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Impressive revenue, margin growth…
Info Edge’s Q3FY11 results were better than our expectations. The
company reported a topline of | 75.1 crore against our expectation or |
73.4 crore registering a growth of 27.5% YoY on the back of increased
recruitment activity. The EBITDA margin improved 610 bps YoY to
36.6%, primarily due to robust revenue growth backed by high
operating leverage. The company reported a PAT margin of 29.2% for
the quarter. PAT stood at | 21.9 crore against our expectation of | 20.3
crore, registering an impressive YoY growth of 40.1%.
ƒ Highlights for the quarter
Both the recruitment and non-recruitment businesses reported
handsome revenue growth of 24.0% and 47.2% YoY, respectively,
for Q3FY11. The company also managed to curtail EBITDA losses in
other verticals to | 2.7 crore as against | 3.9 crore in Q3FY10,
primarily due to lower advertisement expenses in Jeevansathi.
Depreciation for the quarter increased 41% QoQ to | 2.0 crore as
against | 1.4 crore in Q2FY11 on the back of higher depreciation on
the newly commissioned office in Sector 2, Noida. The company
has spent | 24 crore on this facility and is expected to incur another
| 70-80 crore in the next few quarters on the new office in Sector 8,
Noida.
Valuation
At the CMP of | 574, Info Edge is trading at 40.7x FY11E EPS of | 14.1 and
30.9x FY12E EPS of | 18.6. We have valued the stock using DCF
methodology at | 629. Our target price discounts FY12E EPS by 33.9x and
implies an upside of 10%. We maintain our ADD rating on the stock.
ƒ Core segment – impressive performance
This year was marked by increased corporate activity with hiring on
an uptrend. Recruitment services grew 24.0% YoY to | 62.0 crore and
by 25.3% for 9MFY11. Naukri corporate services also registered a
healthy growth of 32.0% YoY in Q3FY11. The IT sector contributed
27% to recruitment solutions revenue in Q3FY11 while the
contribution for BFSI and infrastructure stood at 5% and 20%,
respectively.
Unique customers at the end of Q3FY11 saw a minor decline of 100 to
21,000 from 21,100 in Q2FY11. Also, average number of resumes
added daily fell to 10,000 from 13,000 in the last quarter while number
of resumes modified daily fell to 70,000 from 75,000 in Q2FY11. The
management attributed this to seasonal fluctuation owing to the
Diwali and Dussehra festivities where companies generally scale back
their recruitment plans.
ƒ Non-recruitment – healthy revenue, EBITDA growth,
The non-recruitment segment reported a topline of | 13.1 crore
increasing by an impressive 47.2% YoY and 7.4% QoQ. Also, for
9MFY11, the non-recruitment business posted a revenue growth of
36.3%. Shiksha.com registered handsome revenue growth of 169%
YoY although on a smaller scale.
The company also managed to curtail expenses, thereby improving
the EBITDA margin from -44% in Q3FY10 to -21% in Q3FY11. This
was partly due to high revenue growth in 99acres and lower
advertisement in Jeevansathi. EBITDA loss for Jeevansathi stood at |
30 lakh for Q3FY11. Contribution of the non-recruitment segment in
the topline increased to 17.4% as compared to 15.1% in Q3FY10.
ƒ EBITDA margin
The recruitment business posted its best ever EBITDA margins at
49% for the quarter on the back of robust revenue growth, lower
advertisement and high operating leverage kicking in. Other verticals
also managed to curtail costs. The EBITDA margin in this segment
improved to -21% from -44% in Q3FY10. Consequently, the overall
margin improved to 36.5% for the quarter.
