Info Edge, Strong Investment Buy

Initiating Coverage with BUY:  Joining the Economic Recovery

  • Economy swings back on the recovery path: The Indian economy grew 7.9 per cent during the July-September period — its strongest in six quarters. The growth achieved beat most forecasts and prompted experts to revise their full-year growth projections. This will certainly lead to increased employment opportunities, and Info Edge being an entrenched player in the job search market would reap the maximum benefits
  • Dominant player in the spheres in which it is present: It is one of India’s leading companies in the internet content based business. In fact, it is India’s premier on-line classifieds company with a dominant presence in online recruitment, matrimonial, real estate and educational classifieds and related services in India
  • Diversifying into new businesses: Info Edge recognizes that the internet will witness a significant change in the near future, and thereby has committed to invest in other internet based businesses such as paid online educational assessment and online shopping of financial and insurance products. Although foraying into new businesses is a risky proposition, however keeping in mind the growth prospects of internet platform and company’s past performance and track record, it is prudent to expect this expansion to yield positive results
  • Buy on dips as the stock is defensive: We have used the weighted average of two different approaches and have derived a target price of Rs. 1,107 per share. The value we obtained from our DCF based model (40%weight) is Rs. 1,085/ share and from our price earnings multiplier model (60% weight) a price of Rs. 1,122 per share. Thus our one year price target is Rs 1,105/ share. Given the defensive nature (beta of 0.4) of the stock it could be added to the portfolio on dips

Info Edge, Strong Investment Buy

Author: Rahul Sonthalia, Analyst, Kredent Group

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