Naukri is a cash cow for Info Edge – Info EdgeAniket Khanolkar
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/-.
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