Changyou(USD327mn,53%of
revenuesinCY10)

Revenue:USD613mn(CY10)

SINACorporationprovidesonline
mediaandmobilevalueadded
services(MVAS)mainlythrough
SINA.com(onlinenewsand
content),Weibo.com(microblog)
andSINAMobile(MVAS).Ithasan
arrayofservicesincludingMVAS,
microblog,blog,videoandmusic
streaming,photosharing,online
games,email,search,classified
listings,feebasedservices,etc
andgeneratesmajorityofits
revenuesfromonlineadvertising
andMVASofferings.

Revenue:USD475mn(CY11E)

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IndiaInternet
YoukuwasfoundedbyVictorKoo
in2005as1VergeInc.andlater
renamedtoYouku.comin2008.
Thecompanyenablesonlineusers
tosearch,viewandsharevideos
fromitsrepositoryofmorethan
2100movietitles,1500TVserial
titlesandover246,000hoursof
videocontent.Itgenerates
substantialportionofrevenues
fromadvertisingandhasseenthe
numberofadvertisersincrease
from141in2008to303in2009
andto423in2010.Asper
iResearchithada37%market
shareintermsoftotalusertime
spentviewingonlinevideosin
Chinain2010.

Revenue:USD140mn(CY11E)

Ganji.com.foundedin2005,
onlineclassifiedinformation
platformproviding
informationonproperty
rental,secondhandgoods
sale,jobrecruitment,vehicle
sale,petticketing,education
andtraining,cityactivitiesand
localbusinessservices.Ithas
anextensivecoverageof374
cities.In2009theCompany
launchedmobileversionofits
classifiedportal,Ganji.cn.the
companyisbackedby
BlueRunVenturesandNokia
GrowthPartners.

Revenue:NA

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IndiaInternet
TopUSwebsites

Google.comisaglobalsearch
enginehelpinginternetusersto
connecttoinformationtheyneed
acrossdevicesandinnearlyevery
countryacrosstheglobeandin
146languages.Itsconstant
innovationinwebsearch,means
ofconnectingpeopleand
advertisinghasmadeitswebsite
thetopinternetpropertyandone
ofthemostrecognisedbrandin
theworld.

Revenue:USD29.3bn(CY11E)

Facebookisworld'slargest
networkingsitewithover800
mnusersacrosstheglobe.It
enablesonlineuserstoconnect
andconversewithfriends,
sharephotosandvideos,play
games,etc.Itgenerates
revenuesthrough
advertisementsandsaleof
virtualgoods.

Revenue:USD4.3bn(CY11E)

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IndiaInternet

Yahoo!wasfoundedbyJerryYang
andDavidFiloin1994,provides
widerangeofonlineserviceslike,
searchengine(Yahoo!Search),
mail,news,groups,online
mapping(Yahoo!Maps),video
sharingandsocialmediawebsites
MemeandWretch.Ithasa
presenceinmorethan50
countriesandover25languages.

Revenue:USD4.4bn(CY11E)

YouTubeisavideosharing
website,createdbyChadHurley,
SteveChen,andJawedKarim,in
February2005andwastakenover
byGooglein2006forUSD1.65bn,
onwhichuserscanupload,share
andviewvideos.Unregistered
usersmaywatchvideos,and
registeredusersmayuploadan
unlimitednumberofvideos.Ithas
presencein25countriesacross43
languages,morethan13mnhours
ofvideowereuploadedduring
2010.Itgeneratesmajorityportion
ofrevenuefromdisplayad.
Revenue:NA

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IndiaInternet
Thecompanyfoundedin1995is
anonlineretailer,serving
consumersthroughitsretailweb
sitesandfocusesonselection,
price,andconvenience.Italso
offersprogramsthatenable
sellerstoselltheirproductsonits
websites,andtheirownbranded
websites.

Revenue:USD48bn(CY11E)

Wikipediaisawebbased,
multilingualfreecontent
encyclopedia.Sinceitscreationin
2001,Wikipediahasgrownrapidly
intooneofthelargestreference
websites,attracting400mn
uniquevisitorsmonthlyasof
March2011accordingto
ComScore.Therearemorethan
82,000activecontributors
workingonmorethan19mn
articlesinmorethan270
languages.

