Reiterate ‘top buy’ on Info Edge as sharp recovery anticipated

Potential for value will increase and working leverage ought to translate into buoyant EBITDA margins.

Retailer growth gathers tempo: To our and even administration’s shock, billing elevated 40% QoQ regardless of the panic across the 2nd covid wave starting March 2021. This was 25% above our estimates and largely pushed by the sturdy quantity enhance at Naukri. On this backdrop, the corporate made greater variable pay-outs (~130-140%) to gross sales group.

Along side partial wage hike and a few one-off provisions, reported margins missed our estimates. Key takeaway is the administration commentary on recruitment and matrimony segments not seeing any affect even in April and Could regardless of stringent lockdowns. Whereas 99 Acres was impacted, we perceive site visitors bounced again sharply in June. As highlighted (hyperlink), we have been anticipating a pointy restoration in white collar hiring exercise from H2Fy22 – publish the normalisation of 2nd wave. Nonetheless, the fast tempo of restoration & the sturdy outlook shocked us. Naukri will likely be a key beneficiary given its close to monopoly positioning (80%+ site visitors share) in white collar hiring. Potential for value will increase and working leverage ought to translate into buoyant EBITDA margins. We improve FY22-23E EPS by ~5%.

Reiterate Data Edge as TOP BUY thought in our protection. Impending IPOs of investee corporations (Zomato & Policybazaar) must be key catalysts for worth unlocking.

In-line income; margin miss attributable to greater variable pay-outs and provisions: Reported income was largely in-line with our / avenue estimates. Nonetheless, EBITDA margin was decrease than our estimates. This was led by (1) greater variable pay-outs to gross sales group (within the vary of 130-140%) within the again drop of stronger than anticipated choose up in billing, (2) partial affect of wage hikes and (3) one-off provisions.

Robust lead indicators; sharp restoration in hiring appears to be at play: Total billing witnessed a strong enhance in Mar-21 (+40% QoQ, 25% YoY and 25% above our expectations) not withstanding the panic across the 2nd wave starting March. The power in billings appear to be led by Naukri (+26% YoY), particularly on the quantity entrance.