Q4FY23 Review: Info Edge (India): Billing growth healthy despite moderation in IT

29 May 2023 , 11:47 AM

Info Edge (INFOE) reported revenue growth of 24% YoY (+1.6% QoQ) in Q4FY23, aided by healthy 27% YoY growth in Naukri; primarily due to strong hiring in non-IT sectors. Billings – a leading indicator of revenues – managed to grow at 15% YoY. This is despite a tough base, with Naukri billings growing 14% YoY, which the management attributed to moderation in IT growth. 99acres continued its momentum, growing revenues by 23% YoY, as the Real Estate market remained strong. Ebitda margin rose to 39.1% (+11ppt YoY), as marketing spends were optimised across segments. INFOE recorded an impairment charge of Rs187mn on some of the investments, including 4B Networks. Analysts of IIFL Capital Services cut FY24-25 EPS by up to 9% on tad lower revenues and lower interest income due to allocation made in their investment funds.

Billings’ growth holds steady, despite moderation in IT hiring: 

Recruitment segment saw billings growth moderate to 14% YoY, although on a tough base, as IT sector witnessed slowdown due to current macro and stabilising attrition. However, non-IT hiring remained on a solid growth path. Revenues grew by 27% YoY. 99Acres witnessed a 31% YoY growth, led by strength in the Real Estate market and helped by a favourable base. Jeevansathi continued to decline (revenues -26% YoY) as it drove user traffic through concessional offerings. Shiksha remained strong (31% YoY).

Margins optimised: 

INFOE delivered Q4FY23 margins of 39.1%. Ad expenses declined by 8.7ppt YoY, as it cut marketing spend in Jeevansaathi and 99Acres. Management stated that they expect the Ad spends to remain under check as they look for newer monetisation opportunities; while current margins are sustainable at ~15% revenue growth. INFOE reported impairment loss of Rs187mn, in 4B Networks and others investments.

Maintain BUY: 

Analysts of IIFL Capital Services 12-month TP of Rs5,500 values Naukri at 40x EV/Ebitda (unchanged), Zomato and Policybazaar at their 12-month TP; they ascribe 20% holdco discount to both. Valuation recovery for both these investments may provide upside risk to the valuations. Key risk: slowdown in jobs and aggressive acquisitions.