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Inline operating performance; slowdown in IT Hiring continues to impact near term billings

Result Synopsis

Info Edge(India) (INFOE) reported broadly inline financial performance for the quarter. While, the sequential revenue growth was as per estimates; EBITDA margin was slightly above expectation. Revenue grew by 1.5% QoQ, led by 2.2% QoQ growth in the revenue of Recruitment business. Consolidated Billing was muted on account of weak hiring sentiments in the IT sector, as it was down 30.1% YoY. EBITDA margin increased by 197 bps QoQ to 40.7%, led by control on operating expense. Added 3 mn resumes (QoQ) in the quarter to end at 94mn resumes.

As the hiring activity in IT sector has slowed over last few quarters,the recruitment activity in non? IT sectors continues to drive the Recruitment business. The activity level in real estate market remains robust and would support the performance of 99acres.com. Also, with change in business strategy for Jeevansathi.com, the engagement levels have picked up and should drive revenue growth. 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. The shift in market share towards organized players would also support growth trajectory of the company. However, the slowdown in IT hiring would continue to adversely impact near term billings/revenue growth. We estimate revenue CAGR of 14.1% over FY23?25E with average EBITDA margin of 39.2% over the period. We maintain our ADD Rating on the stock with revised target price of Rs 5,065/share based on SOTP method. The stock trades at P/E of 67.4x/59.9x on FY24E/FY25E on standalone basis.

Result Highlights

? Reported revenue of Rs. 5,930 million. (Up 11.5% YoY, 1.5% QoQ). The sequential revenue growth was led by 2.2% QoQ growth in the revenue of Recruitment business to Rs 4,560 Mn (~77% of revenue); while 99acres grew 5.6% QoQ to Rs 873 Mn (~14.7% of revenue).

? Added 3mn resumes (QoQ) in the Quarter to end at 94mn resumes, with 24k resumes added daily in the quarter.

? Number of listings on the 99acres platform decreased by 2.5% QoQ to 1,134k.

? Reported billings of Rs 5,690 Mn (down 30.1% YoY, up 8.8% QoQ) due to weaker Recruitment billings, while there was increase of 21.8% YoY in 99 acres billings.

? EBITDA margin increased by 197 bps QoQ to 40.7%, led by lower employee cost (down 1.2% QoQ).

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