Revenue:NA

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IndiaInternet
Twitter,foundedbyJackDorsey,
BizStoneandEvanWilliamsin
March2006,isasocial
networkingandmicroblogging
servicethatallowsuserstopost
theirlatestupdatesandconnects
userstothelatestinformation
aboutwhattheyfindinteresting.
Itgeneratesrevenuesthrough
PromotedTweets,whichshowup
whenuserssearchforkeywords
thattheadvertisershavebought
tolinktotheirads.
Revenue:NA

Foundedin1995,eBayisanonline
marketplaceforthesaleofgoods
andservices,aswellasother
onlinecommerce,platforms,and
onlinepaymentsolutionsto
individualsandbusinesses.Ithas
over97mnactiveusersglobally(as
ofSept.2011).

Revenue:USD11.6bn(CY11E)

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IndiaInternet
PartoftheGooglegroup,itfocuses
onhelpingpeoplehavetheirown
voiceonthewebandorganising
informationfromthepersonal
perspectiveandalsoform
communitiesbasedoncommon
interests.Itssimpletouse
interfaceandcustomisable
templateshasmadeitaninstant
successinthebloggercommunity.

Revenue:NA

FoundedbyCraigNewmarkin
1995,asanemaillistsiteforSan
Franciscolaterevolvedintoa
Webforumforlocalsin
metropolitanareasacrossthe
globetopostlistingsforjobs,
housing,companionshipand
dating,saleofgoodsand
services,events,andadditional
communityinformation.eBay
holds~30%ofthecompany.

Revenue:NA

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IndiaInternet

AppendixIIITopwebsitesbycategoryinIndia(MoM%changeinuniqueusers)
DataForMonth:
Airlines
Jetairways.com
Goindigo.in
Flykingfisher.com
Spicejet.com
Airindia.in

Sep2011

DataForMonth:

UU %change
846,247
782,144
583,886
497,182
402,288

13.5
46.4
20.7
55.5
1.5

Airlines

Aug2011
UU

Jetairways.com
Goindigo.in
Flykingfisher.com
Airindia.in
Spicejet.com

745,813
534,318
483,881
396,434
319,795

DataForMonth:
%
change
(2.6)
(21.2)
(28.7)
(20.9)
(29.8)

Airlines
Jetairways.com
Flykingfisher.com
Goindigo.in
Airindia.in
Spicejet.com

July2011
UU
766,057
678,326
678,326
501,051
455,789

DataForMonth:
%
change
(10.9)
(17.9)
(8.7)
9.1
(3.1)

June2011

Airlines
Jetairways.com
Flykingfisher.com
Goindigo.in
Spicejet.com
Airindia.in

UU
859,789
826,626
743,368
470,338
459,344

%
change
(25.5)
19.7
(3.9)
(20.9)
(29.8)

Auto
Carwale.com
Cardekho.com
Zigwheels.com
Gaadi.com
Tatamotors.com

UU %change
1,363,913
15.1
1,001,570
(10.4)
897,768
16.8
634,087
(15.1)
406,527
(8.0)

Auto
Carwale.com
Cardekho.com
Zigwheels.com
Gaadi.com
Tatamotors.com

UU %change
1,184,541
(12.0)
1,117,372
(5.3)
768,535
(2.7)
746,707
24.3
441,901
0.0

Auto
Carwale.com
Cardekho.com
Zigwheels.com
Gaadi.com
Fordfigoindia.com

UU %change
1,346,604
(6.2)
1,179,347
(7.5)
789,474
(20.9)
600,561
(3.7)
590,645
0.0

Auto
Carwale.com
Cardekho.com
Zigwheels.com
Gaadi.com
Tatamotors.com

UU %change
1,434,940
8.5
1,274,585
13.4
998,178
31.0
623,345
(0.6)
428,597
0.0

B2CClassifieds
Quikr.com
Sulekha.com
Olx.in
Clickindia.com
Asklaila.com

UU %change
7,013,862
(3.5)
4,748,917
(8.8)
3,562,636
(11.7)
2,607,145
10.1
2,019,080
(2.2)

