Info Edge (India) Ltd. share price target

As we anticipated in mid-Jun-21 (link), hiring across sectors has witnessed a robust pickup. Net EPFO additions in Jun-21 were ~85% higher than the pre-covid run-rate. RBI's Aug-21 State of the economy' report (link) hints at up to ~38% YoY salary hikes across sectors the best in 15 years. Resignations and voluntary retirements too are surging in line with global trends. Rethinking of work' by employees is driving massive supply-demand mismatch across industries further boosting the need for search' platforms like Naukri. We foresee an employees' job market for at least 12-18 months (vs employers' market for 5+ years now)....

In-line Q1 with revenue up 14% YoY (deferred revenue up 36%) and EBITDA margin at 31.2%

InfoEdge's Q4FY21 numbers were below our estimates. However, the company has seen improving billing growth both on a YoY and QoQ basis. Billing increased 25.1% YoY, 39.8% QoQ to | 415.3 crore, mainly led by 26% YoY growth in recruitment and 41.5% YoY growth in 99 acres billing. As compared to Q4FY19 (a pre-pandemic quarter), overall billing was up 15.0%. Overall revenues on a QoQ basis increased 6.5% QoQ. EBITDA margins declined from 29.9% in Q4FY20 to 18.3% (below our estimate of 29.6%)...

Although Info Edge reported a dip in revenues YoY, its performance improved QoQ. Revenues increased 6.3% QoQ to | 272.3 crore while EBITDA margin improved 491 bps QoQ to 25.0%, indicating a recovery in the economy. However, we believe the performance will improve in coming quarters led by opening up of the economy. In addition, billing has also...

Info Edge (INFOE) reported billings decline in 1Q due to COVID-19, which was reflected in 19% YoY revenue de-growth in 2Q (due to the subscriptionbased model of the business). Continued MoM improvement (after the trough of May'20) in billings is in line with our assumption of a gradual increase in revenues going forward. Margins in 2Q were dragged down by aggressive marketing spends in Jeevansathi/99acres. Management indicates the current run-rate of advertisement spends would continue as the company aims to increase its market share in the matrimony portal. Nevertheless, we still estimate a...

InfoEdge reported a poor set of Q2FY21 numbers that were below our estimates. The significant dip in Recruitment business (down 19.3% YoY) and 99 Acres (down 36.3% YoY) led to 19.1% YoY decline in revenues to | 256.1 crore (below our estimate of | 280.2 crore). EBITDA margins declined from 31.4% in Q2FY20 to 20.1% in Q2FY21. However, we believe the performance will improve in coming quarters led by opening of the economy. In addition, billing has also improved 32% QoQ indicating...

Outlook and Valuation: Currently the stock is trading at very stretched valuations and way beyond fundamentals as the markets are pricing in qualitative factors like solid fundamentals, strong competitive moat, value unlock potential in some of the investments, which will take some time to reflect in the numbers.