Surprised by HNI subscription to Info Edge: Citigroup

He adds that he is particularly surprised by HNI subscription to Info Edge. He informs that most bids for Info Edge came at Rs 320/share. According to him, FY08 numbers should be the benchmark for Info Edge.

Excerpts from CNBC-TV18's exclusive interview with Ravi Kapoor:

Q: Are you surprised by the response?

A: We were not expecting such huge response. But we were expecting a decent response. But this response has surpassed everybody’s expectations and 55 times overall and 83 times on the institutional, is definitely a huge response. 

Q: Most of it came in at Rs 320 and the issue will probably be priced at Rs 320 now?

A: The board is yet to take a decision. But there was no price sensitivity in the book. Most of the demand was at the top-end of Rs 320.

Q: Walk us through how you priced it on a valuation basis and what you are benchmarking it against?

A: It was prices-on-price to earnings ratio and investors were guided more towards the FY08 kind of a valuation more than FY07 because (a) FY07 almost getting over and (b) It is a very high growth company, considering that it was focused on FY08. It was benchmarked to essentially some of the international Internet companies, which includes some of the Chinese companies and also some of the other global Internet players.

Q: Where do you see the potential in this business at this point and for an Info Edge in specific?

A: I think there is a huge potential considering the space in which they are in. They are into jobs, they are into matrimony and real estate is also taking up. So all these three segments are high growth and there is huge potential. If one look at the numbers, it is a PAT positive company and it is a profit making company.

Q: It tells you something about the kind of appetite, which might have return for Internet properties once again because we do not have too many listed internet plays in India and its been a while since a stock got listed in that space?

A: It did get the first-mover advantage and definitely it opens up a way for few more selected companies to come and offer. There is a pent-up demand in the international investors with the local investors for this kind of an offering. And very shortly, there would be few more issuers from this space.         

But talking particularly about this offering, we discussed some of the names but it did get a lot of attraction from the global investors as well as local investors, a fair mix of long accounts and local mutual funds and institutions, and a fair mix of hedge funds also into this account. We received about 240 bids from the institutional investors, which is substantial, given the size of this issuance.

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