Weaker margins cast a shadow on Info Edge despite segmental growth

Higher spends to keep Info Edge margins under pressure

Info Edge (India) stock came under pressure on Wednesday, falling over 1.5 per cent in intraday trade. While the company’s operational performance for the March quarter fell short of Street estimates, it was mounting concerns over near-term margins that weighed more heavily on investor sentiment. 

Several brokerages have revised downward their operating and net profit estimates to account for ongoing growth and margin challenges. 

Given these headwinds, and with the stock remaining largely flat over the past three months, significant upside from current levels appears unlikely in the near term. 

Revenues for the technology holding company that owns, operates, and invests in internet-led businesses were up 13 per cent year-on-year (Y-o-Y) and 2.3 per cent on a sequential basis.  

Overall, billings rose by 19 per cent led by an 18.4 per cent Y-o-Y growth in recruitment (Naukri) billions followed by a 21.9 per cent growth in billings of real estate (99acres) and 18.7 per cent growth in billings of other segments (Jeevansathi/Shiksha). 

Within recruitment billing, while technology, IT services, and business process management grew by 17 per cent, higher growth sub-segments included global capability centres, which were up 19 per cent, recruitment consulting rose 15 per cent, while other segments witnessed a 15 per cent growth.  

IIMJobs, Naukri Gulf, and Naukri Fast Forward also witnessed healthy billings growth of 43 per cent, 26 per cent, and 18 per cent Y-o-Y, respectively.  

Non-tech sectors such as banking, financial services, and insurance or BFSI, healthcare, and infrastructure also posted strong double-digit gains. This, according to analysts led by Abhishek Pathak of Motilal Oswal Research, points to early signs of a more balanced hiring recovery beyond traditional tech-heavy segments.  

For the real estate segment, 99acres, revenue growth came in at a steady 14.3 per cent while billings grew by 21.9 per cent Y-o-Y. 

Broker and channel partner billings saw a bigger jump as compared to the developer billings. Cash burn for 99acres moved up from ₹4.8 crore in Q3FY25 to ₹14.9 crore in Q4FY25 led by higher marketing expense to capture market share while cash burn for other segments saw a fall. 

Motilal Oswal Research believes that the realty vertical is expected to be profitable on the back of current momentum and marketing-led visibility.  

Its other business segments, Jeevansathi (matrimonials) reported revenue growth of 25 per cent Y-o-Y and billings growth of 23.9 per cent.   The company is targeting a 20-25 per cent growth for this segment in FY26 and is slowly moving towards breakeven. Its education vertical, Shiksha saw a 1.6 per cent growth Y-o-Y, while recording billings growth of 15.9 per cent Y-o-Y.  

What disappointed the Street was the operational performance. The standalone operating profit growth was limited to 4.9 per cent Y-o-Y and was sharply below estimates. Operating profit margins too were lower by 546 basis points on a sequential basis and 290 basis points over the year-ago quarter.  

The miss was on account of a ramp-up in advertising and promotional spends in recruitment and real estate businesses and higher investments in artificial intelligence and machine learning. This is expected to continue in the near term.  

Given the limited scope for margin expansion, JM Financial Research has trimmed its standalone earnings per share estimates for FY26-27 by 8-11 per cent while the sum-of-the-parts valuations adjusted for the stock split have been cut to ₹1,500 (from ₹1,560). 

Analysts led by Swapnil Potdukhe of the brokerage have also downgraded its rating to “hold” as the current valuations appear to be priced to perfection. 

While Kotak Securities has retained FY2026-27 revenue estimates, it has trimmed operating profit estimates by 5-7 per cent, driven by weaker margin expectations in the recruitment space and higher losses in the realty business. The brokerage has cut the target price to ₹1,625, and retained an “add” rating on it.