Valuation
At the CMP of | 574, Info Edge is trading at 40.7x FY11E EPS of | 14.1 and
30.9x FY12E EPS of | 18.6. We have valued the stock using the DCF
methodology at | 629. Our target price discounts the FY12E EPS by 33.9x
and implies an upside of 10%. We have upgraded our view on the stock
to BUY from ADD
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Impressive revenue, margin growth…
Info Edge’s Q3FY11 results were better than our expectations. The
company reported a topline of | 75.1 crore against our expectation or |
73.4 crore registering a growth of 27.5% YoY on the back of increased
recruitment activity. The EBITDA margin improved 610 bps YoY to
36.6%, primarily due to robust revenue growth backed by high
operating leverage. The company reported a PAT margin of 29.2% for
the quarter. PAT stood at | 21.9 crore against our expectation of | 20.3
crore, registering an impressive YoY growth of 40.1%.
ƒ Highlights for the quarter
Both the recruitment and non-recruitment businesses reported
handsome revenue growth of 24.0% and 47.2% YoY, respectively,
for Q3FY11. The company also managed to curtail EBITDA losses in
other verticals to | 2.7 crore as against | 3.9 crore in Q3FY10,
primarily due to lower advertisement expenses in Jeevansathi.
Depreciation for the quarter increased 41% QoQ to | 2.0 crore as
against | 1.4 crore in Q2FY11 on the back of higher depreciation on
the newly commissioned office in Sector 2, Noida. The company
has spent | 24 crore on this facility and is expected to incur another
| 70-80 crore in the next few quarters on the new office in Sector 8,
Noida.
Valuation
At the CMP of | 574, Info Edge is trading at 40.7x FY11E EPS of | 14.1 and
30.9x FY12E EPS of | 18.6. We have valued the stock using DCF
methodology at | 629. Our target price discounts FY12E EPS by 33.9x and
implies an upside of 10%. We maintain our ADD rating on the stock.
ƒ Core segment – impressive performance
This year was marked by increased corporate activity with hiring on
an uptrend. Recruitment services grew 24.0% YoY to | 62.0 crore and
by 25.3% for 9MFY11. Naukri corporate services also registered a
healthy growth of 32.0% YoY in Q3FY11. The IT sector contributed
27% to recruitment solutions revenue in Q3FY11 while the
contribution for BFSI and infrastructure stood at 5% and 20%,
respectively.
Unique customers at the end of Q3FY11 saw a minor decline of 100 to
21,000 from 21,100 in Q2FY11. Also, average number of resumes
added daily fell to 10,000 from 13,000 in the last quarter while number
of resumes modified daily fell to 70,000 from 75,000 in Q2FY11. The
management attributed this to seasonal fluctuation owing to the
Diwali and Dussehra festivities where companies generally scale back
their recruitment plans.
ƒ Non-recruitment – healthy revenue, EBITDA growth,
The non-recruitment segment reported a topline of | 13.1 crore
increasing by an impressive 47.2% YoY and 7.4% QoQ. Also, for
9MFY11, the non-recruitment business posted a revenue growth of
36.3%. Shiksha.com registered handsome revenue growth of 169%
YoY although on a smaller scale.
The company also managed to curtail expenses, thereby improving
the EBITDA margin from -44% in Q3FY10 to -21% in Q3FY11. This
was partly due to high revenue growth in 99acres and lower
advertisement in Jeevansathi. EBITDA loss for Jeevansathi stood at |
30 lakh for Q3FY11. Contribution of the non-recruitment segment in
the topline increased to 17.4% as compared to 15.1% in Q3FY10.
ƒ EBITDA margin
The recruitment business posted its best ever EBITDA margins at
49% for the quarter on the back of robust revenue growth, lower
advertisement and high operating leverage kicking in. Other verticals
also managed to curtail costs. The EBITDA margin in this segment
improved to -21% from -44% in Q3FY10. Consequently, the overall
margin improved to 36.5% for the quarter.
Valuation
At the CMP of | 574, Info Edge is trading at 40.7x FY11E EPS of | 14.1 and
30.9x FY12E EPS of | 18.6. We have valued the stock using the DCF
methodology at | 629. Our target price discounts the FY12E EPS by 33.9x
and implies an upside of 10%. We have upgraded our view on the stock
to BUY from ADD
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