B2CClassifieds
Quikr.com
Sulekha.com
Olx.in
Clickindia.com
Asklaila.com

UU %change
7,268,091
3.2
5,206,005
(14.0)
4,036,955
23.6
2,369,039
(8.7)
2,063,656
(34.5)

B2CClassifieds
Quikr.com
Sulekha.com
Olx.in
Asklaila.com
Clickindia.com

UU %change
7,041,270
17.0
6,050,366
14.0
3,265,791
34.8
3,150,000
8.9
2,594,781
19.0

B2CClassifieds
Quikr.com
Sulekha.com
Asklaila.com
Olx.in
Clickindia.com

UU %change
6,017,299
(0.0)
5,306,242
(4.9)
2,892,551
20.7
2,422,761
26.3
2,179,851
(24.7)

Banking
HDFCBank
ICICIBank*
SBIBank
Citibank
AxisBank*

UU %change
5,359,940
(6.6)
5,100,000
(7.1)
4,706,905
6.2
3,583,878
(14.5)
2,950,000
11.3

Banking
HDFCBank
ICICIBank*
SBIBank
Citibank
AxisBank*

UU %change
5,741,071
(15.7)
5,488,888
(7.4)
4,433,757
(10.5)
4,189,493
(1.5)
2,650,000
(5.0)

Banking
HDFCBank
ICICIBank*
SBIBank
Citibank
AxisBank*

UU %change
6,812,045
9.8
5,930,000
(1.2)
4,955,562
20.8
4,253,022
8.6
2,790,000
26.2

Banking
HDFCBank
ICICIBank*
SBIBank
Citibank
AxisBank*

UU %change
6,205,695
(4.7)
6,000,000
2.2
4,102,626
(11.5)
3,914,990
6.8
2,210,000
(26.3)

eCommerce(B2B)
quikr
Alibaba.com
Tradeindia.com
Madeinchina.com
Hotfrog.in

UU %change
2,743,060
3.2
2,224,458
15.0
1,257,122
12.9
522,533
(19.0)
376,197
(40.7)

eCommerce(B2B)
Indiamart.com
Alibaba.com
Tradeindia.com
Madeinchina.com
Hotfrog.in

UU %change
2,657,529
(8.0)
1,934,710
(13.8)
1,113,187
(21.3)
645,102
53.1
634,844
32.2

eCommerce(B2B)
Indiamart.com
Alibaba.com
Tradeindia.com
Hotfrog.in
Madeinchina.com

UU %change
2,888,617
2.4
2,243,834
3.2
1,414,392
14.4
480,297
(17.9)
421,455
6.9

eCommerce(B2B)
Indiamart.com
Alibaba.com
Tradeindia.com
Hotfrog.in
Madeinchina.com

UU %change
2,819,829
8.7
2,174,540
11.9
1,236,512
(2.3)
585,205
(12.9)
394,081
(5.5)

eCommerce(B2C)
Snapdeal.com
Mydala.com
Bagittoday.com
Homeshop18.com
Myntra

UU %change
9,340,487
(13.5)
4,499,746
(1.4)
3,738,735
(23.0)
2,803,894
(8.1)
2,578,729
4.3

eCommerce(B2C)
Snapdeal.com
Bagittoday.com
Mydala.com
Homeshop18.com
Myntra

eCommerce(B2C)
Snapdeal.com
Bagittoday.com
Ebay*
Homeshop18.com
Amazon.com

UU %change
9,956,659
5.3
4,259,365
23.6
2,190,000
0.5
1,947,064
(4.5)
1,874,185
14.1

Education
Entranceexam.net
Indiastudychannel.com
Successcds.net
ignou.ac.in
icbse.com

UU %change
2,032,151
5.2
1,522,910
33.8
912,117
1.0
709,281
0.0
511,951
0.0

Education
Entranceexam.net
Indiastudychannel.com
icai.org
Successcds.net
Infinitecourses.com

Education
Entranceexam.net
Icbse.com
Successcds.net
Indiastudychannel.com
Studynation.com

