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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