Motilal Oswal recommended Neutral rating on Info Edge with a target price of Rs 3620 in its research report dated September 08, 2020.
Motilal Oswal 's research report on Info Edge
The complete impact of the COVID-19-led lockdown was seen in the 1QFY21 financial performance, with billings decline of 44% YoY. The drag in revenues (-10.4% YoY) was curtailed due to the subscription-based model of the business. INFOE has shown a high resilience in the margins (+420bp YoY) on account of superior cost optimization. For the first time, the company was able to show gains from investee companies, primarily led by positive contribution margins from Zomato. Traffic on INFOE’s operating portals has inched up to pre-COVID levels. Billings and revenue should follow a similar trend (in that order). Given the company’s market positioning, multi-dimensional growth may be expected across its core businesses in the medium-to-long term. We expect long-term growth trends to play out at its operating entities, whose margins continue to inch up on high operating leverage. Furthermore, led by an inclination for profitability in investee companies, we expect consolidated losses to be curtailed over time.
Outlook
We value its operating entities using DCF, with WACC of 11% and the terminal growth rate at 5%. Our SOTP valuation indicates target price of INR3,620. Maintain Neutral.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More