Sharekhan recommended hold rating on Info Edge with a target price of Rs 1800 in its research report dated September 04, 2018.
Sharekhan's research report on Info Edge
Post slower growth in the recruitment business in the past two years (lowered to 13%/12% y-o-y in FY2017/FY2018 from 20%/19% in FY2015/ FY2016), Info Edge (India) Limited (Info Edge) has reported 15.4% billing growth in Q1FY2019. Though billing growth of the recruitment business was driven by improving IT hiring during the quarter, management states it is early to conclude that the trend would continue in the coming quarters. The IT & ITeS segment currently contributes 40-42% to total revenue of the recruitment business, which is expected to bounce in FY2019/FY2020 on account of peak utilisation level (among IT companies), rupee tailwind and higherattrition. Traction for RMS/CMS (launched 2-3 years back) among customers (around 2,500 clients) would also support the company’s revenue growth in the recruitment segment in the coming years. Further, management believes its aggressive investments in machine learning and artificial intelligence technologies would help in reaping dividends by maintaining market share (dominant traffic share with above 70% in the past two years) in the coming years.
We have revised upwards the SOTP-based price target (PT) for Info Edge to Rs. 1,800 on account of upgrade in earnings estimates and improving valuation of investee companies.
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