Competition, investment expenses to weigh on Q3 results of listed e-commerce players

E-commerce companies, the poster children of growth in recent years, are likely to report muted earnings for the quarter ended December 2014 due to high competition and investment expenses, say analysts.

While e-commerce companies have grabbed the attention of consumers and have attracted a lot of funding from investors in recent years, only a handful of them listed on stock exchanges.

The few players who are listed include local search engine provider Just Dial and Info Edge, which owns job portal naukri.com, matrimonial website jeevansaathi.com, real estate portal 99acres.com and education classifieds portal shiksha.com.

Others such as Makemytrip have listed in the US, while Flipkart is said to be working on listing on the Singapore Stock Exchange. Homegrown e-commerce company Infibeam is readying to go public, but the listing is still some time away.

Analysts say Info Edge is facing stiffer competition from other real estate websites. However, brokerage firm Nomura says that steady hiring over the past five months would mean 20 per cent growth in Info Edge's Naukri business.

Nomura expects EBITDA losses in 99acres.com to expand from Rs 10 crore in the second quarter to Rs 15 crore in the third quarter as the company plays catch-up on features and higher promotional expenses.

Analysts at Motilal Oswal expect revenue at Just Dial to grow 30 per cent from last year to Rs 150 crore, with the addition of 14,000 campaigns in the quarter.

The company has been investing in expanding its operations (read Hitting the Right Numbers). But Motilal Oswal says the EBITDA margin for Just Dial is likely to remain flat over last year at 28 per cent as money earned from the main business is being invested back in expansion of Search Plus, a service the company launched earlier this year.

"The number of searches on the Internet has been rising for Just Dial and presents a huge growth opportunity for the organisation," says Sanchit Vir Gogia, Chief Analyst and CEO, Greyhound Research. He adds the company has done well in India.

In 2015 the company is also getting into e-commerce, and Gogia indicates this would boost the company's earnings in the future.