UU %change
1,644,855
(6.2)
1,338,684
(23.0)
1,319,133
3.0
1,090,507
(21.5)
1,073,539
0.0

Email
Gmail
Yahoo!Mail*
Rediffmail*
WindowsLiveMail*

UU %change
35,600,000
(2.7)
23,600,000
(7.1)
8,290,000
2.6
6,150,000
(2.2)

Email
Gmail
Yahoo!Mail*
Rediffmail*
WindowsLiveMail*

UU %change
10,800,721
6.7
4,856,377
23.7
4,563,027
40.0
3,051,131
44.4
2,472,505
0.0
UU %change
1,931,625
7.1
1,138,419
(8.7)
964,552
0.0
902,746
(23.0)
812,119
(2.6)
UU %change
36,600,000
1.1
25,400,000
(7.3)
8,080,000
(12.6)
6,290,000
(12.3)

eCommerce(B2C)
Snapdeal.com
Bagittoday.com
Mydala.com
Homeshop18.com
Amazon.com
Education
Entranceexam.net
Indiastudychannel.com
Successcds.net
Studynation.com
Infinitecourses.com
Email
Gmail
Yahoo!Mail*
Rediffmail*
WindowsLiveMail*

UU %change
10,120,509
1.6
3,927,112
(7.8)
3,258,467
0.0
2,112,762
8.5
2,066,976
10.3
UU %change
1,803,335
9.6
1,247,135
14.4
1,172,002
(11.2)
943,292
(12.1)
833,815
0.0
UU %change
36,200,000
2.5
27,400,000
5.4
9,240,000
5.8
7,170,000
1.7

Email
Gmail
Yahoo!Mail*
Rediffmail*
WindowsLiveMail*

UU %change
35,300,000
2.3
26,000,000
(1.9)
8,730,000
(7.0)
7,050,000
(5.1)
Source:Vizisense

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IndiaInternet
DataForMonth:
Entertainment
Yahoo!Movies
Imdb.com
bookmyshow.com
Santabanta.com
bollywoodhungama.com

Sep2011
UU %change
4,550,000
(22.1)
2,020,536
4.0
1,356,515
0.0
1,157,587
4.3
780,546
0.0

DataForMonth:
Entertainment
Yahoo!Movies
Imdb.com
Zimbio.com
Santabanta.com
Bharatmovies.com

Aug2011
UU %change
5,840,000
16.8
1,942,962
21.9
1,401,271
(12.1)
1,110,014
14.0
905,414
0.0

DataForMonth:
Entertainment
Yahoo!Movies
Zimbio.com
Imdb.com
Smashits.com
Santabanta.com

July2011
UU %change
5,000,000
(18.0)
1,594,499
27.7
1,593,619
(7.9)
1,344,893
19.0
974,103
(11.7)

DataForMonth:
Entertainment
Yahoo!Movies
Imdb.com
Zimbio.com
Smashits.com
Santabanta.com

June2011
UU %change
6,100,000
8.2
1,730,372
(16.6)
1,248,166
(23.9)
1,130,246
5.7
1,102,899
(4.1)

Gaming
Ibibo.com
Gametop.com
ace2three.com
Zapak.com
games24x7.com

UU %change
4,408,972
6.4
1,499,290
(14.8)
1,419,147
0.0
1,333,164
18.7
1,286,717
0.0

Gaming
Ibibo.com
Gametop.com
Zapak.com
myplaycity.com
Zynga.com

UU %change
4,145,581
13.9
1,760,402
22.8
1,122,709
12.3
990,463
(5.3)
930,085
(16.2)

Gaming
Ibibo.com
Gametop.com
Zynga.com
myplaycity.com
Zapak.com

UU %change
3,639,354
(13.1)
1,433,353
(10.7)
1,110,508
0.0
1,045,382
3.6
999,361
(1.1)

Gaming
Ibibo.com
Gametop.com
Zapak.com
myplaycity.com
Games24x7.com

UU %change
4,185,769
6.7
1,605,361
27.0
1,010,929
(8.9)
1,009,474
(10.9)
978,492
0.0

