Sector

12 October 2020

Update | Internet

Sector Update | Internet

Internet

Much faster recovery in

IndiaMART

Pre-indicators are encouraging

…traffic on revival trend

Horizontal classifieds surpass pre-COVID levels







Source: MOFSL, Google Trends

(indicate google search data)

Naukri JobSpeak index up 31%

QoQ



Horizontal classifieds, IndiaMART and Justdial, have shown resilient recovery in

terms of traffic. The combined traffic on both platforms is at an all-time high,

having surpassed pre-COVID levels. After declining 35% in April, traffic has

increased ~93%, marking an overall increase of 26% from pre-COVID levels.

Data from Similarweb suggests recovery has been much faster for IndiaMART,

which reported a 43% YoY increase in traffic v/s a 15% YoY increase in Justdial.

While traffic has increased, operational recovery to similar levels would come

with a lag. This is on account of a sharp drop in paid suppliers on these

platforms in1QFY21, which impacted collections. The sporadic recovery in traffic

is also reflected in business inquiries / total listings, which have increased in

IndiaMART/Justdial sequentially. Recovery in traffic/inquiries should fuel paid

campaigns in the near-to-medium term.

2QFY21 has seen a noteworthy uptick in hiring activity at 31% sequentially, v/s

50% decline in 1QFY21. While hiring is yet to reach last year’s levels – and was

down 23% in Sept’20 v/s Sept’19 – marked recovery has been seen in the last

few months from 40–60% decline in April-June.

Overall decline in hiring activity has been the highest in

Hotel/Restaurant/Airlines /Travel (-71%), Retail (-50%), and Oil & Gas / Power (-

45%). On the other hand, industries such as Pharma/Biotech (-4%), Insurance (-

6%), FMCG (-11%), and BPO/ITES (-17%) have remained relatively resilient.

As more and more jobs are posted, traffic on

Naukri.com

has inched up by 35%

from lows of Apr’20. However, as of Sept, traffic is down 37% from pre-COVID

levels. Gradual recovery in traffic should eventually reflect in billings and

revenue for the portal (in that order).

Real estate (RE) portals have been hard hit due to the decline in total absorption

(70% QoQ decline in 1QFY21) and the reluctance for large-ticket spending at this

time.

Traffic on two of the largest real estate portals (99acres and MagicBricks) fell by

55% (combined) in April. A strong uptick is seen from the lows (92% growth

from April); traffic on these portals is down by just 13% from pre-COVID

levels.

Data from Google Trends suggests 99acres is able to maintain leadership in a

duopoly market.

Traffic on IndiaMART/Justdial and the standalone companies of Info Edge have

seen a sporadic recovery, led by: (a) quicker rebound in underlying industries,

(b) growing digitization, and (c) the shift in market share from traditional offline

players to their online counterparts.

Gradual recovery in recruitment portals; JobSpeak index up 31% QoQ





Source: MOFSL, Company

Strong recovery on RE portals; traffic down just 13% from pre-COVID levels







Operations to see a lag effect in near term



Research analyst: Anmol Garg

(Anmol.Garg@motilaloswal.com)

12 October 2020

1

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Sector Update | Internet





While traffic should eventually translate to higher paid offerings, we expect

revenue growth to see a lag effect on account of longer duration contracts.

Lower collections in 1QFY21 should impact deferred revenues, therefore

impacting the top line in the near term.

Full recovery in traffic on classifieds portals is a pre-indicator of faster recovery

in operations. We remain positive on IndiaMART on the expectation of speedier

recovery in paid suppliers on the platform.

Story in Charts

Exhibit 1:

Much faster recovery in IndiaMART

Justdial

120

100

80

60

40

20

47

36

66

67

68

39

IndiaMART

Exhibit 2:

…with traffic up 42% from pre-COVID levels

Visits (m)

Jan

Apr

July

75

Sept

78

0

IndiaMART

Source: MOFSL, Google Trends (indicate google search data)

Just Dial

Source: MOFSL, Similarweb

Exhibit 3:

Naukri JobSpeak index up 31% QoQ

2,600

2,100

1,600

1,100

600

Naukri Jobspeak Index *

Exhibit 4:

…with traffic up 35% from trough in April

Visits (m)

24.3

14.9 15.4

11.4

5.6

17.0

Jan

Apr

July

Sept

8.9

9

5.8

3.3 4.3 4.7

Shine

Source: MOFSL, Similarweb

* Total no. of new jobs posted in Jul'08 scaled to 1,000 &

indexed

Source: MOFSL, Company

Naukri

Indeed

Exhibit 5:

Total absorption down 70% sequentially in

1QFY21

Exhibit 6:

Traffic on real estate portals down just 13% from

pre-COVID levels, indicating faster recovery in 2QFY21

Total Absopion (msf)

144

135

104 105

128

116

116 114 119 124

143 141

128 122

142

128

Visits (m)

9.7

6.5

39

Jan

Apr

July

Sept

7.5

7.6

3.8

6.3

7

4.0

99acres

Source:MOFSL, Propequity

Magic Bricks

Source:MOFSL, Similarweb

12 October 2020

2

Sector Update | Internet

Explanation of Investment Rating

Investment Rating

Expected return (over 12-month)

BUY

>=15%

SELL

< - 10%

NEUTRAL

< - 10 % to 15%

UNDER REVIEW

Rating may undergo a change

NOT RATED

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within

following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.

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12 October 2020

3

Sector Update | Internet

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12 October 2020

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