Neutral Info Edge; target of Rs 4200: Motilal Oswal

Motilal Oswal's research report on Info Edge

Info Edge (INFOE) delivered a weaker-than-expected revenue growth in 1QFY24, with standalone revenue rising 15% YoY (20.6% expected). EBITDA margin was better than expected at 38.8%, down 30bp QoQ (120bp beat). Overall Billings were muted and remained flat YoY at INR 5.2b, largely on account of lower billings in Recruitment solutions business (down 4.2% YoY). The management continues to see a slowdown in IT hiring activity, which remains a key risk, given its significantly high revenue contribution to the Naukri business. Though Non-IT has been doing well for the past couple of quarters, it has started witnessing a slowdown with delayed renewals, which would add to the drag on the billings. The management was surprised by the dip in hiring activity in July’23. While we see recovery in IT hiring in FY25, we expect Naukri billings to decline in FY24 on a high base, which will result in single-digit growth for FY24 and FY25.

Outlook

We value the company’s operating entities using DCF valuation. Our SoTPbased valuation indicates a TP of INR4,200. We reiterate our Neutral stance on the stock.