Buy Info Edge India Ltd For Target Rs.5,512 - Yes Securities
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Result Highlights
* Reported revenue of Rs 2900 mn in Q4FY21( down 10% YoY, up 6.5% QoQ, slightly below estimate as weak billings in early part of Pandemic had adverse impact on Q4 topline.
* EBITDA was down 45% YoY( down 22% QoQ) led by wage hike as employee cost(52% of sales) increased by 15% QoQ as it continues to invest in talent with improvement in demand outlook. Advertising expense also increased by 10.8% QoQ as unlocking of the economy in Q4FY21 required higher marketing expense especially in Jeevansathi.
* On the positive note, the total billings grew by 40% QoQ to Rs 4,146mn, signifying strong growth outlook . Naukri billings grew by 50% QoQ to Rs 2,979 mn, led by strong traction in job market. Similarly, 99acres billings grew by 37% QoQ in the quarter, led by gradual recovery in online real estate classified business.
* Total cash and equivalent is Rs 30bn and it is actively looking for acquisition in allied sectors.
* Operational Highlightsâ The total number of resumes grew to 75 mn compared to 73 mn in Q3FY21, with the number of unique Naukri clients growing 10% QoQ. Number of listing in 99acres grew by 5% QoQ.
Our view:
High growth in billings have improved the growth outlook for all its businesses. It is expected to maintain leadership position in the recruitment vertical. The real estate segment with low online penetration offers huge potential and will be major contributor to revenue growth in coming years.
The rising valuation of promising startups such as Policy Bazaar and Zomato and improving payout ratio will drive the valuation of Info Edge. It is a direct beneficiary of the growing digitalization of the Indian economy and will also gain from ongoing migration of customers from unorganized to organized sector. Margins are expected to improve going ahead, led by positive operating leverage and cash generation to remain strong led by negative working capital. We maintain BUY on stock with unchanged target price of Rs 5,512.
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