Info Edge (India) Ltd. share price target

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.

Monthly Chartbook: India's recovery gathers steam. INFOE: Lower billings a cause for concern. VMART: Revival hopes pinned on Q3 festive season

Near term headwinds, long term revenue trend robust Covid-19 impacted revenue growth in Naukri. Revenues from the recruitment business declined 8.8% YoY vs. sustained double digit growth. Billings also dipped 44.3% YoY in Q1FY21 led by lockdown. However, the company is witnessing improving traffic share across segments (including recruitment). We expect revenues to return to pre-Covid levels in Q3FY21E. In addition, opening of economy and recovery in IT sector will further boost revenues at recruitment business. In 99acres, continued pressure in real...

Info Edge (INFOE) posted weak Q1FY21 revenues with a 10% YoY decline, weighed down by a 25% slump in 99acres.com revenues.

Valuation Upgrade to Buy with a PT of Rs. 3,650: We have revised our estimates upward for FY2021E/FY2022E, factoring in strong beat in operating margin, continued growth momentum in Jeevansathi business, and gradual recovery in billings in IT and telecom segments. We continue to believe that leadership position in its core businesses along with improving valuation in certain investee companies (Zomato and PolicyBazaar) bodes well for the company. Further, we expect revenue and margin to improve sharply in FY2022E because of the company's cost-control measures and resumption of economic activity. We prefer...

8 September 2020 The complete impact of the COVID-19-led lockdown was seen in the 1QFY21 financial performance, with billings decline of 44% YoY. The drag in revenues (-10.4% YoY) was curtailed due to the subscription- based model of the business. INFOE has shown a high resilience in the margins (+420bp YoY) on account of superior cost optimization. For the first time, the company was able to show gains from investee companies, primarily led by positive contribution margins from Zomato. Traffic on INFOEs operating portals has inched up to pre-COVID levels. Given the companys market positioning, multi-dimensional growth may be expected across its core businesses in the medium-to-long term. We expect long-term growth trends to play out at its operating entities, whose margins continue to inch up on high operating leverage. Furthermore, led by an inclination for profitability in investee companies, we expect consolidated losses to be curtailed over time.

Outlook and Valuation: While we believe that these are a positive development for INFOE, we continue tobelieve that the core/standalone business of the company is expected to suffer in thenear term as the growth prospects of the company are closely linked to GDP growth ofthe company.

Info Edge (INFOE) posted muted YoY revenue growth of 10% in Q4FY20, the lowest in the last 12 quarters.

Outlook and Valuation: We value INFOE at Rs. 2092 based on SOTP. While the standalone business is valued at a 3-yr historical average FY22E PE of 64x, Policybazaar and Zomato are valued based on their last round of funding.