Info Edge (INFOE) is focused on investing in Naukri.com to raise product quality and maintain its dominance. Naukri is looking to enter new verticals and also improve its recruiter-jobseeker matching engine.
The growth outlook is steady but the macro climate and growth rates need to improve for any material margin gains.
Competition among real estate portals has reduced at the margin, but 99acres.com will continue to invest in products and improve its share of new homes. Management believes that real estate portals are an advertisement-led model and that new homes drive most of the real estate ad spends.
INFOE continues to maintain a war-chest of Rs 5.7 billion (cash on balance sheet) to fend off competition if Quikr (post-Common floor buyout) turns aggressive.
We continue to like INFOE’s internet portfolio and current valuations don’t build in much upside from investments like Zomato. Further, a tightening startup funding environment in India should reduce competition for some of its properties and reduce capital burn.
Maintain ‘buy’ with a March 2017 TP of Rs 1,050.