JobSearch
Naukri.com
Timesjobs.com
Monsterindia.com
Shine.com
Freejobalert.com

UU %change
6,418,927
2.9
5,546,901
15.3
4,968,413
24.2
2,674,444
8.7
1,416,397
27.6

JobSearch
Naukri.com
Timesjobs.com
Monsterindia.com
Shine.com
Freejobalert.com

UU %change
6,237,293
(0.5)
4,812,490
(11.5)
4,000,560
8.1
2,460,143
0.0
1,109,623
7.1

JobSearch
Naukri.com
Timesjobs.com
Monsterindia.com
Recruitment4u.in
Freejobalert.com

UU %change
6,271,571
(5.1)
5,435,325
24.2
3,699,847
1.0
1,046,324
0.0
1,036,347
0.0

JobSearch
Naukri.com
Timesjobs.com
Monsterindia.com
Shine.com
Indeed.co.in

UU %change
6,609,820
3.7
4,375,105
(2.6)
3,662,809
7.1
2,398,256
27.2
1,963,865
2.8

Matrimony
Shaadi.com
Bharatmatrimony*
Jeevansathi.com
Communitymatrimony.co
Simplymarry.com

UU %change
2,638,376
(22.0)
2,440,000
(3.6)
1,200,687
4.8
383,341
(50.3)
145,430
(65.3)

Matrimony
Shaadi.com
Bharatmatrimony*
Jeevansathi.com
Communitymatrimony.co
Simplymarry.com

UU %change
3,380,419
26.1
2,530,000
(9.6)
1,145,560
15.9
770,685
19.3
418,675
18.7

Matrimony
Bharatmatrimony*
Shaadi.com
Jeevansathi.com
Communitymatrimony.co
Simplymarry.com

UU %change
2,800,000
(14.6)
2,681,611
12.5
988,523
(19.1)
645,863
(25.4)
352,727
63.2

Matrimony
Bharatmatrimony*
Shaadi.com
Jeevansathi.com
Communitymatrimony.co
Simplymarry.com

UU %change
3,280,000
11.9
2,383,401
(8.7)
1,221,648
(29.0)
865,583
48.8
216,121
(36.7)

MobileManufacturer
Nokia*
Apple.com
Micromaxinfo.com
Blackberry.com
sonyericsson.com

UU %change
2,190,000
(7.6)
1,941,542
(6.8)
824,239
(15.1)
610,038
(4.9)
339,841
(4.1)

Matrimony
Nokia*
Apple.com
Micromaxinfo.com
Blackberry.com
sonyericsson.com

UU %change
2,370,000
7.2
2,082,212
19.7
971,224
190.3
641,289
(23.9)
354,318
19.1

Matrimony
Nokia*
Apple.com
Blackberry.com
Micromaxinfo.com
sonyericsson.com

UU %change
2,210,000
0.0
1,739,960
8.9
842,821
6.5
334,564
0.0
297,410
30.6

Matrimony
Samsungmobile.com
Nokia*
Apple.com
Blackberry.com
Sonyericsson.com

UU %change
2,268,679
17.2
2,210,000
24.9
1,597,689
16.2
791,272
(4.6)
227,664
0.0

MobileServiceProviders
Tataindicom.com
Reliancenetconnect.co.in
BSNL*
Airtel.in
Rcom.co.in

UU %change
6,079,008
3.6
3,653,147
0.9
3,130,000
4.3
2,883,208
(3.5)
2,207,873
(16.4)

MobileServiceProviders
Tataindicom.com
Reliancenetconnect.co.in
BSNL*
Airtel.in
Rcom.co.in

UU %change
5,865,128
(4.1)
3,619,066
12.9
3,000,000
(6.0)
2,989,314
(7.3)
2,640,313
8.3

MobileServiceProviders
Tataindicom.com
Airtel.in
Reliancenetconnect.co.in
BSNL*
Rcom.co.in

UU %change
6,114,661
3.4
3,225,953
0.5
3,204,743
(6.6)
3,190,000
5.6
2,437,177
8.9

MobileServiceProviders
Tataindicom.com
Reliancenetconnect.co.in
Airtel.in
BSNL*
Rcom.co.in

