Info Edge (Q2 FY14)

India Infoline News Service | Mumbai |

Info Edge reported Q2 FY14 rupee revenue of Rs1.24bn (+14.6% yoy) was marginally below our expectation.

CMP Rs343, Target Rs369, Upside 7.6%

  • Info Edge reported Q2 FY14 rupee revenue of Rs1.24bn (+14.6% yoy) was marginally below our expectation. Recruitment business’ (73% of total revenues) growth was at 8% yoy supported by the IT segment recruitment and certain market share gains. On the other hand, the non-recruitment core business (99acres, Jeevansathi and shiksha) grew ahead of expectation with revenues of Rs333mn (+45% yoy). 


  • The deferred sales revenue growth – an indicator of future performance was at 18% yoy. This is a decent growth supported by both the stable IT sector recruitment as well as good growth in non-recruitment space i.e. 99acres, Jeevansathi and Shiksha. The Naukri Job Speak index improved 9% yoy to 1238 in September. Management commentary continued to be slightly weak on the recruitment business considering the cautious hiring on the non-IT sectors but on the other hand, improvement in market share in recruitment business is a silver-line.


  • The OPM performance for the company was materially ahead of expectation, improving 1.4% yoy against our expectation of 2.5% yoy correction. Though the recruitment business margin was stable at 50.7% (versus 50.3% in Q1 FY14 and 50% in Q2 FY13), the profitability of the non-recruitment business improved materially with combined losses coming in at Rs6.6mn versus 23mn loss in Q2 FY13. This was largely due to cut in advertisement expenses and better realisations. More specifically, Jeevansathi’s operating losses reduced on the back of higher realisations. Also, 99 acres operating losses narrowed to Rs5.4mn versus Rs22mn last quarter. Overall, the beat on the margin front resulted in PAT coming in ~6% ahead of estimate at Rs333mn.


  • Sluggishness of the recruitment business could continue in near term as indicated by the management’s cautious outlook. On the non-recruitment business, though the traction (especially in 99acres) was good, the heightened competitive intensity may lead to delay in achieving sustained profitability as company continues its investments to maintain the competitive market share. On a positive note, we are enthused by the promising traction in the key investee companies and expect improved traction going ahead. We expect 22%/12% (pre exceptional) Revenue/PAT CAGR over FY13-15E. Considering the protracted growth expectation and recent price up-tick, we now assign MP rating with marginally increased 9-month TP of Rs369.  We continue to remain positive on a longer term basis considering the Company’s diversified business and investments in the growing Indian Internet space.

 
Result table
(Rs mn)
Q2 FY14
Q1 FY14
% qoq
Q2 FY13
% yoy
Net sales
1,236
1,208
2.3
1,078
14.6
Operating profit
442
366
20.6
370
19.3
OPM (%)
35.8
30.3
543 bps
34.3
142 bps
Depreciation
40
40
(0.2)
20
93.5
Interest
6
6
5.7
6
(8.2)
Other income
92
134
(31.7)
112
(18.5)
Exceptional item
-
(26)
 
-
 
PBT
488
429
13.7
456
7.1
Tax
155
137
13.0
123
26.7
Effective tax rate (%)
31.8
32.0
-
26.9
-
Reported PAT
333
292
14.0
333
(0.2)
EPS (Rs)
3.0
2.7
14.0
3.1
(0.2)
Source: Company, India Infoline Research
 
Financial Summary
Y/e 31 Mar (Rs m)
FY12
FY13
FY14E
FY15E
Revenues (Rs m)
3,919
4,723
5,647
6,978
yoy growth (%)
21.8
20.5
BSE 1,221.00 [5.35] ([0.44]%)
NSE 1,235.00 3.65 (0.30%)

***Note: This is a NSE Chart

 

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