Info Edge (India) Ltd share price plunges 5% on muted Q3 results; here’s what brokerages say

Info Edge (India) Ltd share price slumped nearly 5% during the trading session on Wednesday as a result of the company's muted Q3 results. However, the company's overall performance was in line with the Street's estimates. Info Edge share price today opened at ₹5,392.55 apiece on BSE. The Info Edge share price touched an intraday low of ₹5,054.65 and an intraday high of ₹5,400 apiece. 

According to Rajesh Bhosale, Technical Analyst at Angel One, the Info Edge share price is down more than 4%, and we are seeing fresh short positions backed by high volumes. Expect further weakness in the near term, with 4,900 as the next support, whereas any bounce towards 5,300 in the near term may face resistance.

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Info Edge reported a ₹151.1 crore profit for the December quarter compared to the same period last year. The business posted a loss of ₹116.5 crore during the same period previous year. The business appears to have fared well in spite of the continuous slowdown in the employment of people in the information technology (IT) industry.

In Q3, the company's total revenue rose 6.4% to ₹627.1 crore. In a regulatory filing, the business stated that billing for the December quarter climbed by 4.8 percent year over year to ₹576.9 crore.

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In an exchange filing, the company said that Info Edge's non-recruitment business verticals—the real estate vertical 99acres.com, the matrimony business Jeevansathi.com, and the education business Shiksha.com—kept up their growth trajectory and performed well in Q3FY24, with YoY revenue growth of 21.8%, 23.0%, and 23.3%, respectively. The hiring slowdown in the IT sector notwithstanding, the recruiting industry's revenues increased 3.1% annually.

In its exchange filing, the company stated that it kept its operating profit margins at 36.7% of revenue and that, on a standalone basis, its operating profit increased by 7.0% to ₹218.7 crore for the quarter that ended on December 31, 2023, from ₹204.4 crore in Q3FY23. The standalone company's cash from operations (before tax) for the quarter was ₹272.5 crore, representing a YoY increase of 12.7%.

"Efficient execution in the 99acres and Jeevansathi businesses spurred top-line growth and helped reduce burn during the quarter. While the non-IT hiring sector remained robust, the continued slowdown in IT hiring impacted Naukrl's growth," said Hitesh Oberoi, Managing Director and Chief Executive Officer of the company. 

Here's what brokerages say? 

Kotak Institutional Equities 

Though Naukri's 3% year-over-year sales increase was somewhat less than anticipated, Info Edge reported in-line revenue growth of 7% yoy in 3QFY24, according to the brokerage. Good growth in other divisions and a 22% year-over-year gain in 99acres countered this. Remaining Naukri billings are under pressure and are down 1% year over year. Naukri's PBT margin suffered a 400 basis point annual reduction as a result of this as well. The brokerage has an ‘Add’ rating on the stock. 

“We trim Naukri revenues by 3-4% and EBITDA forecasts by 4-7% for FY2025-26 though overall EPS remains unchanged on lower losses from other segments. Naukri continues to be the market leader in the online recruitment space and should bounce back when IT hiring picks up,” the brokerage said. 

Nuvama Institutional Equities 

Info Edge posted in-line Q3FY24 earnings, according to the brokerage. With revenue of ₹590 crore, up 7.2% year over year, it met its projection of ₹600 crore. In accordance with the brokerages' expectation, EBITDA came in at ₹240 crore (+11% YoY). -30bps QoQ, the EBITDA margin was 40.4%. Additionally, PAT of ₹210 crore was consistent with the brokerages' forecast.

“We contend the IT business headwind should start to moderate, going forward, given lower than historical attrition and higher than pre-covid utilisation. Non-recruitment business would continue to surprise on both growth and profitability. We are revising FY24E/25E/26E EPS by - 0.2%/-5.6%/-6.5%. Retain ‘BUY’ with a revised SoTP-based target price of ₹6,500 (earlier ₹6,220) as we roll forward to FY26,” the brokerage said. 

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