UU %change
5,911,738
(4.7)
3,432,225
7.1
3,210,387
0.0
3,020,000
4.5
2,238,593
16.7

Music
Songs.pk
Beemp3.com
Mp3raid.com
gaana.com
Raaga.com

UU %change
6,745,073
4.4
2,907,003
(10.8)
2,402,449
(9.1)
1,706,970
0.0
1,339,143
(17.4)

Music
Songs.pk
Beemp3.com
Mp3raid.com
Raaga.com
Smashits.com

UU %change
6,460,142
30.5
3,259,436
23.1
2,642,147
45.3
1,621,162
20.2
1,393,408
3.6

Music
Songs.pk
Beemp3.com
Mp3raid.com
Raaga.com
Smashits.com

UU %change
4,949,411
(13.1)
2,647,977
0.0
1,817,835
12.3
1,349,277
18.8
1,344,893
19.0

Music
Songs.pk
Beemp3.com
Mp3raid.com
Raaga.com
Smashits.com

UU %change
5,695,546
11.2
2,647,561
11.4
1,618,693
(21.7)
1,136,017
(8.1)
1,130,246
5.7

Photo/VideoSharing
Facebook(Overall)
Youtube.com
Metacafe.com
Filestube.com
Flickr.com

UU %change
41,753,203
(4.6)
29,437,253
6.9
4,615,953
10.1
3,988,354
5.2
1,792,826
(17.1)

Photo/VideoSharing
Facebook(Overall)
Youtube.com
Metacafe.com
Filestube.com
Flickr.com

UU %change
43,745,989
2.4
27,534,360
16.9
4,193,533
5.3
3,792,701
15.1
2,162,264
10.9

Photo/VideoSharing
Facebook(Overall)
Youtube.com
Metacafe.com
Filestube.com
Flickr.com

140

UU %change
42,735,327
7.0
23,561,973
(1.4)
3,980,982
(10.0)
3,294,602
(12.8)
1,949,037
0.2

Photo/VideoSharing
Facebook(Overall)
Youtube.com
Metacafe.com
Filestube.com
Flickr.com

UU %change
39,920,958
0.5
23,890,271
(0.6)
4,423,346
(19.3)
3,779,722
(2.0)
1,945,308
7.9
Source:Vizisense

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IndiaInternet
DataForMonth:
RealEstate
Magicbricks.com
99acres.com
Makaan.com
Indiaproperty.com
Indiahousing.com

Sep2011
UU %change
1,074,727
(9.7)
867,019
(12.1)
756,912
(13.0)
382,374
(30.5)
233,794
6.2

DataForMonth:
RealEstate
Magicbricks.com
99acres.com
Makaan.com
Indiaproperty.com
Indiahousing.com

Aug2011
UU %change
1,189,791
(8.1)
985,958
1.5
870,285
17.2
549,929
(8.3)
220,107
8.2

DataForMonth:
RealEstate
Magicbricks.com
99acres.com
Makaan.com
Indiaproperty.com
Indiahousing.com

July2011
UU %change
1,294,988
(2.0)
971,391
(7.4)
742,681
0.9
599,610
16.0
203,452
33.5

DataForMonth:
RealEstate
Magicbricks.com
99acres.com
Makaan.com
Indiaproperty.com
Indiahousing.com

June2011
UU %change
1,321,572
(3.5)
1,049,336
7.5
736,388
3.1
516,889
(12.9)
152,413
(14.5)

Search
GoogleSearch*
YahooSearch
Ask.com
Bing.com
Peeplo.com

UU %change
61,600,000
(1.1)
14,500,000
9.0
14,432,975
3.8
5,534,045
(17.2)
2,681,172
(1.3)

Search
GoogleSearch*
Ask.com
YahooSearch
Bing.com
Peeplo.com

UU %change
62,300,000
(1.3)
13,899,280
15.6
13,300,000
(6.3)
6,682,732
35.2
2,715,123
34.4

