Blog Post

India’s First Internet Stock Naukri Lists Today; Closes At Rs 594 After A High Of Rs 623

Updated: Info Edge listed today. The stock opened at Rs 451, and hit a high of Rs 623 levels and closed at Rs 594 on National Stock Exchange. At this price, Info Edge’s market cap is over Rs 1,500 crore. And that values the founder Sanjeev Bikhchandani’s 43.23 per cent stake in Info Edge at about Rs 700 crore.
It, however, remains to be seen if Naukri can hold on to its gains.
CNBC TV18 has an interview with Mahesh Murthy of Seed Fund and Sandeep Singhal of Sequoia Capital on the Info Edge listing. According to Murthy, Info Edge should be valued at 10 times of sales or 30 times its earnings (Naukri had revenues of Rs 84 crore in 2005-06 and is expected to close 06-07 with Rs 110-120 crore). “By and large, 10 times the sales is a fair valuation for dotcom companies. However, PE multiple beyond 25 for dotcom companies is a cause for concern,” Murthy said.
In my opinion, public market valuations are decided a lot by the sentiments. So earnings multiples can take a back seat as far as valuations are concerned.

(Our earlier post) India’s first pure play internet stock – InfoEdge Ltd – will be listing on Tuesday as its founder Sanjeev Bikhchandani rings the opening bell at the Bombay Stock Exchange (BSE). The listing price (the share allocation price) is Rs 320, which is the higher end of the band (Rs 290-320). The shares will be traded on both BSE and National Stock Exchange.
The IPO of the owners of portals like Naukri.com, Jeevansathi.com and 99acres.com was oversubscribed 55 times. With the listing, the company has raised Rs 174 crore.
The issue constituted 19.50 per cent of the fully-diluted post issue paid-up capital of the company. The market cap at Rs 320 a share will be about Rs 900 crore. ICICI Securities and Citigroup Global Markets India were the lead managers for the issue, while Intime Spectrum Registry was the registrar.
Related:
Naukri IPO Oversubscribed 55 Times

12 Responses to “India’s First Internet Stock Naukri Lists Today; Closes At Rs 594 After A High Of Rs 623”

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  2. The "lucky idiot" here.:)

    For those who actually heard the show – as opposed to those who are commenting on a 2nd hand report of the show – I actually was cautious on the interview – not bullish.

    I sounded a warning saying that valuing a company – any company, not just an internet one – at more than 10 times sales or 25 times earnings is a dangerous trend. My point was that there are several big ticket investments that have been made lately where companies have been valued at far, far more.

    In addition, Rediff is valued at some truly insane price – while I think Naukri's Indian revenues are higher than Rediff's Indian revenues.

    The reasoning for this wasn't anything complex. The average price-to-earnings of the Sensex companies on BSE is about 17 I understand. This includes old / new / emerging economy type companies – all of them. If the "average" multiple is 17, then there's an acceptable range of say 10 to 25 that you should be okay with for companies across different sectors and flavours of the market. If the net is booming and growing at all those rates we know and talk about, valuing at 25x instead of 17x isn't irresponsible.

    Finally, what we need to know is that the investors in the market take their own decisions.

    There's a reasonable chance someone else thinks that a PE of 25 is too low and takes the stock even higher.

    P.S.: I do not own, directly or indirectly, even one share of Infoedge or Rediff. Sadly, as it turns out.:)

    P.P.S.: Re: "Glib talkers on screen in glossy suits". I'm not sure I'm a glib talker – but I wasn't on screen – it was a phone-in interview and to anyone who knows me – I don't own a suit:)

  3. """CNBC TV18 has an interview with Mahesh Murthy of Seed Fund and Sandeep Singhal of Sequoia Capital on the Info Edge listing. According Murthy, Info Edge should be valued at 10 times of sales or 30 times its earnings"""

    This is pure simple over hyping up a normal company by getting in some glib talkers on the screen suited in glossy suits.

  4. Bob Singh

    Correction: I mean maximum 3-5 times sales, or 10 times Net profit, whichever is lower.

    Murthy is trying hard to create another euphoric era…Sorry pal, we are on the path to enlightenment (Geoffrey Moore, Crossing the Chasm)..

  5. Bob Singh

    Murthy is an idiot, albeit a lucky one. He got lucky because he sold his company to Intel for exorbitant sums of money and then gave up and is resting on his laurels. Have you ever heard anything from Murthy after this, except for Pinstorm, an internet advertising and marketing company, and may be a few guest columns in Businessworld.

    It is purely because of glib talkers like Murthy that we have bubbles and tech busts and dot-com busts. By what yardstick is Murthy saying that internet companies should have a P/S ratio of 10. I would say it should be realistically 5 or 10 times net profit, whichever is lower.

    Steven Case did not do wonders as chairman of Time Warner, but was unceremoniously sacked. Internet whizkids, quick money do not make a successful entrepreneur. A glib talker may be, but a successful company plays out its value over time.

    Ask Warren Buffet, not me.