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Info Edge (Price Rs. 574 (as on Jan 20 ), TP Rs. 640, ER 11.5%, EDY
0.1%, 3L) : Inline Quarter
Inline 3Q — Revenues at Rs751m were up ~28% yoy (CIRA: Rs777m) while
EBITDA margin was 36.6% (CIRA: 31.9%), an improvement of more than
600bps yoy. Ad expenditure declined ~450bps (as a % of revenues) on a
qoq basis. Profits at Rs219m were up ~40% yoy (CIRA: Rs202m). The
revenue growth trajectory has declined marginally this quarter after
improving over the last four quarters – flattish in 3Q10, ~13% yoy in
4Q10, ~25% yoy in 1Q11 and ~29% in 2Q11.
Pickup in deferred revenues — Deferred revenues at the end of the
quarter stood at Rs689m – up ~7% qoq and ~53% yoy. The book-to-bill
ratio was 1.06x (2Q: 1.04x) indicating that some sense of stability is
coming back in the backlog vis-à-vis the revenues booked.
Recruitment Solutions steady — Revenues at Rs620m were up ~24% yoy
with EBITDA margins at 48.7% (improvement of ~500bps yoy). The traffic
share, according to Comscore, continues to be ~55% highlighting the
leadership position of Naukri.com. This bodes well for the future, in
our view.
Other segments picking up — Revenues at Rs131m were up ~47% yoy with
EBITDA loss narrowing to Rs27m (2Q: loss of Rs59m). While 99acres had
revenue growth of ~74% yoy, Jeevansathi grew ~16% yoy. In terms of
EBITDA, 99acres and Jeevansathi had losses of ~Rs4m each. Losses in
Jeevansathi decreased partly because the company did not advertise on
television. Real estate segment continues to do well, according to the
management and with traffic share at ~50%, the company should benefit
in future.
Maintain Sell — We are positive on the business fundamentals of Info
Edge, however, valuations continue to concern us. The stock is down
~15% in the last two months. We look toward valuations becoming more
reasonable before getting constructive on the name.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Info Edge (Price Rs. 574 (as on Jan 20 ), TP Rs. 640, ER 11.5%, EDY
0.1%, 3L) : Inline Quarter
Inline 3Q — Revenues at Rs751m were up ~28% yoy (CIRA: Rs777m) while
EBITDA margin was 36.6% (CIRA: 31.9%), an improvement of more than
600bps yoy. Ad expenditure declined ~450bps (as a % of revenues) on a
qoq basis. Profits at Rs219m were up ~40% yoy (CIRA: Rs202m). The
revenue growth trajectory has declined marginally this quarter after
improving over the last four quarters – flattish in 3Q10, ~13% yoy in
4Q10, ~25% yoy in 1Q11 and ~29% in 2Q11.
Pickup in deferred revenues — Deferred revenues at the end of the
quarter stood at Rs689m – up ~7% qoq and ~53% yoy. The book-to-bill
ratio was 1.06x (2Q: 1.04x) indicating that some sense of stability is
coming back in the backlog vis-à-vis the revenues booked.
Recruitment Solutions steady — Revenues at Rs620m were up ~24% yoy
with EBITDA margins at 48.7% (improvement of ~500bps yoy). The traffic
share, according to Comscore, continues to be ~55% highlighting the
leadership position of Naukri.com. This bodes well for the future, in
our view.
Other segments picking up — Revenues at Rs131m were up ~47% yoy with
EBITDA loss narrowing to Rs27m (2Q: loss of Rs59m). While 99acres had
revenue growth of ~74% yoy, Jeevansathi grew ~16% yoy. In terms of
EBITDA, 99acres and Jeevansathi had losses of ~Rs4m each. Losses in
Jeevansathi decreased partly because the company did not advertise on
television. Real estate segment continues to do well, according to the
management and with traffic share at ~50%, the company should benefit
in future.
Maintain Sell — We are positive on the business fundamentals of Info
Edge, however, valuations continue to concern us. The stock is down
~15% in the last two months. We look toward valuations becoming more
reasonable before getting constructive on the name.
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