Buy Infibeam Avenues; target of Rs 27.8: KR Choksey

KR Choksey's research report on Infibeam Avenues

Infibeam Avenues Q3FY25 PAT exceeded our expectations, despite a miss on revenue. Gross revenue stood at INR 10,704 Mn, increased by 18.0% YoY (+5.3% QoQ). EBIT stood at INR 593 Mn, up 19.6% YoY (-3.2% QoQ). EBIT Margin declined to 5.5% in Q3FY25 (7bps YoY/-49bps QoQ) on account of increased employee expense and depreciation. Net Profit stood at INR 624 Mn, up 42.6% YoY (+41.6% QoQ), driven by increased other income. PAT margin stood at 5.8%, (+101bps YoY/+150bps QoQ). The company has outlined its global expansion plans and data center investments, with strategic growth expected from Saudi Arabia, Oman, UAE, and Rediff integration. However, these initiatives are in the nascent stages, with execution risks and scalability yet to be demonstrated. Margin contraction remains a concern, driven by elevated operating costs linked to expansion and diversification into new verticals, exerting near-term pressure on profitability despite potential long-term accretion. Based on these developments, we reduce our FY26E/FY27E EPS estimates by 7.3%/7.2% to INR 0.90/1.07, respectively.

Outlook

We rollover our valuation to FY27E and assign a P/E of 26.0x, to arrive at a reduced target price of INR 27.8 per share (previously: INR 33.9). Despite near-term margin constraints, we maintain our BUY rating, supported by the company’s strong market positioning and diversification into high-growth sectors like data centers and AIdriven financial services.