Search
GoogleSearch*
YahooSearch
Ask.com
Bing.com
Peeplo.com

UU %change
63,100,000
4.0
14,200,000
4.4
12,027,091
13.4
4,943,834
(1.5)
2,019,466
(6.8)

Search
GoogleSearch*
YahooSearch
Ask.com
Bing.com
Peeplo.com

UU %change
60,700,000
2.5
13,600,000
(2.2)
10,608,919
1.9
5,017,175
(59.0)
2,166,062
(47.4)

SocialNetworking
Facebook.com
Orkut*
Linkedin.com
way2sms.com
Twitter.com

UU %change
42,800,000
(2.2)
9,710,000
(11.7)
5,601,591
5.5
4,708,726
0.0
3,536,484
(14.1)

SocialNetworking
Facebook.com
Orkut*
Linkedin.com
Twitter.com
Bharatstudent.com

UU %change
43,745,989
2.4
11,000,000
(0.9)
5,311,986
(8.7)
4,115,356
13.0
1,679,287
12.1

SocialNetworking
Facebook.com
Orkut*
Linkedin.com
Twitter.com
Bharatstudent.com

UU %change
42,735,327
7.0
11,100,000
(9.0)
5,818,793
14.7
3,641,034
5.3
1,497,812
(9.5)

SocialNetworking
Facebook.com
Orkut*
Linkedin.com
Twitter.com
Bharatstudent.com

UU %change
39,920,958
0.5
12,200,000
(4.7)
5,071,901
0.8
3,457,893
0.0
1,655,099
(24.2)

Sports
Yahoo!Cricket*
Espncricinfo.com
RediffCricket
cricbuzz.com
espnstar.com

UU %change
6,200,000
29.7
1,950,422
(7.8)
829,000
(18.7)
551,038
25.0
339,044
(2.2)

Sports
Yahoo!Cricket*
Espncricinfo.com
RediffCricket
cricbuzz.com
espnstar.com

UU %change
4,780,000
(12.5)
2,115,362
(15.5)
1,020,000
2.0
440,791
(36.6)
346,743
0.0

Sports
Yahoo!Cricket*
Espncricinfo.com
RediffCricket
cricbuzz.com
Crictime.com

UU %change
5,460,000
14.7
2,503,266
31.3
1,000,000
2.1
695,418
55.1
458,501
0.0

Sports
Yahoo!Cricket*
Espncricinfo.com
RediffCricket
cricbuzz.com
Espnstar.com

UU %change
4,760,000
(14.1)
1,906,868
(19.2)
979,000
2.2
448,371
(23.3)
254,261
0.0

Stocks/Finance
YahooFinance
Moneycontrol.com
Nsdl.com*
RediffMoney
Bseindia.com

UU %change
3,160,000
(4.2)
3,069,998
3.4
2,100,000
(5.8)
1,760,000
(2.2)
1,051,182
(7.2)

Stocks/Finance
YahooFinance
Moneycontrol.com
Nsdl.com*
RediffMoney
Bseindia.com

UU %change
3,300,000
47.3
2,969,244
(9.1)
2,230,000
(42.4)
1,800,000
(10.9)
1,133,024
(12.2)

Stocks/Finance
Nsdl.com*
Moneycontrol.com
YahooFinance
RediffMoney
Bseindia.com

UU %change
3,870,000
0.0
3,265,751
24.1
2,240,000
(22.5)
2,020,000
6.9
1,290,545
27.7

Stocks/Finance
YahooFinance
Moneycontrol.com
Nsdl.com
RediffMoney
Bseindia.com

UU %change
2,888,888
0.0
2,632,272
(17.0)
2,251,512
(1.9)
1,890,000
0.0
1,010,380
(10.0)

TraveleCommerce(B2C)
Irctc.co.in
Makemytrip.com
Yatra.com
Cleartrip.com
Redbus.in

UU %change
7,641,190
(5.7)
4,009,707
13.5
3,229,788
7.6
2,496,943
(7.5)
648,682
(6.8)

TraveleCommerce(B2C)
Irctc.co.in
Makemytrip.com
Yatra.com
Cleartrip.com
Redbus.in

