Zomato is among the two biggest players in India’s food delivery business
As optimism about a coronavirus vaccine drives away tech stocks, one of those stocks in India continues to rally as market watchers bet its investments in startups will start to pay off.
Info Edge India Ltd. climbed to a record on Tuesday and is the top winner this month in the 10-member TI index of the National Stock Exchange. The company runs Naukri.com, the nation’s leading job search platform, and has investments in at least 23 startups, according to its website. It owns about a fifth of Zomato, India’s largest web-based food delivery platform that counts Jack Ma’s Ant Group among investors.
Zomato is among the two biggest players in the Indian food delivery business.
Info Edge has won in November despite reporting quarterly earnings and revenue that fell short of analyst forecasts. The stock’s 186 percent rise over the past two years has traded it at more than 125 times the 12-month estimated earnings of analysts, data compiled by Bloomberg shows. Zomato is in the process of hiring bankers for its initial public offering, local media reported earlier this month.
“The list of individual portal companies could be very interesting simply because, depending on the moment, the market may decide to give it a very good valuation,” said Stephen Lew of JOHCM USA, whose fund counts Info Edge among its top leaders. farms. “Zomato, if managed well, could really become one of the first globally important Internet companies in India.”
Founded in 1995 during the dot-com boom, Info Edge was the first internet-related company to be listed on the Indian stock exchanges in November 2006. The recruitment website, along with marriage and real estate search portals, they are your main income generators.
“Info Edge is a unique company in the internet space in India and therefore has a certain premium,” according to Jyoti Roy, equity strategist at Angel Broking Ltd. “The new rating of the stock has been driven by the consistent performance of the recruitment business and due to a significant increase in the valuations of its investments in Zomato and policybazaar.com. “
India Internet Media and Services (BICS)
* Info Edge is the largest player in India’s Internet media and services sector and its shares are the best performer this year among companies in this space with a market capitalization of at least $ 500 million:
| company name | Market cap (In millions of USD) |
Stock to date Performance |
What they do |
|---|---|---|---|
| Info Edge | 6,778 | 0.55 | Jobs, marriages, real estate portals |
| MakeMyTrip (listed in USA) | 2,566 | 0.085 | Travel services |
| Just check | 530 | 0.12 | Local search engine |
| TeamLease Services | 553 | -2.90% | Staffing, human resource services |
Bloomberg data. (Figures prior to Tuesday’s close).
However, not everyone is optimistic. Chokkalingam G, chief investment officer at Equinomics Research & Advisory Ltd. in Mumbai, “is not comfortable” with the stock’s valuation, which now trade 24 percent above analysts’ 12-month average price target.
“The future story has to be compelling with the right valuations,” he said. “So I’m not buying.”
‘Tremendous potential’
Still, that skepticism hasn’t stopped the stock moving forward as it heads for a ninth straight year of earnings.
In addition to the potential to unlock the value of investments in other online businesses, Info Edge’s niche position in India and the stakes that coronavirus-driven e-commerce and technology trends are likely to remain popular beyond the pandemic. they also keep buyers interested in the stocks.
Sanjeev Bikhchandani
The recruiting business remains a key valuation engine and is increasingly growing towards digitization, said Roy of Angel Broking, adding that Info Edge has an advantage over traditional recruiters and it will be difficult for any newcomer to develop such capabilities soon. .
Sanjeev BikhchandaniZomato’s revenue is expected to return to pre-Covid levels in a month or two, while revenue from hiring IT companies on Naukri.com has recovered, said Sanjeev Bikhchandani, vice president and founder of Info Edge, on a call with analysts last week. The shares rose 8 percent last week, the most since July, amid a widespread rally in stocks in India.
This is a “must do” action for investors given the popularity of the Internet and technology topic, according to Devang Bhatt, an analyst at ICICI Direct Research. “First you get a job, then you get married, then you buy a house, so it’s like they’re capturing the entire universe of the Indian economy online. That has tremendous potential for growth.”
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