Info Edge India

Current market price: Rs 631.25
Target Price: Rs 775
Upside: 22.77%
Brokerage: ICICI Securities

The demand for Indian IT services can be under pressure in the aftermath of a slowdown in the US BFSI segment resulting in a slowdown in the IT/ITeS recruitment market.

Even in non-IT recruitment markets, recruitment growth can be restricted with a slew of new infrastructure and real-estate projects being delayed. In this scenario, the brokerage expects Info Edge’s naukri.com to grow at 23 per cent for FY09E (earlier estimate of 36 per cent).

The company is better positioned to tackle any slowdown on account of its diversified product portfolio, including education and matrimony portals and its real-estate portals (relatively under-penetrated).

The company’s innovative product launches, experienced management team and strong execution track record will keep Info Edge in a comfortable position against any possible slowdown. The company has cash surplus of over Rs 300 crore in its books.

The company’s revenue, EBITDA and PAT is expected to grow at 30 per cent, 32 per cent and 26 per cent (earlier estimates of 38 per cent, 41 per cent & 34 per cent) respectively, over FY08-11E. The brokerage feels that naukri.com can revive better growth post 2-3 quarters, but in the short term, it will be tough. It has revised the stock’s target price to Rs 775 (earlier Rs 1,225).