Buy Info Edge Ltd For Target Rs.7,350 - Yes Securities
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Maintains Steady Performance
Our view
Overall, strong result on revenue and billings front. The pickup in hiring activity and the recovery in real estate market would support revenue growth. Best placed to benefit from growing digitalization of Indian economy. Positive operating leverage should support margin in medium term. It is expected to continue to make tech related investments to drive revenue growth and maintain its leadership position across segments. We maintain BUY Rating on the stock with revised target price of Rs 7,350/share
Result Highlights
* Reported revenue of Rs 3,517mn( up 10% QoQ), as ease in lockdown restrictions aided revenue growth, primarily led by the recruitment segment, which has benefited from strong hiring activity in the IT sector.
* Recruitment vertical grew by 15.2% QoQ, accounting for 73% of revenue; while Real estate vertical ( 99aces.com)was down 1.8% QoQ to Rs 483 mn. The revenue performance of other verticals remained muted in the quarter.
* EBITDA margin was down 95 bps QoQ to 30.2% as expected, on higher advertising cost(up 17.5% QoQ) which was increased to benefit from the opening of the economy after the 2nd wave of covid19.
* The economic recovery led to strong growth in Billings ( up 61% YoY, up 28% QoQ) and would support growth momentum going ahead.
* As compared to pre‐pandemic levels, i.e. Q2 FY20, Billing growth is 33.9%, led by Recruitment Solutions 38.8% and 99acres 12.5%.
Valuation
The stock trades at P/E of 128.9x on FY24E standalone Earnings. Robust growth in billings provide strong revenue growth visibility. Recruitment vertical would continue to drive revenue growth, while early signs of improving prospects in 99acres.com are also visible. We roll over to FY24E estimates and value the stock through DCF method to arrive at target price of Rs 7,350/share.
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