Store expansion gathers pace: To our and even management’s surprise, billing enhanced 40% QoQ regardless of the panic about the 2nd covid wave starting March 2021. This was 25% above our estimates and largely driven by the robust volume enhance at Naukri. In this backdrop, the corporation made greater variable spend-outs (~130-140%) to sales group.
In conjunction with partial salary hike and some one-off provisions, reported margins missed our estimates. Key takeaway is the management commentary on recruitment and matrimony segments not seeing any effect even in April and May regardless of stringent lockdowns. While 99 Acres was impacted, we comprehend site visitors bounced back sharply in June. As highlighted (hyperlink), we had been anticipating a sharp recovery in white collar hiring activity from H2Fy22 – post the normalisation of 2nd wave. However, the fast pace of recovery & the sturdy outlook shocked us. Naukri will be a essential beneficiary provided its close to monopoly positioning (80%+ site visitors share) in white collar hiring. Potential for price tag increases and operating leverage should really translate into buoyant EBITDA margins. We upgrade FY22-23E EPS by ~5%.
Reiterate Info Edge as Prime Purchase notion in our coverage. Impending IPOs of investee firms (Zomato & Policybazaar) should really be essential catalysts for worth unlocking.
In-line income margin miss due to greater variable spend-outs and provisions: Reported income was largely in-line with our / street estimates. However, EBITDA margin was reduced than our estimates. This was led by (1) greater variable spend-outs to sales group (in the variety of 130-140%) in the back drop of stronger than anticipated choose up in billing, (2) partial effect of salary hikes and (3) one-off provisions.
Strong lead indicators sharp recovery in hiring appears to be at play: Overall billing witnessed a robust enhance in Mar-21 (+40% QoQ, 25% YoY and 25% above our expectations) not withstanding the panic about the 2nd wave starting March. The strength in billings look to be led by Naukri (+26% YoY), specifically on the volume front.