Info Edge (India)'s Q1FY20 results (Neutral) - Steady performance in Naukri, moderation likely in 99acres

1QFY20 result highlights: Largely inline with consensus

• Standalone revenues at Rs3.13bn (vs cons. est. of Rs3.1bn), growth of 20.5% yoy.
• EBITDA margins were down 20bp yoy to 32.3% (vs cons. est. of 32.1%). EBITDA margins were aided by ~2pp impact from Ind AS116 adoption. Depression in EBITDA margins in Naukri and Jeevansathi was led by advertising and tech investments.
• PAT (before EOI) at Rs749mn down 5% yoy, depressed by lower other income and higher taxation.

Segmental performance: Steady performance in Naukri

• Naukri grew 19% yoy, 99acres grew 35% yoy and Jeevansathi grew 9% yoy.
• Naukri EBITDA margins at 52.4% down 440bps yoy, 99acres was at break-even (vs Rs115mn EBITDA loss) and Jeevansathi EBITDA losses expanded to Rs88mn (vs Rs56mn in 1QFY19). 
• Billings grew 20% yoy in recruitments, 18% yoy in real estate and 12% in other classified.
• Naukri traffic share was at 85% (excluding Indeed) and 67% (including Indeed), while 99acres traffic share is near 50% based on similarweb data.

Result view: Results were largely inline with consensus.

Positives: Sustained growth in Naukri and rise in traffic share.

Negatives: Softening of billing growth in 99acres and fall in Nauki margins on tech and advertising spends.

Valuation & View: We like INFOE for its leadership position in online recruitments/real estate, along with the global scalability potential of Zomato (Investee Company of INFOE). However, we find the stock to be fairly valued and await better entry points. We retain expectations of revenue/EPS CAGR of 20% each over FY19-22E and our SOTP based TP of Rs2180.  Any fund raise at higher valuation for Zomato could be a catalyst for the stock. Our estimates and TP is unchanged post results.