Buy Infoedge; target of Rs 5170: HDFC Securities

HDFC Securities' research report on Infoedge

Infoedge reported a modest quarter with in-line revenue growth of 1.6% QoQ and better recruitment billings and margins. Naukri (~78% of total revenue and billings) continues to show resilience despite the slowdown in IT hiring (~35% of Naukri revenue). Growth in Naukri is led by traction in non-IT sectors like BFSI, travel, auto, construction, etc. The Naukri billings were up 30% YoY in FY23, which implies a modest growth of ~13-15% in FY24E following two strong years of >40% YoY growth. The margin for the recruitment segment continues to be >60%, which is impressive. 99acres and Shiksha will continue to be the focus areas and attract investments. Jeevansathi's revenue grew for the first time after the change in strategy and it has also gained market share in the north region. We expect growth to be led by Naukri, 99 acres and Shiksha. The margin for recruitment will be in the range of 60-61%.

Outlook

We maintain our BUY rating with a SoTP-based TP of INR 5,170, valuing Naukri at 38x EV/EBITDA, 99acres/Jeevansathi/Shiksha at 5/3/3x P/S, while Zomato and Policybazaar have been assigned the market value (~15% discount). The core recruitment business is trading at 27x FY25E EV/EBITDA.