Info Edge Dips 2% on Lackluster March Quarter Results

Info Edge (India), the parent company of subsidiaries such as Naukri.com and Jeevan Saathi, announced its results for the fourth quarter on Monday.

Shares of Info Edge slipped over 2.5% at Rs 4,853 per share on the BSE today, in an otherwise strong market, after the company witnessed weakness in its operating performance during the quarter.

The company reported 60.2% rise in standalone net profit to Rs 666.8 m on 10.2% fall in net sales to Rs 2.9 bn in the fourth quarter of 2021 against the same period last year.

Its revenue from recruitment solutions segment was at Rs 2 bn, down 13.9% year on year (YoY), revenue from 99acres for real estate was at Rs 500.9 m, down 11.1% YoY in the March quarter.

The company reported a 44.9% YoY decline in operating earnings before interest, taxes, depreciation, and amortisation (EBITDA) at Rs 532 m during the quarter.

Its total income came in at Rs 3.3 bn during the quarter ended 31 March 2021, up by 44.9% over the same period last year.

However, the company has seen improving billing growth both YoY and quarter on quarter (QoQ).

Billing increased 25.1% YoY and 39.8% QoQ to Rs 4.2 bn during the fourth quarter, mainly led by a 26% YoY growth in recruitment and 41.5% YoY growth in 99 acres billing.

As compared to the quarter four of 2019 (a pre-pandemic quarter), the company's overall billing was up 15%.

Financial performance during the full year

The company's standalone net profit increased by 13.7% to Rs 2.7 bn on a 31.7% decline in net sales to Rs 11 bn in the financial year over the last year.

The company's operating EBITDA stood at Rs 2.8 bn, down 31.1% over the financial year ended March 2020.

For the year 2021, Billing was at Rs 1.2 bn, down by 9.3% over the financial year ended March 2020.

Total income stood at Rs 1.2 bn down by 10.5% compared to the last year.

Commenting on the results, Mr Chintan Thakkar, CFO said,

• We have witnessed continued recovery during the quarter, led by billings growth in Naukri India and 99acres by 26.0% and 41.5%respectively, over quarter four billings of financial year 20202.
  
  As compared with quarter four of fiscal 2019, a pre-pandemic quarter, the billings in Naukri India and 99acres have grown 16.7% and 7.5% respectively.

Key takeaways from the company's conference call

During the investors call Hitesh Oberoi, CEO of Info Edge said that the property listing platform 99 acres.com took a hit in April and May.

He said that once the lockdown restrictions are removed, the company expects to see broader recovery on all fronts such as listings, traffic, revenue, and enquiries.

Naukri.com did not see any lull during Covid-19

'Surprisingly Covid had no effect on Naukri.com's business. We were a bit surprised,' Mr Oberoi said.

He attributed the reason behind this to the digitisation and adoption of smartphones among citizens, and the shift of the hiring process to the online sphere.

Planning to grow Jeevan Saathi at 20 per cent annum per year

Despite the losses in this vertical of InfoEdge, the company plans to invest consistently, especially in the marketing segment to maintain a 20% growth.

Mr Oberoi contended that there are other competitors in the market (Bharat Matrimony, Shaadi.com), who spend considerably more on the marketing segment.

'If we have to gain share, we have to match marketing spend of our competitors', he added.

Reorganisation of verticals

Info Edge is in the process of re-organising the management structure of its verticals, especially 99 Acres. Oberois said that the workings of each segment like resale, commercial, new home and rental is different from the other.

So as of now, the company is re-organising the product teams for each of the segments. In the coming days, they will be re-organising the engineering teams.

Info Edge looking to get into the blue-collar jobs hiring segment

Essentially, naukri.com provides listing for white-collar jobs. However, now Info Edge has been testing a product called 'Job Hai' to attract blue-collar job listings.

In this regard, Oberoi said, 'Since everyone has a smartphone, and are digitally savvy, it is easy to get job seekers on to our app. The harder part is to get small companies to use the platform to hire', he said.

They may roll out the product nationally in the coming months.

That apart, the company has made significant strategic investments over the last few years.

Let's take a look at the list of few subsidiaries and joint ventures of Info Edge

Subsidiaries	Joint Ventures
Allcheckdeals India	Zomato Media
Interactive Visual Solutions	Makesense Technologies
Jeevansathi Internet Services	Happily Unmarried Marketing
Naukri Internet Services	Nopaperforms Solutions
	International Education Gateway
	Agstack Technologies
	Shopkirana E Trading

Data Source: Company's Website

Info Edge to sell stake in proposed Zomato IPO

In the last month, Info Edge said it will sell stake worth Rs 7.5 bn in the initial public offering (IPO) of its investee company Zomato.

In a regulatory filing, Info Edge said Zomato an online food delivery platform is proposing an IPO of its equity shares, comprising a fresh issue of equity shares by Zomato and an offer for sale by Info Edge.

Info Edge, the Delhi-based internet services firm that put a mere Rs 6 m as its first investment in Zomato in 2010, is sitting on 77x returns from its total equity investment of Rs 1.4 bn.

According to the draft red herring prospectus (DRHP) filed by food-delivery firm Zomato as part of IPO plan, Info Edge currently owns 1.2 bn shares at an average cost of Rs 1.16 each.

Equitymaster's view on investing in the IT sector

We reached out to Richa Agarwal, Senior Research Analyst at Equitymaster, and Editor of the smallcap service, Hidden Treasure, for her view on investing in the IT sector.

Here's what she has to say...

• Post pandemic, amid liquidity in the global markets and broad-based growth momentum, the IT sector and the stocks listed in it have had a dream run.
  
  The BSE IT index is at a ten year high, up 159% from the pre-Covid highs.
  
  While picking stocks in the industry, one should be mindful of relative growth and valuation of companies in the sector.

How the stock markets reacted to Info Edge March quarter numbers today

Shares of Info Edge opened the day at Rs 4,961.5 on the BSE and Rs 4,969 on the NSE.

Its share price closed at Rs 4,867.3 (down 2.2%) on the BSE and Rs 4,872.9 (down 2.1%) on the NSE.

At its current price, it is trading at a P/E of 40.6.

The share touched its 52-week high of Rs 5,880 and 52-week low of Rs 2,660 on 6 January 2021 and 25 June 2020, respectively.

Over the last 30 days, the Info Edge share price is up 9.5%. Over the last one year, the company's share price is up 76.5%.

About Info Edge

Info Edge, is an Indian multinational Internet technology company, based in Noida, Uttar Pradesh, India. It was founded by Sanjeev Bikhchandani in 1995.

The company runs an online job portal Naukri.com, a matrimony website Jeevansathi.com, a real estate classifieds platform 99 acres.com and an educational website Shiksha.com.

As of September 2020, it also holds minority stakes in 23 online companies including two unicorns such as the food delivery company Zomato (18.4% stake, as of February 2021) and the insurance aggregator Policybazaar (15.1% stake, as of August 2020).

For more details about the company, you can have a look at Info Edge factsheet and quarterly results on our website.

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