Jupiter Infomedia: A Weak Past And A Dodgy Future

Jupiter Infomedia, an online media company with business operations that include an online B2B portal (www.jimtrade.com), an India-centric encyclopaedia (www.IndiaNetzone.com) and an online yellow pages directory (www.jimyellowpages.com), is hitting the primary market with an IPO to raise Rs 4.08 crore. It is offering 20.4 lakh shares priced at Rs 20 per share. The issue opened on 30th July, 2012. Though the industry and the growth factors look attractive, Jupiter Infomedia’s prospects are highly questionable.

The company commenced operations in April 2005, with 99.99 per cent shares held by its promoters and promoter group. With 27 employees and a pre-issue net worth of  Rs 1.99 crore, the company is relatively small as compared to that of its competitors in any of the businesses that the firm operates in. Jupiter is raising money in order to expand geographically, involving the purchase or rent of five new offices, and to fund the initial marketing and operating costs involved with this expansion. The company plans to hire 60 staff members, all in marketing roles in the five new planned offices, which is indicative of its intended concentration on generating listing revenue for the yellow pages business.

Presently, Jupiter Infomedia generates most of its revenues from advertisements from Google AdSense. In the last three years, the income earned from this source has been in the range of 78-89 per cent. The yellow pages industry has been seeing tremendous growth due to the proliferation of mobile phones. Considering the shift in internet usage from computers to mobile phones and the faster growth of internet penetration, the next big thing to tap in the Indian markets is the mobile internet space. According to web analytics company, StatCounter, internet usage on mobile devices has increased from 18.1 per cent in January 2011 to 42.25 per cent in January 2012, and India is fast moving towards the trend seen in developed economies, where 90 per cent of internet access takes place via mobile phones. Jupiter Infomedia has not mentioned anywhere about its plans of making their website phone friendly or working towards developing a web-based application accessible through phones. Betting on the prospect of Jupiter tapping the use of phones for accessing classifieds is out of the question, considering the amount of investment required to come anywhere close to the existing competition. Due to this limitation in increasing the reach of its product, the company would fail to command a premium on listing.

The traffic ranks in India according to Alexa for www.indiamart.com is 93 and for www.alibaba.in is 138, whereas it is 21287 for www.jimtrade.com. Moreover, the business model offers nothing beyond being a marketplace. Companies have earlier used niches and offerings to leverage their standing in the market, but Jupiter doesn’t specify any plans to do so.

On the encyclopaedia front, there is no potential for income apart from advertising, which looks bright if the company manages to improve on the visits. www.IndiaNetzone.com currently fetches better traffic in terms of volume than the other products of the company. Over the last five years, the revenue from operations has increased by 13.45 per cent, which is not impressive considering the potential the industry has been offered in view of the growth rates in internet usage and advertising. The net profit before tax of the company has been rather polarised, with alternate years of positive and negative YoY growth. For FY12, the revenue from operations stood at Rs 63.94 lakh and the net profit before tax at Rs 2.96 lakh, marking a YoY change of -18.60 per cent and -60.64 per cent respectively.

A question that arises amidst the dull growth figures and the equity issue of Rs 4.08 crore for a debt-free company is over the transfer of Rs 1.59 crore to the promoter Manisha Doshi as ‘Refundable Deposit For Offices’ in FY12, boosting the total assets and net worth of the company dramatically. Using the sum to boost performance instead wouldn’t be perceived as uncanny, considering the fact that the net income of Rs 2.96 lakh in FY12 over post issue number of shares have resulted in rather comical figures with an EPS of Rs 0.085 and a PE of 235.81x, making the company highly overvalued and not worth investing in.