Zomato, PB Fintech, Delhivery, LIC and Info Edge: Target prices for 5 stocks after Q3 results

A handful of companies including Zomato, PB Fintech (Policybazaar), Delhivery, Life Insurance Corporation of India (LIC) and Info Edge recently announced their quarterly results. Info Edge and PB Fintech’s numbers were strong, but Zomatos was a mixed bag. LIC’s figures were in line with expectations. Delhivery’s quarterly earnings failed to meet analyst estimates.

Zomato

Nuvama said Zomato reported better-than-expected revenue and in line with profitability. Gross order value (GOV) in food delivery was flat sequentially due to a decline in monthly transaction users (MTU) with the closure of the Zomato Pro membership program, increase in dining and increased travel business. Zomato Gold’s relaunch will be a big boost to growth, it said.

“While growth was impacted, coverage ratio improved from 4.5 percent in Q2FY23 to 5.1 percent in Q3FY23. Blinkit’s performance was encouraging with 18 percent QoQ growth in GOV and improvement in profitability,” it said while hinting at a target of Rs 74 on the Share.

Emkay said operating performance was mixed. It said Zomato recorded a disappointingly muted GOV, but the contribution margin in food delivery and Hyperpure revenue growth beat expectations.

Management indicated that ex-quick trade broke even in January and sees a good chance of achieving adjusted Ebitda breakeven ex-quick trade in Q4.

“It remains confident of achieving an adjusted Ebitda margin of 4-5 percent of GOV, in the food delivery business over the medium term. The Q3 result reinforces our belief in the company’s ability to execute and deliver profitable growth, but growth moderation in MTU/ GOV remains a concern,” Emkay said while hinting at a Rs 90 target for the stock.

PB Fintech

Nuvama Institutional Equities said PB Fintech’s December quarterly numbers were strong, as premium flow increased 70.3 percent year-on-year. This, it said, largely led to a 66.1 percent jump in revenue year-on-year and also Ebitda reduction to Rs 133 crore from Rs 317 crore.

Adjusted Ebitda margin improved in existing/new initiatives segments to 6.1 percent/29.2 percent as the company is focused on improving productivity in its core insurance platform and new initiatives, while building track revenue in its credit business, it said.

“Given its 90 percent plus market share in online insurance sales and a growing offline presence, PB is poised to deliver strong sales. We narrow the FY23E/FY24E Ebitda loss by 8.1/12.2 percent, giving a DCF -based TP at Rs 550. Given limited upside, we downgrade PB to ‘HOLD’,” it said.

Kotak Institutional Equities said Policybazaar’s business performance remains consistent, with high growth and steady profitability. Unlike digital peers, the long-term estimates have been largely unchanged since coverage began. The path to profitability and recovery in the credit business has been better than initially expected, the brokerage said while reducing its fair value on the stock to Rs 700 from Rs 730

Delhivery

ICICI Securities said Delhivery’s December quarter earnings came in lower than estimates due to delayed partial truck load (PTL) recovery. The management specified that this was due to the optimization of the network footprint and reduced volumes in the first days of the December quarter due to unusual rain in Tauru. According to management, ICICI Securities said, volumes have steadily increased since then.

“Management also mentioned that they have renegotiated contracts with low-paying customers in the PTL business. This resulted in PTL returns improving by 4.8 percent QoQ. Given the slower than expected recovery in PTL, we have cut FY24E/25E earnings and Ebitda estimates by 9 percent each and target price by 8 percent,” it said while hinting at a target of Rs 425.

With SpotOn’s integration, margin improvement met expectations, but volume growth for express parcel shipments was weak, Nuvama Institutional Equities said.

“Since its IPO, Delhivery has seen a strong 30 per cent rally led by two drivers: high growth prospects for e-commerce and the company already being profitable in H2FY22. As both of these were challenged in H1FY23, the stock was hit hard. While FY23E may still see 13-15 percent express parcel growth, Delhivery’s story and valuation is heavily dependent on e-com growth of 15-20 percent or above for a decade or so,” it said while hinting at a target of Rs.360 stock.

LIC

Analysts said a multiple-fold increase in the quarterly profit of LIC in December was as expected. Emkay Global said LIC trades on an undemanding FY24E P/EV valuation of 0.63 times. However, given the lack of positive catalysts, it continues to maintain a “neutral” view on the stock. This brokerage has a target of Rs700 on LIC.

JM Financial expects LIC to be able to maintain its NBMs in the range of 15-16 percent aided by favorable product mix and cost control. The prevailing valuations at 0.5x FY25E EV are undemanding and it expects the stock to change on the back of its key strengths: large customer base, large agency network, strong brand equity and, importantly, the superb guarantee attached to LIC policies. The brokerage finds the stock worth Rs 940.

YES Securities has a target of Rs 770 on the stock.

Info Edge

Motilal Oswal said Info Edge delivered strong revenue growth of 33 percent year-on-year, led by 40 percent growth in the recruitment vertical. Ebitda margin, it said, rose 450 bps QoQ to 39.1 percent due to lower staff costs, ad spend and other expenses (strong blow). Invoicing remained strong, up 14.5 percent, and grew ahead of Motilal’s estimates, despite a decline in IT employment.

“While near-term recruitment growth is expected to be negatively impacted by lower IT demand, good medium-term recruitment growth should help the company deliver 16 per cent revenue CAGR over FY23-25. With management investing cautiously, some of its current investments should scale up in the medium to long term, further contributing to the group’s valuation, it said while hinting at a target of Rs 3,800.

Elara said it is positive for Info Edge on robust growth in the naukri.com business and synergy from acquired recruitment businesses. It likes Info Edge’s consistent improvement in Ebitda margin since last five quarters.

“We maintain our earnings estimates. Our target of Rs 5,050 (from INR 5,150) attributes Rs 3,715 per share to naukri.com, Rs 326 per share to 99 acres, and Rs 52 to jeevansathi.com. Also, Zomato is valued at $5. , Policybazaar at $2.7 billion and other investments at book value of Rs 520 crore, after recognizing cash and equivalents of Rs 2,790 crore,” it said.

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