Buy Info Edge India Ltd For Target Rs 5230 - ICICI Securities
Firing on all cylinders…
About the stock: Info Edge provides internet based service delivery like recruitment services (Naukri), real estate (99 acres), Jeevansathi and Shiksha.
* Quasi play on Indian start up like Zomato, PolicyBazaar, Shoekonect, Ustra, Gramophone and job market, matrimony services & real estate market
* Prudent capital allocation and recruitment business EBITDA margin >50%
Q1FY23 Results: Info Edge reported strong Q1FY23 results.
* Revenues increased 11.4% QoQ aided by recruitment business growth of 12.4% QoQ
* EBITDA margin improved 400 bps QoQ to 32.1%
* Continued to remain invested in Zomato & PolicyBazaar despite lock in for pre-IPO investors expiring
What should investors do? Info Edge’s share price has grown by ~4.6x over the past five years (from ~| 956 in August 2017 to ~| 4,431 levels in August 2022).
* We maintain BUY rating on the stock
Target Price and Valuation: We value Info Edge at | 5,230 on SOTP basis.
Key triggers for future price performance:
* Improving hiring trend in IT, healthcare, education, telecom and improving billing trend to drive recruitment revenues
* Continued pent up demand in housing as well as rental market driving 99acres revenues despite increasing home interest rates. Traction in Jeevansathi, Shiksha to further drive revenues
* Expect revenues to grow at a CAGR of 20.2% over FY22-24E
Alternate Stock Idea: Apart from Info Edge, in IT coverage we also like Affle India
* Key beneficiary of a shift of advertising budget to digital medium, continued strong growth in converted users
* BUY with a target price of | 1,295
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