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Exchanges, Staffing and Internet - Q2FY22E Results Preview - Mixed bag; visibility improving - HDFC Securities

Posted On: 2021-10-14 22:31:31 (Time Zone: IST)


Exchanges: MCX ADTV declined 8% QoQ to INR 255bn in Q2FY22 due to a volume decline of 22/18% in bullion/metals, offset by 22% QoQ increase in energy volume. While the index derivative volume remained subdued, options volume rose sharply (~3x) in the quarter. Revenue is expected to decline 4% QoQ and margin will contract 137bps QoQ to 40.7%. With the higher upfront margin impact now over (the fourth phase implemented in Sep-21), options volume creating additional revenue stream effective Oct-21, energy volume rising back to normalised levels, and change in IT vendor leading to cost savings, we expect rerating in the stock, backed by revenue growth and margin expansion. Upgrade to BUY with 35x P/E to Dec 23 core PAT.

NSE and BSE volumes were soft in July-21 but gradually recovered in Aug and Sep-21. BSE's cash/derivative markets for Q2FY22 stood at 8.0/4.1%, +80/-238bps QoQ. StAR MF continued to register strong growth, while INX declined 4% QoQ. BSE is expected to report 2.3% QoQ growth in revenue and an EBITDA margin of 32% (-32 bps QoQ). We maintain our core target multiple at 20x, which is still at a ~50% discount to peers. Our target price of INR 1,580 is based on 20x core Dec-23 PAT + net cash + CDSL stake. Maintain BUY.

CDSL continues to be the greatest beneficiary of the rise in discount brokers; the BO account market share stood at 66% in Sep-21 (+10.1% YoY) with total BO accounts reaching ~46mn. CDSL is expected to post another strong quarter (+5.9% QoQ), led by transaction and IPO/corporate action revenue. Transaction revenue will be supported by higher trade volume YoY and IPO/corporate action revenue will benefit from private companies tapping public market. Online data charges (MF e-KYC) are expected to grow by 5.0% QoQ. Margins will expand in the quarter (+164bps to 64.5%), offset by higher technology investments. We maintain our 45x multiple, based on continued revenue momentum and market share gains. Maintain BUY.

Staffing: Teamlease is expected to post a strong quarter, driven by high associate headcount additions. The rise in economic activities and demand for digital talent are expected to keep the hiring activity robust and thereby benefit the general and specialised staffing business. The revenue is expected to grow 6.4% QoQ, and the EBITDA margin will increase 10bps QoQ to 2.2%, led by higher margins in general staffing business, higher productivity, and improving business mix. Sustained recovery will lead to ~25/42% revenue/EPS CAGRs over FY21-24E. Maintain BUY.

Internet: IndiaMart is expected to post a good quarter on account of economic recovery, improving business sentiment, and easing of mobility restrictions. We expect a healthy addition of ~8K paid suppliers, with most of them in the monthly package and some of the lost suppliers are expected to return to the platform. We expect the revenue to increase 3.4% QoQ and margin to decline 159bps QoQ to 47.2% on account of increase in outsourced sales cost. We expect revenue/EPS CAGRs of +20/14% over FY21-24E. Maintain BUY with a DCF based target price of INR 9,650, implying 54x FY24E EBITDA.


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