Info Edge Shares Plummet Up to 5% Following Brokerage Downgrade of FY27 Earnings Estimates

Info Edge Shares Plunge to 5-Year Low Following Earnings Downgrade

Info Edge (India) shares suffered a significant loss on May 25, plummeting as much as 5% to Rs 908.3 apiece, marking their lowest level since December 2023. The stock eventually settled 2.5% lower at Rs 936.9, amidst concerns over revised earnings forecasts for FY27 following the company's March quarter results.

Brokerage firm Goldman Sachs led the charge in downgrading the company's earnings prospects. The firm reduced its revenue projections for Info Edge by 3-7% and cut earnings per share estimates by 2-6% for FY26-FY29. Despite the downgrade, Goldman Sachs retained its "buy" recommendation, citing the stock's attractive valuation of 11 times FY28 enterprise value.

However, Goldman Sachs also noted that the company's recruitment segment may remain under pressure due to weak hiring trends in the information technology sector. The brokerage expects gains in traffic market share within Info Edge's real estate business to support monetization efforts, projecting billings growth of 10-11% in the near term.

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JPMorgan also lowered its FY27 and FY28 earnings estimates by 2-10%, citing slower billings growth in the company's Naukri business. The brokerage noted that job market sentiment remains "subdued but stable," though it expects EBITDA margins to stay resilient, supported by lower marketing expenses.

Domestic brokerages Motilal Oswal Financial Services and JM Financial have also expressed their concerns over the company's earnings prospects. Motilal Oswal Financial Services reiterated its "reduce" rating on the stock and set a target price of Rs 1,050, citing steady growth in recruitment and 99acres but limited scope for acceleration. JM Financial also has a "reduce" rating on the stock with a target price of Rs 1,000, citing the lack of signs of Naukri billings acceleration.

While growing adoption of AI-Rex, Jobhai, and B2C offerings is encouraging, any meaningful gains in billings growth are unlikely in the near term, according to JM Financial. This is due to the broader hiring environment continuing to be subdued amidst growing AI adoption in tech jobs and economic/geopolitical uncertainties.

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