“Info Edge is the best proxy for the grand job-wedding-housewarming party!” brokerage firm ICICI Securities said in a recent note. The brokerage has raised its price target on the stock by 28 per cent to Rs 8,050 and retained its ‘buy’ call.
The stock has already risen more than 104 per cent in the past 12 months and 38 per cent in last six to hit a record high of Rs 6,750 earlier this week.
ICICI Securities believes the company will grow operating profit by 23-35 per cent over the next two years, even as it benefits from the stock price appreciation of the current bull market’s sensation – .
“Jobs, weddings and own houses are the three (stereo) typical and interconnected life goals in the Indian socio-cultural construct. Besides the parental influence, this trinity now seems to have another common driving force – liquidity!” ICICI Securities said.
Holy Trinity
The holy trinity of jobs, weddings and housing are coming together for the internet platform company, as the economy’s engines rev up after being halted by the second wave of the Covid-19 pandemic. The formal sector job market has been heating up in recent months with the Reserve Bank of India suggesting salary hikes of up to 38 per cent year-on-year across sectors.
Retaining talent is becoming a headache for companies at a time when there has been a surge in demand, resulting in higher attrition as individuals leave current jobs for higher paying ones. Naukri.com, one of the largest job portals run by Info Edge, will likely be a direct beneficiary of this job boom in this formal sector.
The housing market, too, has seen a resurgence in demand after the second wave with real estate developers now hinting at a situation where demand may soon outstrip supply in the coming quarters.
99acres.com, one of the largest property portals run by Info Edge, has seen a 69 per cent jump in daily active users between May and July, reflecting the current demand for housing property.
“All our metrics are at an all-time high at 99acres and July was a very, very good month. So we are hopeful and confident that unless and until we get hit by another wave of Covid-19, things should be quickly get back on track for 99acres across all segments — new homes, resale, rental and commercial,” Info Edge told investors at a post-earnings conference call.
If the pandemic has accelerated one thing in India, it is the wedding plans of people. Traffic on marriage portals like Jeevansathi.com has swelled manifold during the pandemic year, as the uncertainty of life nudged individuals to tie the knot.
“During the peak of the second wave of the pandemic, the subdued sentiments didn’t hamper the steady progress of the growing number of users and billings at JeevanSaathi,” Info Edge said last month.
ICICI Securities expects a massive surge in matchmaking activity through online portals as traditional means have been hit by the pandemic and localised lockdowns. “Incipient signs of this uptick are already visible in the exponential increase in JeevanSaathi’s download numbers in the recent past,” the brokerage firm said.
What’s ahead?
Brokerage YES Securities in a recent report said the company is best placed to benefit from the ongoing digitisation of the Indian economy. The brokerage expects both return on equity and operating margins to swell over the next two years.
Going ahead, a major catalyst for the company will be the initial public offering of PolicyBazaar. While the online insurance broker was recently valued at around $2 billion, some analysts believe that could triple to nearly $6.8 billion by the time its IPO opens for subscription.
