Hold Info Edge India; target of Rs 405: Sushil Finance

Sushil Finance has recommended hold rating on Info Edge India with a target of Rs 405, in its October 29, 2012 research report.

“The quarterly performance of Info Edge was slightly below our Revenue & APAT estimates. During Q2FY13, its Revenues grew 1.7% QoQ & 17.3% YoY to Rs. 1,078 mn, driven by strong Revenue growth in Jeevansathi & 99acres. While its Recruitment solutions biz (Naukri) grew 11.6% YoY to Rs. 834 mn, its Real Estate biz (99acres) and Matrimonial Biz (Jeevansathi) grew 52% & 25% on YoY to Rs. 115.7 mn & Rs. 79.7 mn respectively. The slower growth in Recruitment solutions biz was mainly due to slowdown witnessed in job market on account of weak macro environment. The deferred sales revenue which is an indicator of near term growth has also decreased from Rs. 1,110 mn in Q1 to Rs. 1,020 mn this quarter. The management expects the Recruitment biz to remain sluggish in Q3 and some pick-up expected in Q4FY13 with improvement in hiring activity. However, the other verticals - 99acres, Jeevansathi & Shiksha will continue to deliver strong growth during current year.”

“Its EBITDA for Q2FY13 grew 10.4% QoQ to Rs. 370.2 mn, while the EBITDA margins fell 200 bps YoY to 34.3%. The fall in EBITDA margins can be attributed to increased investment in brand building and expanding sales operation of other verticals. During Q2FY13, the 99acres biz incurred a loss of Rs. 12 mn, while Jeevansathi biz incurred as loss of Rs. 21 mn at EBITDA level. However, the EBITDA margins in Naukri remained strong at 50%. The management expects its EBITDA margin to remain under pressure in near term, but would come back to normalcy once job markets improve. Its PBT (Including other income) grew 15% YoY to Rs. 455.8 mn and APAT grew by 18% YoY to Rs. 333.2 mn.”

“Info Edge has delivered strong growth in its Revenues & APAT in FY11 & FY12. The growth in H1FY13 was also decent with Revenue & PAT growth of 20% & 21% respectively. However, the growth in H2FY13 is likely to be muted due to sluggishness in job market, which is expected to improve form Q4FY13. Info edge has strong balance sheet with negative working capital & high net cash of ~ Rs. 4,750 mn. We believe the current sluggishness in Recruitment biz is temporary and the growth will be back as job market improves. Hence, considering the business outlook, we have largely maintained our FY13E & FY14E estimates. We expect the company to deliver 17.6% CAGR in Revenue and 12.5% CAGR in APAT during FY12-14E. At CMP of Rs. 370, it is trading at 30.9x & 26.4x its FY13E & FY14E Earnings respectively. We maintain our ‘HOLD’ Rating on the stock with SOTP based target price of Rs. 405,” says Sushil Finance research report. 

Public holding more than 90% in Indian cos  

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