BofA Upgrades Info Edge India on Strong Naukri Margins
BofA Upgrades Info Edge India for Strong Growth Potential
BofA Securities has made a notable move regarding Info Edge India Ltd. (INFOE:IN), elevating its rating from Underperform to Buy. The brokerage has also raised the price target significantly to INR9,000.00, reflecting an optimistic view of the company’s performance and its ability to recover in the market.
Naukri Portal's Dominance in the Job Market
The analyst at BofA highlighted the strong positioning of Info Edge's Naukri portal, which captures roughly 70% of job-related traffic in the Indian market, maintaining a dominant role for over twenty years. The forecast suggests minimal disruption risks in the near future, primarily due to the network effect that has allowed the company to uphold impressive margins exceeding 50%.
Signs of Revenue Recovery
Following a cyclical slowdown over the last 12-18 months, Info Edge's Naukri is on a recovery trajectory, shaking off previous year-over-year revenue declines. Positive indicators have emerged from discussions with IT companies along with recent industry analyses, which project a steady rebound in revenues driven by an expected rise in IT hiring. The diversification of business avenues is anticipated as a potential driver for further enhancing both revenue streams and profit margins.
Successful Investments Boosting Financial Outlook
In addition to its core operations, BofA's analyst pointed out the remarkable performance of Info Edge's strategic investments in Zomato and PB Fintech. These companies have experienced stock price increases of 165% and 138%, respectively, outpacing the Nifty’s 26% growth over the last year. Notably, these investments represent approximately 33% of Info Edge’s Sum of the Parts (SOTP) valuation, even after considering any applicable holding company discounts, which is expected to maintain a positive business trend.
Positive Impact on Stock Price
The anticipated mark-to-market effect from Info Edge’s holdings in Zomato and PB Fintech is expected to positively influence the company's stock price. As a result, this reinforces the optimistic outlook established by BofA, contributing to the rationale behind the increased price target.
Frequently Asked Questions
What did BofA Securities say about Info Edge India?
BofA upgraded Info Edge India from Underperform to Buy and increased its price target to INR9,000.00.
Why is Naukri's market position significant?
Naukri holds about 70% of the traffic in the Indian job market, ensuring its continued dominance and high profit margins.
What factors contribute to Info Edge's revenue recovery?
The gradual increase in IT hiring and potential diversification of business avenues are key factors boosting revenue recovery.
How are Zomato and PB Fintech performing?
Both companies have seen significant stock price increases, which positively impacts Info Edge's overall financial outlook.
What is the expected effect on Info Edge’s stock price?
The mark-to-market influence from investments in Zomato and PB Fintech is likely to positively impact Info Edge's stock price.
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