Hold Info Edge; target of Rs 1370: Centrum

Centrum's research report on Info Edge

We maintain our Hold rating with a revised TP of Rs1370 as we roll forward the valuations to FY20E. While the revenue growth in the core recruitment business is healthy, billing growth is in low teens on the back of slowdown in IT sector. We believe it would take some quarters to revive back to high teen’s level. Further the company would need to invest aggressively in A&P for steady growth in both jeevansaathi and 99acres. While $50mn disinvestment in Zomato is a positive, we believe the post money valuations at $1.1bn is lower than expected coupled with the fact the secondary sale was at a lower valuation to primary issue.

Outlook

While we have marginally increased our revenue by 0.6%/1.2% for FY18E/FY19E, operating profit has been increased by 5.1%/6.4% due to healthy operating leverage. We maintain Hold rating on the stock with a revised TP of Rs1,370 as we roll forward to FY20E. We continue to value the company on SoTP basis, with the core recruitment business valued at Rs914 (35x FY20E), 99acres.com (5x EV/Sales) at Rs86 and Zomato at Rs181 and cash at Rs130.

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