1. Bottom-up Approach
THE RISE & RISE OF
E-COMMERCE -
SECTOR OVERVIEW
SPECIFIC RECOMMENDATIONS
ITM - EMBA (Finance) - Batch 34
2. Table of Contents
E-commerce sector in India
Evolution
Types
Holistic
Graphs
Key Drivers of Growth
Global Scenario
SWOT of the sector
Info Edge
Just Dial
ITM - EMBA (Finance) - Batch 34
3. Evolution of E-commerce
Business
Launch of
internet in India
dialup in 6 cities
Launch of
online job
portals
Launch of online
B2B portals
Launch of online
matrimonial sites
Muted activity in
the industry due
to the dotcom
bubble bust in
2000
Launch of
online
agents
(OTA)
Launch of first
group buying
website in
India
New trend of
use
networking
sites as a
marketing toll
begins or the
advent of
social
commerce
Entry of a number
of players in e-
tailing segment
Aug 1995
1996
1997 2000 2005
2006
2007
2010
1st Wave (1996-2000)
2nd Wave (2006-
present)
ITM - EMBA (Finance) - Batch 34
5. A Holistic View
THEN
Internet user base close to 5.5m in 2006
Average time spent online by an Indian
consumer per month 2.6 hrs in 2006
No 3G spectrum auction in India till
2010
Number of credit card and debit card in
India 4.2m and 0.3m respectively in
1999
Number of broadband subscribers as
low as 51,000 in 2001
Number of users transacting online 3
million in 2007
NOW
Internet user base close increased to
300m
Average time spent online by an Indian
consumer per month 21 hrs in 2015
3G subscribes to reached 118m in 2014
and 303.4m by 2020
Number of credit card and debit card in
India 73.7m and 350m respectively in
2014
Number of broadband subscribers
reached 100m by 2014 and more then
300m by 2020
Number of users transacting online 38
million in 2014ITM - EMBA (Finance) - Batch 34
6. Graphs reveal all………
Break-up of Indian E-Commerce
Industry
Online Buyers as % of internet users
ITM - EMBA (Finance) - Batch 34
7. Graphs reveal all………
E-commerce Industry in early stages
in India…….
E-Commerce Industry as % of
country’s GDP (2013)
ITM - EMBA (Finance) - Batch 34
8. Key Drivers of growth in Indian E-Commerce
Sector
Increased Internet
Usage
• Number of Internet users to crossed USA
• Rural areas showing 58% CAGR growth rate for internet
adoption
Favorable
Demographics
300m middle
class
• Rapidly growing middle class
• Rising levels of urbanization
Increased Mobile
penetration
• Mobile users have higher frequency of access
• Urban users contributing lion’s share of Indian mobile
users
• Mobile internet users have grown by 2.7x in the last 18
months ITM - EMBA (Finance) - Batch 34
9. Key Drivers of growth in Indian E-Commerce
Sector
Better
accessibility to
Internet
• Due to new technological development users have faster access
to internet
• Data rates have come down internet usage is affordable
Hardware
accessibility
• Cost of PC’s, laptop and other hardware devices have become
reasonable
• Single largest contributor to the success of E-Commerce is affordable
android devices
Safe Payment
Gateway
• Safe payment gateways give confidence and assurance to internet
shoppers
• There are several payment options to choose from
• Cash on delivery is an instant hit with the Indian online shoppers
ITM - EMBA (Finance) - Batch 34
10. SWOT Analysis of the Sector
Strengths
• Less Capital Intensive
• Venture capital willing to
fund, less debt burden of
these co’s
• Different models of
business is already tried and
refined in the west
Opportunities
• Job creation
• Scope for overall infrastructure
development
• Tier I – Tier II cities are
untouched
• Head room for growth due to
favorable demographics
• Growth directly related to
spending power which is
increasing
Weakness
• No entry barriers
• Fierce competition
• Margins are thin
• Allied sector not very well
developed
• Bargaining power of firms is less
• Overdependence on technology
• These co’s trade at high multiples
Threats
•Change in government rules,
currently no specific rules for this
space
• Fragmented too many players
• Threat of substitute / new entrants
• Scope for misuse of confidential
information
• Threat of takeover is highITM - EMBA (Finance) - Batch 34
11. INFO EDGE
Company Profile
• The Company was incorporated on May 1, 1995 under the Companies Act,
•1956 as Info Edge (India) Private Limited. and converted into a Public Limited on
•April 27, 2006.
