INFOE’s Q4FY17 revenue grew 8.0% y-o-y to Rs 2.08 bn, ahead of our estimate of Rs 2 bn, led by recruitment segment revenue growth of 9.2% y-o-y to Rs 1.55 bn against estimate of Rs 1.46 bn. Higher revenue drove EBITDA margin of 30.3% +620bp y-o-y v/s estimate of 27%. However, a higher tax rate and lower other income led to PAT before exceptional items of Rs 368.5 m, below our estimate of Rs 516 m.
Standalone revenue grew 12.6% in FY17 to Rs 8.02b, but more importantly, EBITDA margin revived to 28.4% from 20% in the previous year. This was due to normalisation of advertisement expenses to 11% of sales, after ballooning to 18.5% in FY16. This drove 66% y-o-y PAT growth to Rs 2.03bn. INFOE’s key investee company Zomato reported revenue of Rs 332 bn captured in consolidated accounts financials with a cash EBITDA loss of Rs 930m in FY17.
Smart pick-up in recruitment segment +10.7% q-o-q was an unexpected positive, as the impact of demonetisation on hiring was less severe than our estimated embedded potential impact from the same. This was the case in 99acres.com too, but the segment continues to remain under stress in the foreseeable future with a weak physical market and RERA implementation introducing fresh uncertainties for players.
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Our standalone earnings for FY18E/19E are up by 6.7%/4.5% due to revenue beat, allayed demonetisation concerns and lower employee costs. We see Naukri.com pick-up in economic growth, 99acres.com lower competitive intensity and Zomato.com focus on driving monetisation and profitability as the key drivers of valuation at INFO. Our SOTP-based price target of Rs 1,050 implies an 18% upside. Maintain Buy.
Revenue grew 8% y-o-y to Rs 2,084 m compared to our estimate of Rs 1 ,996m; 2.2% y-o-y. Revenue in the Recruitment business grew by 9.2% y-o-y to Rs 1,555m and that in 99acres.com was flattish y-o-y to Rs 275 m. Total operating expenses during the quarter stood at Rs 1,452 million, compared to our estimate of Rs 1,455m. PAT before exceptional items was Rs 368.5m, -15.6% y-o-y, lower than our estimate of Rs 516m, because of higher tax expense and lower other income.