Markets
Info Edge has shed ₹30,000 crore in market cap. Blame Zomato and PolicyBazaar.
Summary
- Almost half of this drop is due to its two prized investments, in which the company holds 13% each.
- Naukri.com continues to hold the fort, but may face challenges from the IT sector's gloomy outlook.
In a board meeting on Monday, the management of Info Edge (India) Ltd fixed 7 May as the record date for its 1:5 stock split, in which one share with a face value of ₹10 will be split into five. This should enhance market liquidity by encouraging greater participation from retail investors. It is a good way to attract retail investors who generally stay away from stocks with high prices, irrespective of their valuation.
Info Edge shares are now trading at ₹6,700 each, even after falling about 27% from their all-time high on 6 January. This translates to a market cap erosion of about ₹30,000 crore from the peak. The company holds about 13% each in Eternal Ltd (formerly Zomato) and PB Fintech Ltd (Policybazaar). The combined value of these holdings has fallen by nearly ₹15,000 crore from their respective peaks.
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This means almost half of the drop in Info Edge’s market cap is due to its two investment jewels. The other half can be explained by the perceived drop in the valuation of its standalone business. Naukri.com, its recruitment business, accounts for 75% of Info Edge’s standalone revenue, with the rest coming from real estate (99acres.com) and matrimonial (Jeevansathi.com) websites.
IT sector's gloomy outlook
About half of Naukri’s revenue comes from recruitment in the information technology (IT) sector. Perhaps the Street is apprehensive that the company’s recruitment revenue from IT might suffer because of the sector’s hazy growth outlook, apart from the noise about the IT industry needing fewer employees because of artificial intelligence.
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For now, Naukri.com appears to be insulated from such threats. Info Edge’s latest business update showed recruitment revenue grew by 18% and 15% year-on-year in Q4FY25 and FY25, respectively, to ₹740 crore and ₹2,158 crore. Sure, as management has indicated in the past, non-IT revenue may have picked up pace in Q4 from sectors such as BFSI, healthcare, infrastructure, and manufacturing.
To mitigate the negative impact of the slowdown in the IT sector, which forms a part of white-collar recruitment, Info Edge has already begun focusing on blue-collar recruitment through JobHai.com. With the recruitment business likely to continue its steady pace of growth, it won't be surprising to see Info Edge's share price affected by movements Eternal and PB Fintech shares in the near term.
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