Info Edge's prized assets fallen prey to Covid-19 and the lockdown

Those at Motilal Oswal Financial Services have retained their neutral rating on the stock, citing a halt in near-term earnings.

In contrast, JM Financial recently upgraded its recommendation on the stock to ‘buy’ from ‘hold’, on expectations that the firm will tackle the crisis better than its peers. The optimism is based on the firm’s track record of dealing with crises, its strong fundamentals, superior positioning across businesses, and a cash cushion of Rs 1,500 crore as of the December quarter.

The brokerage is mindful of the near-term earnings pressure, owing to the pain in naukri and 99acres.

JM Financial has reduced its stand-alone revenue estimates for FY20, FY21, and FY22 by 3 per cent, 12 per cent and 14 per cent, respectively, on assumptions that Covid-19 related pressures are contained by June 2020.

These numbers don’t factor in the possible decline in revenues of its food delivery business Zomato, in which Info Edge owns a stake, adds up to 21.2 per cent of the latter’s valuation.

Under these circomstaces, even though valuations have moderated to 60x its FY21 estimated earnings (from 85x earlier), the reigning uncertainties doesn’t justify the asking rate yet.