UU %change
8,100,684
4.6
3,533,803
(13.7)
3,001,475
(9.5)
2,700,001
9.6
696,068
(13.0)

TraveleCommerce(B2C)
Irctc.co.in
Makemytrip.com
Yatra.com
Cleartrip.com
Redbus.in

UU %change
7,743,658
(6.9)
4,093,922
(14.8)
3,317,418
18.9
2,464,440
(2.4)
800,401
0.0

TraveleCommerce(B2C)
Irctc.co.in
Makemytrip.com
Yatra.com
Cleartrip.com
Ezeego1.co.in

UU %change
8,314,568
(20.4)
4,805,001
(15.6)
2,790,826
(14.3)
2,523,792
(14.9)
444,770
0.0

TravelInformation
Tripadvisor*
Mustseeindia.com
Holidayiq.com
Railtourismindia.com
Indiamike.com

UU %change
1,870,000
3.9
967,185
(13.4)
728,520
(13.6)
639,001
(2.4)
340,199
(21.2)

TravelInformation
Tripadvisor*
Mustseeindia.com
Holidayiq.com
Railtourismindia.com
Indiamike.com

UU %change
1,800,000
(2.7)
1,117,397
16.4
843,191
14.3
654,722
1.5
431,802
(7.3)

TravelInformation
Tripadvisor*
Mustseeindia.com
Holidayiq.com
Railtourismindia.com
Indiamike.com

UU %change
1,850,000
(0.5)
959,584
(19.0)
737,968
(3.5)
644,872
13.7
465,837
5.0

TravelInformation
Tripadvisor*
Mustseeindia.com
Holidayiq.com
Railtourismindia.com
Indiamike.com

UU %change
1,860,000
(3.6)
1,185,375
(15.4)
764,742
4.5
567,231
(22.9)
443,830
19.7

WebPortals
Yahoo.com
Rediff.com
Msn.com
Indiatimes.com
In.com

UU %change
39,906,508
(4.0)
13,168,969
(9.8)
6,978,632
(16.0)
6,877,457
(7.8)
6,296,428
(15.9)

WebPortals
Yahoo.com
Rediff.com
Msn.com
In.com
Indiatimes.com

UU %change
41,589,214
(4.3)
14,594,949
(5.7)
8,309,393
(0.4)
7,483,323
(0.9)
7,460,489
3.9

WebPortals
Yahoo.com
Rediff.com
Msn.com
In.com
Indiatimes.com

141

UU %change
43,444,371
2.8
15,479,980
2.5
8,344,095
3.7
7,552,109
3.9
7,182,560
5.9

WebPortals
Yahoo.com
Rediff.com
Msn.com
In.com
Indiatimes.com

UU %change
42,268,918
0.6
15,097,808
(3.1)
8,044,178
(2.0)
7,270,207
(19.4)
6,783,292
(20.5)
Source:Vizisense

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NOTES:

142

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EdelweissSecuritiesLimited,EdelweissHouse,offC.S.T.Road,Kalina,Mumbai400098.
Board:(9122)40094400,Email:research@edelcap.com
VikasKhemani

HeadInstitutionalEquities

vikas.khemani@edelcap.com

+912222864206

NischalMaheshwari

CoHeadInstitutionalEquities&HeadResearch

nischal.maheshwari@edelcap.com

+912266233411

1,150

(INR)

950
750

Buy

550
Buy
Buy

350

J ul-08
Aug-08
Se p-08
Oc t-08
Nov-08
De c -08
J a n-09
Fe b-09
Ma r-09
Apr-09
Ma y-09
J un-09
J ul-09

150
DistributionofRatings/MarketCap

RatingInterpretation

EdelweissResearchCoverageUniverse
Buy

Hold

Reduce


Rating

Total

Expected to

RatingDistribution*
*3stocksunderreview

119

> 50bn

MarketCap(INR)

111

47

15

184

Between 10bn and 50 bn

< 10bn

57

16

Buy

appreciatemorethan15%overa12monthperiod

Hold

appreciateupto15%overa12monthperiod

Reduce

depreciatemorethan5%overa12monthperiod

Access the entire repository of Edelweiss Research on www.edelresearch.com


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