Info Edge (India) Ltd: Jobs and more!

India Infoline News Service | Mumbai |

Info Edge’s majority business is providing online classified services in variety of domains like recruitment, matrimony, real estate, education and restaurants catalogues.

CMP Rs301, Target Rs345, Upside 14.6%

Info Edge, largely known by its recruitment portal Naukri.com, is the first listed internet based player on Indian bourses and until recently the only one. Info Edge owns a diversified portfolio of portals like Naukri.com, 99acres.com, Jeevansathi.com and Shiksha.com which have come a long way in establishing strong market and mind share.  This is evident in Naukri’s market leadership among job portals with 60%+ market share and 99.acres’s market leadership (30%+) among real estate classifieds portal. Its matrimony portal – Jeevansathi (JS) too is one of the top players in the online matrimony space.  Its investment companies like Zomato, PolicyBazaar and Meritnation have also shown early success with leading market share and brand recall.


Info Edge’s strong growth since inception in these key portals is on the back of key structural tailwinds. These include increasing internet penetration, faster and cheaper internet access. The internet penetration in India , despite the strong growth,  is still one of the lowest (11%) and is poised to grow threefold by 2015 . The average annual growth in mobile subscriber base of 33% over FY07-13 also further validates the improving penetration through mobile internet.  Over a longer period of time, this under-penetration and India’s young demographics is expected to bode well for internet-based businesses in general and Info Edge in particular.


In last five years though, Info Edge’s growth has been impacted due to the effects of global financial crisis (over FY09-10) and more recently in FY13 which was on the back of general slowdown of both global and domestic economy. Due to strong linkage of recruitment (75%+ of the consolidated revenues) to business cycles and increased competitive intensity from non-traditional players (Linkedin), we expect the slower growth to continue in the medium term. On the flipside, high under-penetration, small base, dominant positioning should lead to robust growth for portals like 99acres, JS, Zomato, Meritnation and PolicyBazaar. Overall, we expect the company to register 21%/12% CAGR over FY13-15E and assign a conservative P/E multiple (28x 1 yr forward v/s 37x historically) considering slower growth.  Initiate with BUY and 9-month TP of Rs345.


Financial summary

Y/e 31 Mar (Rs m)
FY12
FY13
FY14E
FY15E
Revenues
3,919
4,723
5,693
7,030
yoy growth (%)
21.8
20.5
20.5
23.5
Operating profit
1,183
1,210
1,561
1,763
OPM (%)
30.2
25.6
27.4
25.1
Reported PAT
919
916
1,349
1,438
yoy growth (%)
45.5
(0.3)
47.3
6.6





EPS (Rs)
8.5
10.6
12.4
13.2
P/E (x)
35.3
28.4
24.3
22.8
Price/Book (x)
6.2
5.4
4.5
3.8
EV/EBITDA (x)
25.8
25.2
18.7
15.9
RoE (%)
19.3
20.3
20.1
18.0
Source: Company, India Infoline Research
BSE 1,240.00 12.80 (1.04%)
NSE 1,239.90 11.05 (0.90%)

***Note: This is a NSE Chart

 

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