JM Financial has released its brokerage notes on Internet business companies. JM Financial’s brokerage note has kept its bullish view on companies like Zomato Limited, PB Fintech Limited (Policybazaar), FSN E-Commerce Ventures Limited (Nyka), Cartrade and Affle Limited, while Delhivery, Indiamart Intermesh Limited and Just Dial Limited have a bullish view on the companies. Growth is expected to slow down in the quarter.
brokerage report
“Info Edge has started showing positive signs in billings growth. Zomato is expected to maintain strong growth and margin expansion, while Nykaa is likely to gain market share across its categories,” the brokerage report said. ” PB Fintech’s core insurance premiums are expected to grow strongly due to health insurance and savings, although margins are likely to decline further, JM Financial said ahead of second-quarter results.
Info Edge Recruitment billings register strong growth after few quarters. Delhivery will continue to face challenges with self-logistics at Meesho, which now accounts for 40 percent of its shipment volumes. JM Financial believes that companies like Nykaa, Zomato and CarTrade can still maintain strength.
Zomato
In the food delivery segment, JM estimates sequential gross order value (GOV) growth at 7 per cent (24 per cent YoY). It sees MTU growth to 21.2 million as against 20.3 million in 1QFY25. Ordering frequency and average order value (AOV) are witnessing a growth of 1 percent quarter-on-quarter and 2 percent quarter-on-quarter, respectively. Take-rates are likely to rise to 21.2 per cent in Q2 compared to 21 per cent in Q1FY25 due to further increase in platform fees. A mix of strong GOV growth and take-rate expansion should lead to sequential revenue growth of 13 percent.
Take-rates may increase to 19.3 percent from 19.1 percent in the first quarter due to advertising revenue and subscriber fees. JM Financial believes contribution margin will improve to 4.1 per cent (as a government percentage) compared to 4 per cent in Q1, as aggressive opening of new stores may offset take-rate expansion. Considering last quarter’s ESOP cost, the company expects PAT to be Rs 229 crore compared to Rs 253 crore in Q1.
Affle India
JM Financial expects Apple India’s revenue to grow 23 per cent year-on-year to Rs 530 crore (1.9 per cent quarter-on-quarter) on the back of a favorable base driven by strong recovery trends in developed markets and other emerging markets (except India). Are performing well continuously.
JM said, “However, the Indian business is likely to once again register mid-teens growth. We expect gross margins to remain stable at 38.5 per cent sequentially, but to decline by 100 basis points YoY, “Because the company continues to focus on topline growth, any significant gains may be limited.”
The domestic brokerage expects EBITDA margin to expand 20 bps YoY to 20.4 per cent due to operating leverage, while EBITDA margin is expected to expand 70 bps YoY to 16.6 per cent due to lower D&A as a percentage of revenue. “Accordingly, we estimate EBIT/EBIT to grow by 24 per cent/28 per cent YoY. PAT to grow by 29 per cent YoY to Rs 86.2 crore due to improved operating performance and reduction in D&A,” the report said. Will be done.”
Car Trade
JM Financial expects CarTrade’s new auto business to grow 9 percent sequentially and 21 percent year-on-year, driven by continued strength in new auto sales as well as sharp growth in OEM advertising spend as a percentage of revenue. With continued decline in repossessions and higher mix of retail business, the remarketing segment is expected to improve and deliver sequential revenue growth of 20 per cent (2 per cent YoY).
“On the OLX front, we should see 4 per cent sequential growth in revenues with management’s focus on delivering auto category results. Overall, CarTrade should deliver 30 per cent YoY revenue growth in 2QFY24. Adj. EBITDA, JM said , “Margins (excluding ESOP expense) will expand by 300 bps sequentially (130 bps y-o-y) to 22.6 per cent.” Considering the fixed cost structure, the company is expected to see a sharp increase in adjusted EBITDA margin over the year. “We expect CarTrade’s new auto business to benefit in the current environment as supply exceeds demand due to low growth in auto sales,” it said.
Delhivery
JM expects shipments in the express parcel segment (EPS) to grow 6.2 per cent YoY, while Meesho’s in-housing (40 per cent of volume mix) will continue to decline. Additionally, it expects the PTL business to deliver 20.4 per cent tonnage growth and 1.7 per cent realization growth on an annual basis.
“On a YoY basis, Express Parcel revenues are expected to grow by ~9 per cent, while PTL revenues should see a growth of 22 per cent. With the scaling up of contracts along with revenues from key customers added last year, We expect supply chain services to grow 34 percent year-on-year, although there will be a decline of 15 percent sequentially due to base effect.
“The first quarter was seasonally strong,” JM said. It said Delhivery’s revenue growth on a consolidated basis will be 2.3 per cent/14.4 per cent quarter-on-quarter/year-on-year. “With incremental gross margins remaining strong, we expect Delhivery to register a gross margin improvement of 50 bps QoQ/ 200 bps YoY. Additionally, with inclusion of the impact of wage hike in the last quarter, the adjusted EBITDA margin PAT is expected to expand by 25 bps QoQ (260 bps YoY) to Rs 16.60 crore in Q1 due to one-time gain.”
