Naukri is a cash cow for Info Edge – Info Edge

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 22^nd 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 2^nd 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 3^rd wave pans out. The 3^rd 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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