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Sustains growth momentum in revenue and billings

Our view and valuation

Overall, it reported strong performance for the quarter, with revenue growth above expectation; while EBITDA margin was broadly along estimates. The   robust hiring activity and the recovery in real estate market would support revenue growth.  Positive operating leverage should support margin in medium term. Recruitment vertical would continue to drive revenue growth, while there are early signs of improving prospects in 99acres.com. It is expected to continue to make tech related investments to drive business growth and maintain its leadership position across segments. It is best placed to benefit from growing digitalization of Indian economy . The shift in market share towards organized players would also support growth trajectory of the company. We estimate revenue CAGR of 22.3% over FY22‐FY24E, with average EBIT margin of 31.4%

We maintain BUY Rating on the stock with revised target price of Rs 5,125/share based on DCF methodology. Trades at PE of 70.4x on FY24E EPS on standalone basis.

Result Highlights

* Revenue grew by 9.5% QoQ( up 51.6% YoY) to Rs 4,555mn. The growth was led by Recruitment business   that grew 10.6% QoQ. Real estate business, 99acres,  grew 4.6% QoQ.  

* The number of resumes on Naukri.com grew 2mn QoQ to 82 mn; while 21k resumes were added daily in Q4FY22, compared to 18k in Q3FY22.

* EBITDA margin declined by 100 bps QoQ to 28.1%, on higher advertising cost that grew 20% QoQ ( 21.2% of revenue); while employee cost grew by 9.1% QoQ; and network cost grew by 4.2% QoQ.

* The growth in billings remained strong as total billings grew 56.2% YoY( up 35% QoQ). Naukri billings grew by 39% QoQ.

.* Headcount grew by 5.8% QoQ to 4,805.  

* The Board has also recommended a Final Dividend of Rs. 5/‐ per share (on face value of Rs.10/‐ per share) for the financial year 2021‐22 subject to declaration of the same by the Members at the 27th Annual General Meeting of the Company.

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