Buy Info Edge Ltd For Target Rs. 5800 - ICICI Direct
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Strong hiring, rebound in real estate augurs well…
About the stock: Info Edge provides internet based service delivery like recruitment services (Naukri), real estate (99 acres), Jeevansaathi 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%
Q3FY22 Results: Info Edge reported robust Q3FY22 results.
* Revenues increased 14.7% QoQ, aided by recruitment business growth of 16.4% QoQ
* EBITDA margin dipped 240 bps QoQ to 27.8%
* Billing increased 16.4% QoQ, 57.6% YoY to | 356 crore
What should investors do? Info Edge’s share price has grown by ~6x over the past five years (from ~| 824 in January 2017 to ~| 4,900 levels in January 2022).
* We continue to remain positive and retain our BUY rating on the stock
Target Price and Valuation: We value Info Edge at | i.e. 5800 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
* Lower interest rate and affordability is expected to drive 99acres revenues. Traction in Jeevansaathi, Shiksha to further drive revenues
* Expect revenues to grow at a CAGR of 21.4% over FY21-24E
Alternate Stock Idea: Apart from Info Edge, in IT coverage we also like Teamlease.
* Key beneficiary of formalisation of economy and underpenetrated temp staffing market
* BUY with a target price of | 4,500
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