The ongoing battle in the Information Technology (IT) sector has worked in favor of Info Edge (India) Ltd. The company’s flagship recruitment platform, Naukri, has reported year-on-year (YoY) growth in Q4FY22 billing. The platform contributed to over 85% of the total billing in the Recruitment Solutions segment.
The outlook for this vertical remains strong, as IT companies are on a hiring spree to meet the strong demand. For example, large-cap IT services provider Infosys Ltd plans to hire over 50,000 freshers in FY13.
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Recruitment in non-IT sectors is also bouncing back.
In a post earnings call with analysts on Monday, Info Edge management said it is seeing recovery in sectors such as hospitality and travel. Upbeat remarks from management propelled the stock on Tuesday, as it ended the day’s trading session 9.4% higher on the NSE.
Analysts at Motilal Oswal Financial Services said, “We expect to maintain our strong revenue growth in FY23 (revenue compounded annual growth rate of 26 per cent in FY22-24), H2FY23 before normalizing in FY24 due to reduction in the number of employees in the
On the flipside, investors in this stock should note that the company’s recruiting segment derives a substantial portion of its revenue from IT companies that are more indexed in the U.S. market.
As such, a possible slowdown in the US could impact the segment’s revenues.
Info Edge’s other verticals have their own concerns. The competitive intensity in the real estate segment is high. In the matrimonial segment, Info Edge sees a 30-40% drop in revenue over the next few quarters due to its strategy of offering multiple paid services free of cost to gain market share. In the educational sector, the company is trying to get high paying customers.
As far as earnings performance is concerned, these verticals are too small for the company to move the needle.
In Q4FY22, the Recruitment Solutions vertical contributed around 76% to Info Edge’s standalone revenue 455.5 crores.
Meanwhile, Info Edge stock is down 44% from its 52-week high October saw 7,465.4.
This is partly due to the recovery in the stocks of Zomato and PB Fintech, where Info Edge holds 15% and 13%, respectively.
“A primary catalyst for the shares of Info Edge will be a meaningful jump in the share prices of Zomato and PB Fintech. While the recruitment business has strong growth tailwinds, its resilience amidst bearish trends is a key factor,” said Vivekananda Subbaraman, Analyst, Ambit Capital Pvt Ltd.