Just about there… • InfoEdge :: ICICI Securities

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Just about there…
• InfoEdge reported its Q3FY15 earnings, which were generally in line
with our estimates. Revenues grew 18.1% YoY but declined 1.2%
QoQ to | 145.7 crore (| 148 crore estimate) led by 19% YoY growth
in the Naukri business and 15.5% growth in other verticals
• At 24.9%, EBITDA margins declined 369 bps QoQ but were in line
with our estimate, led by higher advertising & employee expenses
• Reported PAT of | 38.6 crore was modestly ahead of our | 35.4 crore
estimate led by other income beat
Pick-up in Naukri growth continues...
For the quarter, the recruitment solutions business grew 19% YoY to
| 108.4 crore. Note, in 9MFY15, recruitment business was up 18% YoY
while its growth continues to see a healthy pick-up from the lows of 4.4%
YoY growth achieved in Q4FY13. We expect InfoEdge to deliver FY14-16E
revenue CAGR of 24.6%, above its FY09-14 CAGR of 18.3% primarily led
by Naukri business. For FY15E, we expect revenues to grow 24% led by a
recovery in the Naukri business and market share gains, continued
traction in 99acres and growth in other businesses (Zomato, Canverra
Technologies). Modest growth in FY14 (20%), relative to historical
average was led by softness in flagship recruitment business (9.8%)
despite healthy growth in other verticals (36%) and investee companies.
That said, growth moderation in other verticals may pose challenge….
The non-recruitment business grew 15.5% in Q3 to | 37.3 crore (declined
7.7% QoQ), slower than 32% CAGR during FY09-14, led by sharp growth
moderation in 99acres (20% to | 23 crore vs. 32% YoY to | 24.5 crore in
Q2), Jeevansathi (9.5% YoY growth to | 9.7 crore vs. 2.5% YoY to | 9.5
crore in Q2) and Shiksha (6% YoY growth vs. 14% YoY in Q2 and 32% in
Q1). Zomato continues to see traction in the restaurant listing space and
is expanding to multiple geographies (the recent being Poland, Czech
Republic and Slovakia). For FY15E, we expect other verticals to grow 36%
YoY led by growth in 99acres and Zomato.
Recruitment business operating highlights…
IT services, ITeS revenue contribution to recruitment business declined
one percentage point (pp) QoQ and improved one pp YoY to 28% while
infrastructure business contribution was flat QoQ and YoY at 17%.
Overall, resumes on Naukri.com increased by a million in Q3 to 40 million
vs. four million each in FY14 and FY13 and 26 million average for FY09-
14. For FY15E, we expect recruitment solutions to grow 14% YoY vs. 12%
CAGR during FY09-14, led by a likely revival in the employment market.
Readings from December 2014 Naukri Job speak Index (JSI)
Naukri Job Speak Index for December 2014 stood at 1,425, up 10% YoY.
The IT software index grew 12% YoY to 1,835 while the BPO-ITeS index
rose 9% to 1,251. Surprisingly, the oil & gas index grew 27% YoY to 1,228
while the banking, capital goods index grew 17%, 6% to 1,571, 801,
respectively. Telecom, pharma and auto index were weak and declined
12%, 4% and 3% YoY to 691, 1,473, and 927, respectively.
Naukri revival remains long term positive…
We maintain our estimates and expect revenue, PAT CAGR of 25%, 44%,
respectively, during FY14-16E as the overall hiring outlook could likely
improve led by IT while investee companies could outgrow the company
average growth. We maintain our DCF based target price of | 1100, which
discounts our FY16E EPS estimate of | 15.4 by 71x. Though valuations
appear rich, the shares are a play on the economic recovery.

LINK
http://content.icicidirect.com/mailimages/IDirect_InfoEdge_Q3FY15.pdf