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Solid fundamentals; positive outlook

Info Edge (India) Limited operates an online job posting website. The website offers services for recruiters, job seekers, and employers. The company also operates an online matrimonial website for prospective brides, grooms, and relatives.

* Consolidated revenue grew 14.4% YoY to Rs. 626cr (+3.5% QoQ) in Q1FY24, driven by healthy growth in Naukri.com and 99acres segments.

* EBITDA remained strong at Rs. 203cr with a margin of 32.4%, due to lower marketing and advertising spends. Profit after tax (PAT) dropped 50.0% YoY to Rs. 147cr but recovered sharply from the previous quarter.

* Info Edge reported a decent quarter, with modest growth in topline, supported by the recruitment business despite slowdown in IT hiring. 99acres and other businesses grew well and are expected to grow further with continued innovations and investments. Hence, we reiterate our BUY rating with a rolled forward target price of Rs. 4,896 based on SOTP valuation.

Topline expanded amid weak hiring in IT

In Q1FY24, consolidated revenue increased 14.4% YoY to Rs. 626cr, led by 15.4% YoY (+0.5% QoQ) growth in the recruitment business and 24.6% YoY (+9.4% QoQ) growth in 99acres. Billing growth in the recruitment business declined 4.2% YoY to Rs. 397cr, owing to lower growth in hiring in the IT sector. While the billing growth rate increased 20.0% YoY to Rs. 73cr in 99acres, this was driven by increased user activity amid recovery in real estate demand. Further, revenue from other businesses rose 0.9% YoY to Rs. 81cr (+16.7% QoQ), supported by growth in the Jeevansathi (JS) and Shiksha businesses. While JS billings rose 6.4% YoY to Rs. 18.8cr, its revenue declined 15.3% YoY (+3.5% QoQ) to Rs. 19.4cr. On the other hand, Shiksha’s revenue increased 14.6% YoY (+11.9% QoQ) to Rs. 36cr, with billings increasing 9.8% YoY to Rs. 33cr on account of healthy growth in platform traffic and student response.

Key concall highlights

Key concall highlights

* In the Naukri business, engagement of job seekers on the platform was high during the quarter, with 6% growth in active user base, 7% increase in daily users, and 21% growth in daily resume changes.

* In the 99acres business, the number of brokers, new projects and live listings— all saw an increase

Profitability recovered with lower expenses

EBITDA increased 119% YoY to Rs. 203cr; with margin expanding 1550bps YoY to 32.4%. The increase in EBITDA was due to expenses such as administrative expenses (-33.0% YoY) and marketing expenses (-20.3% YoY) declined, on account of reduced marketing and advertising spends. Subsequently, PAT stood at Rs. 147cr (-50.0% YoY), mainly owing to lower other income of Rs. 64cr vs Rs. 327cr in Q1FY23.

Valuation

While IT recruitment has been subdued, the company continues to demonstrate resilience in its hiring practices, supported by non-IT recruitment in sectors such as manufacturing, BFSI, healthcare and infrastructure. The company is also witnessing rise in the real estate sector and can maintain its leading position going ahead. Hence, with a long-term prospect we reiterate our BUY rating on the stock with a rolled forward target price of Rs. 4,896 based on SOTP valuation.

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