Global recruitment classifieds industry has seen a few key trends: (1) presence of multiple classified portals in large markets such as US, China and UK, (2) an active M&A scene (acquisition of LinkedIn by Microsoft and Monster by Randstad), and (3) low penetration of online hiring in developing countries (India and China). We believe Naukri?s strong platform has decent long-term growth potential, although it may see near-term headwinds due to IT hiring slowdown
Classifieds, as a category, has been quick to take to the online media, because of ease of reaching the target segment and lower cost. Recruitment classifieds is a key category that has over time taken away significant share from print media. Online recruitment classifieds accounted for 78-90% of overall recruitment classifieds revenues in developed markets in 2015.
Naukri?s dependence on IT/ITES is fairly high?this industry (including consultants) contributed ~40% of its revenues in FY2016. Naukri?s new customer addition had declined to 1,500 annually over FY2009-10, when IT hiring had slowed (new customer addition has averaged at ~4,300 over FY2011-16). We currently build in 17-18% yoy revenue growth for Naukri over FY2017-19E; we believe these assumptions may be at risk if IT slowdown is more than anticipated.
