Here’s why Info Edge stocks rallied over 5% despite 60% fall in quarterly profit
- The India’s oldest internet company plans to raise ₹1875 crore by selling shares to qualified institutional investors.
- The stock has grown by 70% since the lockdown began in March.
- Eventually, the 11% growth in annual consolidated revenue was much better than estimates.
The $5 billion company, which runs Naukri.com, Jeevansaath.com, 99acres.com and Shiksha.com, continues to be one of India’s largest internet companies. Investors had feared the company to perform a lot worse. So much so that a 60% fall in profit was better than expectation.
Better than what analysts expected
|JM Financial revenue estimate||₹1272.7 crore|
|Actual revenue||₹1416.3 crore|
One of the better bets
Internet businesses are being seen as some of the safer bets amidst the global recession triggered by the COVID-19 pandemic. And InfoEdge is one of the big ones in that space. “We believe the crisis will expedite the offline to online transition of several small/large businesses that could help Info Edge deliver exceptional performance over the medium to long term due to its strong fundamentals and superior market positioning,” said the JM Financial report.
Naukri’s India business, which makes for one-third of InfoEdge’s annual consolidated revenue, saw a year-on-year decline of collection by ₹14 crore in the fourth quarter of FY20 and it worsened in April with a decline of ₹26 crore as compared to the same month the previous year. But that was due to the lockdown. Just before that, Naukri was growing at 13% (year-on-year) until mid March, according to the company.
|Jan-March 2020||Revenue growth (YoY)||Profit growth (YoY)|
|99acres.com||3.5%||Loss shrinks to a third|
|Others||-17.6%||Loss has doubled|
And the promoters are cashing in. The company is set to raise ₹1875 crore through Qualified institutional placement i.e. selling new equity shares to big institutions. The internet company’s bid to raise funds through the unique method if successful will make it the third company (after Kotak Mahindra Bank and JM Financial) to raise capital through QIP since March this year.
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