IndiaMart
JM expects IndiaMart Intermesh’s core classifieds business to add only 2,700 paid suppliers quarter-on-quarter, as silver membership continues to have a high churn rate due to poor quality leads. While this would be slightly better than the 1.5k increase in the first quarter, it would still be well below management’s target of 5,000-6,000. Cash collection growth is expected to decline for the fourth consecutive quarter, at 13 per cent year-on-year compared to 14 per cent growth in the previous quarter. This will be due to slow upsells, which is again below management’s expectations of 20-25 per cent.
“While revenue growth may be better than collection growth at 16.6 per cent YoY, it is a notable deceleration from 30.8 per cent/21.5 per cent/17.4 per cent in FY23/FY24/1QFY25. The only positive is the expected Ebitda margin, driven by weak subscription and collection growth “Could expand by 800 bps YoY due to lower operating costs and sales incentives in the absence of,” it said. The ups and downs in paid membership trends and management commentary on investment in the accounting services sector will be closely watched.
Info Edge
Info Edge’s segment-wise billing was reported by the company on October 7. Recruitment segment billings growth accelerated from 8.5 per cent YoY to 14 per cent YoY last quarter, the fastest billings growth after several quarters of weakness, likely due to the strong hiring recovery in IT. The 99 Acre segment saw 16.5 per cent YoY billing growth, up from 10.4 per cent YoY in the first quarter, however, this was lower than expected as a stronger recovery was expected after the first quarter was impacted by the elections and heat wave. Other segments (which include spouses and education) saw 12.1 percent YoY growth, disappointing compared to the strong 28.4 percent YoY growth in the second quarter.
JM said, “Standalone revenues should see a growth of 9.2 per cent YoY, which includes YoY growth of 7.3 per cent/15.7 per cent/14.7 per cent in Recruitment/99 Acres/Others segments respectively. We estimate that the Recruitment business Segment-wise, PBT margin for recruitment business may contract by 400 bps YoY due to margin pressure, which will result in EBITDA margin contraction of 50 bps YoY to 40.2 per cent (39 per cent in Q1FY25). The reason is continued technology and platform investments amid slow revenue growth.” It is expected that PAT will increase by 11 percent on annual basis. Management’s commentary on demand environment in hiring and A&P spend at 99 Acres and Jeevansathi should be closely monitored, JM said.
Jerk off
JM expects Nika’s gross merchandise value (GMV) to grow 22 per cent YoY, driven by 23 per cent YoY growth in core BPC GMV, as well as GMV-NSV conversion from 57.8 per cent in Q1. It is expected to increase to 58.5 percent in this quarter. It said demand in the overall fashion industry may remain sluggish.
“A gradual recovery is expected in the second half of FY2025 due to weddings and festivals. Fashion GMV growth is likely to slow at 12 per cent YoY, yet continues to gain market share while other online fashion platforms face tough times. However, reduction in leakages and lower RTOs are expected to lead to improvement in revenue conversion for EB2B and overall business with GMV growth at 63 per cent YoY/QoY and GMV-NSV conversion at 58.5 per cent. Expect to acquire a stake in the mix,” it said. Overall, JM expects Nykaa to deliver 26 per cent year-on-year growth in second-quarter revenue as well as 63 bps year-on-year EBITDA margin improvement. Management commentary on industry trends, competitive landscape, continued supply chain investments and international expansion plans in BPC/Fashion in FY25 will be keenly watched.
PB Fintech
JM expects PB Fintech to maintain its growth momentum, with insurance premiums projected to grow 52 per cent YoY, including 42 per cent YoY growth in core insurance premiums, while new initiatives are expected to see a sharp growth of 81 per cent. Can.
“PaisaBazaar disbursements are expected to decline by 2 per cent year-on-year, however will grow by 29 per cent sequentially with gradual recovery of unsecured loans as well as some initial growth in secured loans. We expect PolicyBazaar/PaisaBazaar Revenue growth is expected to be 43.6 per cent/7.6 per cent year-on-year due to decline in take-rates in insurance and improvement in loan disbursements,” it said. JM Financial expects group contribution margin to remain at 29.1 percent, and core contribution margin is expected to decline further due to continued growth in new health insurance.
“Additionally, we expect adjusted EBITDA margin expansion of 280bps/190bps to reach 4.4 per cent on a YoY/QoQ basis, as strong topline growth drives operating leverage on the recent decision to enter the healthcare space. “A close watch must be kept.”
Route Mobile
M expects revenue growth for Route Mobile to be 11 per cent YoY, driven by the Vi Firewall deal and the start of revenue realization from TeleSign. But a sequential 60 bps decline in gross margin to 21.5 per cent is expected due to the lower margin profile of the telesign business.
“Ebitda margin may be just 12 per cent versus 13.2 per cent/12.4 per cent in 2QFY24/1QFY25 due to weak gross margins. As a result, Ebitda expansion will likely be limited to 1 per cent year-on-year. However, PAT will expand by 13 per cent due to growth in other income. “/9 percent quarter-on-quarter growth is expected.”
The brokerage believes the market’s focus will be on management’s commentary on the recently announced Microsoft and Proximus Group partnership benefits 2) Expected revenue synergy from Telesigns and operating margin guidance.