• Info Edge is largely known for its recruitment portal Naukri.com in India. It was
•the first listed internet-based player on Indian bourses.
Executive Summary
Sanjeev Bikhchandani, Founder and Executive Vice Chairman –
Founded the company in 1995 and previously worked with Lintas and
GSK.
Hitesh Oberoi, Managing Director and CEO – Joined the company in
2000 and has worked with HLL previously.
Ambarish Raghuvanshi, CFO. Joined the company in 2000 and has
worked with Bank of America and HSBC previously.
Particulars Data
CMP 800.50
Mkt Cap 5348.72 CR
52 Week High –
Low
1015 – 523.70
Face Value Rs. 10
Traded Volume
(shs)
91,111
Ticker BSE
532777
Ticker NSE
NAUKRI
51%29%
11%
0.27%5% 4%
Shareholders as on 31 March 2014
Promoters
FII
MF & UTI
Corporate Bodies
Indian Public
Individuals
Others
Promoters continue to hold 51%
Major shareholder is HDFC MF which
holds close to 7%.
Other prominent shareholders include
funds like T.Rowe Price, SBI MF &
ITM - EMBA (Finance) - Batch 34
13. INFO EDGE
Strengths
•First mover
advantage in various
categories
•Recruitments,
contributing ~77% of
company revenues,
is ~50% EBITDA
margin business
•No debt and cash
generating business
Weaknesses
• Low barriers to
entry
• Failure to adapt to
newer technological
shifts
• Competition
• Over dependence
on one segment
Opportunities
• Rising internet
penetration
• Improving
macroeconomic
conditions
• Strong growth in
Mobile platform.
Threats
• Technological
obsolence
• Competing
products from new
or existing players
ITM - EMBA (Finance) - Batch 34
15. Company Profile
Just Dial is a “local” search engine company in India, incorporated in 1993
as
A&M communications by Mr. V.S.S Mani. It started offering local search
services in
1996 under the Just Dial brand. Just Dial's search service is available to
users
across multiple platforms, such as the internet, mobile Internet, over the
telephone
(voice) and text (SMS)
Just Dial is the largest online classifieds player in India with 15million listings
and 45million reviews. The company IPOed in June’13; it was listed at
Rs.530
Management and Directors’ background
Mr. V.S.S. Mani, Managing Director – Founder and an industry veteran with over 25
yrs of experience in media and local search services.
Mr. V. Krishnan, Executive Director– Co-Founder and has over 20 yrs of experience in
strategic planning and execution.
Mr. Sandipan Chattopadhyay, CTO. Over 16yrs of experience in technology services
and been
with Just Dial since 2009.
Mr. Ramkumar Krishnamachari, CFO. Over 22yrs of experience in finance and
accounting
Particulars Data
CMP 1322.05
Mkt Cap (crs) 3390.73
52 Week High
– Low
1894 - 982
Face Value Rs. 10
Traded
Volume (shs)
348032
Ticker BSE
535648
Ticker NSE
JUSTDIAL
Justdial
ITM - EMBA (Finance) - Batch 34
16. 32.89%
27.38%
4.71%
35.02%
Shareholding pattern
Promoters
FII
DII
Non
institutions/Pub
c
Top Shareholders:
• Tiger Global
• SAIF II Mauritius
• Sequoia capital
Justdial
Board nod for
hiking FII
holding limit (5
Aug 2014)
The sharp selloff in Just Dial has come
amid fears of redemption by pre-IPO
investors, whose lock-in period expires on
June 5, 2014. This could put a large
number of shares in the open market (6
May 2014).
ITM - EMBA (Finance) - Batch 34
17. Strengths
• First mover
advantage in the
category.
• Profitable business
model,
• No debt and cash
generating
business.
• Access through
multiple platforms.
Weaknesses
• Low barriers to
entry
• Potential failure to
adapt to newer
technological
shifts
Opportunities
• Strong growth
and increased
penetration rate
in the Mobile
platform are the
biggest
opportunities for
the company.
Threats
• Technological
obsolence.
• Competing
product from
new or existing
players
Justdial
ITM - EMBA (Finance) - Batch 34
