As white-collar recruitment shows signs of slowing down, Info Edge (India) Ltd management expects blue-collar hiring through JobHai.com to offer some respite.
In the June quarter (Q1FY25), Info Edge’s recruitment business, which has the flagship brand Naukri.com, saw tepid revenue growth of 5.6% year-on-year to ₹472 crore with pre-tax profit dropping 3.4% to ₹255 crore. Here, non-IT revenue, accounting for 70% of the total, grew 15%, implying the remaining revenue from IT segment was down about 15%.
Info Edge said billing growth in IT moderated to mid-single digit or about 5%, which means IT recruitment volume must have fallen around 20%.
On IT recruitment volume growth, the management highlighted that July had started well and there were some green shoots in tech and Global Capability Center (GCC) hiring.
Naukri has around 1.2 lakh customers and the management aims to increase it to 2.5 lakh over the next five years. The number could be almost 1 million customers for JobHai.com over the same span if things go as planned. JobHai.com has vernacular language options and addresses the recruitment needs of the small and medium enterprises (SME) segment.
The segment might have lower pricing versus the big corporates, but if the volume or number of customers is 4x of Naukri.com, investors can be looking at adding revenue of at least one more Naukri.com over the next five years.
The recruitment business contributes almost 75% of Info Edge’s revenues and entire share of profit as real estate (99acres.com), matrimony (Jeevansathi.com) and education (shiksha.com) are yet to become meaningful.
Notwithstanding that, investors are more interested in knowing whether the management is likely to cash out its golden investments in Zomato Ltd and PB Fintech Ltd (policybazaar.com). The management indicated that it’s not on the horizon in the near future, citing potential for greater value creation from these investments.
In Info Edge’s sum-of-the-parts (SoTP) valuations, analysts assign a 20-25% discount to the current market price of these companies as they also ascribe a holding company discount. But if the investments are liquidated, it is likely to be at the market price with a marginal premium or discount due to the large block. If they are liquidated, cash will be valued without any discount. Thus, the removal of discount itself will provide an upside to the consensus analysts’ targets.
For now, unless other businesses surprise in a big way, the Info Edge story would revolve around the recruitment business and Zomato, as these two account for nearly 80% of the SoTP valuation.
Also Read: Enterprise and employment: We need dynamic firms to generate jobs