Neutral Info Edge; target of Rs 4390: Motilal Oswal

Motilal Oswal's research report on Info Edge

Info Edge (INFOE) delivered a better-than-expected 2QFY24 performance. Revenue increased 11.5% YoY in 2QFY24 (est. 9%). EBITDA margin, at 40.7%, was a strong 440bp beat on our estimate. Overall billings were up 4.8% YoY to INR5.7b, which came in better than expected given the ongoing pain in the recruitment vertical. 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. Non-IT has been doing well for the past couple of quarters and helped INFOE to partly offset the adverse impact from IT hiring. The management is adding more braches to support the demand from smaller towns, which is positive. While we expect a recovery in IT hiring in FY25, we believe Naukri’s billings would decline in FY24E on a high base, which will result in a 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 INR4,390. Reiterate Neutral.