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The grand job-wedding-housewarming party is here!

Job, wedding and own house are the three (stereo) typical and interconnected life goals in the Indian sociocultural construct. Besides the parental influence, this trinity now seems to have another common driving force – liquidity!

As we anticipated in mid-Jun-21, hiring across sectors has witnessed a robust pickup. Net EPFO additions in Jun-21 were ~85% higher than the pre-covid run-rate. RBI’s Aug-21 ‘State of the economy’ report hints at up to ~38% YoY salary hikes across sectors – the best in 15 years. Resignations and voluntary retirements too are surging in line with global trends. ‘Rethinking of work’ by employees is driving massive supply-demand mismatch across industries further boosting the need for ‘search’ platforms like Naukri. We foresee an employees’ job market for at least 12-18 months (vs employers’ market for 5+ years now). This is driving strong traction in online realty too (99 Acres DAUs in Jul-21: +28% v/s Feb-21) further led by: (1) low interest rates, (2) new launches, (3) online shift.

We expect a sharp pent-up increase in Jeevansathi’s (downloads in Jul-21: >13x v/s Feb-21) paid listings as wedding restrictions ease and most of the ~17mn deferred weddings (I-Sec est., CY20 & CY21) come into planning pipeline. The robust volume spike at 99 Acres / Jeevansathi should come along with EBITDA profitability surprising the street. Post our upgrade in mid Jun-21, the stock was up ~29% (vs ~10% return in NIFTY). Given the improved growth and margin outlook across segments, we upgrade FY22E - FY24E EBIT by 23%-35% and TP by 28%. We value Naukri at 75x FY23E EPS. As elaborated in our report (link), our 1-year forward valuation of Zomato stands at US$22bn. We factor in holding company discount of 15% on listed / to be listed investments of Infoedge.

* Strong hiring. Naukri can be a key beneficiary of demand-supply mismatch. As we expected in mid Jun-21, there was a robust and broad based pick-up in hiring – across sectors. Trends in markets like the US, which publish job market data periodically, hint at a significant demand-supply mismatch. For instance, the US currently has 10mn job openings while 8.4mn people are unemployed! This is being led by rethinking of work, family responsibilities & flexibility by employees. While granular data on Indian market is absent, anecdotally, we notice similar trends. Entrepreneurship, preference to work in start-ups and need for flexibility are the biggest drivers of the demand-supply mismatch. In this backdrop, we foresee employees’ market for at least 12-18 months with search platforms like Naukri benefitting. Under-investment by India Inc. for the previous 5+ years, and current reflationary environment give us the confidence. Notably, even as the NIFTY 50 / BSE 200 aggregate revenues grew 52% / 47% over FY16-20, permanent headcount increased just 16%/15%. Even accounting for technology led productivity gain, we see further headroom for hiring.

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