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Strong operating performance led by Recruitment and Real estate segments

Result Synopsis

Info Edge(India) (INFOE) reported strong financial performance for the quarter. While, the sequential revenue growth was inline with estimates; EBITDA margin was above expectation. Revenue grew by 4.4% QoQ, led by 4.5% QoQ growth in the revenue of Recruitment business. Consolidated Billing remained strong as it grew by 14.5% YoY. There was sequential increase in EBITDA margin(up 445 bps QoQ) on account of control on A&P expense. Added 2mn resumes (QoQ) in the quarter to end at 88mn resumes. While, the hiring activity in IT sector has slowed; the recruitment activity in non? IT sectors continue to power the Recruitment business. The recovery in real estate market continues to be on track and would support the performance of 99acres.com. We expect that, with change in business strategy for Jeevansathi.com, the engagement levels should pick up going ahead. Also, Shiksha, the education segment, has seen strong traction recently and is expected to sustain the momentum. Positive operating leverage should support margin in medium term. It is expected to continue to make tech related investments to drive business growth and maintain its leadership position across segments and also 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 28.8% over FY22?24E with average EBITDA margin of 35.1% over the period. We maintain our BUY rating on the stock with revised target price of Rs 5,215/share based on DCF methodology. The stock trades at P/E of 65.1x/55.6x on FY23E/FY24E on standalone basis.

Result Highlights

* Reported revenue of Rs. 5,552 million. (Up 33.4% YoY, 4.4% QoQ). The sequential revenue growth was led by 4.5% QoQ growth in the revenue of Recruitment business to Rs 4,368 Mn (78.7% of revenue); while 99acres grew 4.6% QoQ to Rs 729 Mn (13.1% of revenue).

* Added 2mn resumes (QoQ) in the Quarter to end at 88mn resumes, with 20k resumes added daily in the quarter compared to 23k resumes added daily in Q2FY23.

* Number of listings on the 99acres platform improved by 2.4% QoQ to 1,077k.

* Reported robust billings of Rs 5,507 Mn (up 14.5% YoY), led by 17.7% YoY increase in billings in Recruitment business. ? EBITDA margin increased by 445 bps QoQ to 39.1%, led by lower advertising cost in the quarter (down 10.2% QoQ)

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