Info Edge falls 2% as CLSA downgrades stock with target at Rs 3,580

Shares of Info Edge (India) declined over 2 percent intraday on BSE on September 9 after the global brokerage firm CLSA downgraded the stock to 'outperform' from 'buy'.

CLSA has a target price of Rs 3,580 for Info Edge.

As per CNBC-TV18, CLSA expects the company's reported financials to remain soft over Q2 and Q3.

The foreign brokerage highlighted that the 44 percent year-on-year (YoY) drop in billing in Q1 was higher than its estimates of a 38 percent decline.

Cost control is likely to stay, though the ad spend could increase, CLSA said.

Morgan Stanley has an 'equal-weight' rating on the stock with a target price of Rs 2,950.

"Base case value implies calculations are full and hence we remain equal-weight," CNBC-TV18 quoted Morgan Stanley saying so.

Morgan Stanley is of the view that the billing growth was affected by lockdown, but cost control was better than expectations.

Domestic brokerage firm Sharekhan by BNP Paribas has upgraded the stock to a 'buy' with a target price of Rs 3,650.

"We have revised our estimates upward for FY2021E/FY2022E, factoring in strong beat in operating margin, continued growth momentum in Jeevansathi business, and gradual recovery in billings in IT and telecom segments," said Sharekhan.

The brokerage believes that the leadership position in its core businesses along with improving valuation in certain investee companies (Zomato and PolicyBazaar) bodes well for the company.

Sharekhan expects revenue and margin to improve sharply in FY2022E because of the company’s cost-control measures and resumption of economic activity.

"We prefer Info Edge, given its dominant position in online classifieds with the potential to gain market share and its strong balance sheet. Further, with the recent fundraised through QIP, Info Edge has a cash balance of more than Rs. 3,300 crore, which would be largely utilised for merger and acquisition opportunities in its core areas," Sharekhan said.

The company reported consolidated net profit at Rs 93.66 crore for Q1Fy21, which surged 149 percent, as compared to Q1FY20 when it reported a loss of Rs 190.91 crore. The net profit margin in Q1FY21 came in at 32.86 percent which jumped by 92.58 percent YoY.

Consolidated net revenue in Q1FY21 stood at Rs 285 crore, which fell by 10.85 percent YoY from Rs 319.7 crore in Q1FY20. Its EBITDA stood at Rs 104 crore in Q1FY21 which jumped 16.62 percent YoY.