INFOE’s Q3FY17 results missed estimates on account of weaker growth in all its segments. Recruitment (Naukri) suffered from IT hiring slowdown and new sales incentive policy, while 99acres was impacted from demonetisation. Management expects Naukri revenues to pick up H1FY18 onwards. We cut our FY2018-19E EPS estimates by 7-9% primarily to factor in slower growth in Naukri. We retain ‘add’ rating with an SoTP-based target price of R960.
INFOE reported a weak quarter on account of multiple headwinds. Revenues missed our estimates by 9.1%, leading to a 27% miss on EBITDA.
Management believes INFOE’s higher dependence on BPO/captive centers and improvement in BFSI hiring would offset the impact of slowdown in hiring by IT outsourcing companies.
Naukri remains a traffic leader in its segment, and while the slowing pace of revenues is a concern, we believe it can benefit from any cyclical recovery in hiring. We trim our FY2018-19E EPS estimates by 7-9%, primarily on account of weaker growth in Naukri. Earnings cut leads to a lower TP of R960 (R990 earlier), a rollover to March 2019E notwithstanding. Maintain add.