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 Rs. 256.1 crore (below our estimate of Rs. 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 improving revenue trends in future.
Valuation & Outlook
The company is expected to witness improving revenue and margin trends in coming quarters led by opening up of economy and market share gains. We like InfoEdge due to its prudent capital allocation, it being a quasi-play on the Indian start up ecosystem and leadership in recruitment with EBITDA margin of above 50%. In addition, the company already has two unicorns in the growing space (Zomato & PolicyBazaar) while its investment in the tech start up space makes it an attractive company. There are few other start-ups like Shoekonect, Ustra, Gramophone, which are receiving a healthy response from marquee investors and could turn out to be a long term value driver. Hence, we upgrade the stock from HOLD to BUY and value the stock on an SOTP basis to arrive at a target price of Rs. 4090.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_InfoEdge_Q2FY21.pdf
Shares of INFO EDGE (INDIA) LTD. was last trading in BSE at Rs.3940.35 as compared to the previous close of Rs. 3882.9. The total number of shares traded during the day was 14118 in over 1811 trades.
The stock hit an intraday high of Rs. 3946.1 and intraday low of 3803.5. The net turnover during the day was Rs. 54895151.