Update on the Indian Equity Market:
On Wednesday, Nifty closed in the red at 15,687 (-0.5%). Among the sectoral indices, Auto (+0.5%) was the only one to close higher. Metal (-1.1%), IT (-0.9%), and Pvt Bank (-0.6%) closed in the red. Maruti (+2.3%), Titan (+1.5%), and Bajaj Fiserv (+1.3%) were the top gainers. Adani Ports (-3.3%), Wipro (-2.9%), and Divis Labs (-1.5%) were among the top losers.
Excerpts of an interview of Mr. Hitesh Oberoi, MD & CEO, Info Edge with CNBC-TV18 dated 22nd June 2021:
- Speaking about the company, Mr. Oberoi said the digital transformation story is panning out in all categories.
- The recruiting vertical of Info Edge, Naukri.com has generated Rs 1,950mn of cash in 4QFY21. The Naukri vertical is acting as a cash cow to fund other investments made in the operating business like 99acres.com, Jeevansathi.com, and Shiksha.com.
- Speaking about EBITDA margins, he said the collection of money is done in advance, and revenue is recognized over a period of time. The billing growth in 4QFY21 was 25% YoY.
- The 99acers.com business was affected due to the Covid19 2nd wave but now there is some recovery.
- In Q4FY21, billings for shiksha.com grew by 50% YoY. The education technology is doing well for the company. The schools and colleges are shut for the past 1-1.5 years which has acted as a catalyst to speed up the growth.
- The company plans to focus on its 4 existing verticals.
- There is enough cash on books but no immediate acquisition on the cards.
Asset Multiplier comments:
- We believe digital transformation led by Covid-19 is acting as a catalyst for verticals like Shiksha.com and Naukri.com
- We believe the recovery in the 99acers.com vertical will depend upon how 3rd wave pans out. The 3rd wave might hamper the recovery seen in this vertical.
Consensus Estimate: (Source: market screener and Investing.com website)
- The closing price of Info Edge Ltd was ₹ 4,779 as of 23-June 2021. It traded at 138x/102x the consensus Earnings per share estimate of ₹ 34.7/46.7 for FY22E/FY23E respectively.
- The consensus average target price is ₹ 2,873/- which implies a PE multiple of 62x on FY23E EPS of 46.7/-.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”