Info Edge, the parent company of Naukri.com, is witnessing substantial growth from its diverse startup investment portfolio in AI, deeptech, and consumer technology, which has surged to a valuation of Rs 41,300 crore, providing a crucial new growth engine amidst challenges in its traditional recruitment business.
Key Points
- Info Edge's startup investment portfolio, primarily in AI, deeptech, and consumer tech, is now valued at Rs 41,300 crore, an 8.4x return on its Rs 4,900 crore investment since 2007.
- Consumer tech and consumer AI are the largest contributors to the portfolio's value, with investments of Rs 2,760 crore across 45 companies now valued at Rs 37,220 crore.
- The company's core recruitment business faces stress due to weak hiring trends and uncertainty in the IT sector, leading to a significant drop in its stock price over the past year.
- Despite overall subdued hiring, demand for AI and machine learning-related roles remains healthy, offering a potential bright spot for the recruitment segment.
- Brokerages have adjusted target prices or maintained 'reduce'/'sell' ratings on Info Edge due to near-term risks, though some retain 'buy' ratings based on attractive valuations.
In a weak market, the stock of Info Edge (India) was the top gainer in the BSE 100 index, rising 2.8 per cent on Tuesday.
In comparison, the BSE 100 and the Sensex were down 1.16 per cent each.
The gains for the company, which runs multiple online classified platforms, including recruitment site Naukri.com, came after it posted an update on its investment portfolio in startups.
Strategic Investments in Emerging Technologies
The investments are in the artificial intelligence (AI), deeptech, and consumer technology (tech) sectors, made through its alternative investment funds.
Since 2007, the company has made investments of Rs 4,900 crore across 135 startups across sectors.
This is now valued at Rs 41,300 crore as of March this year, translating into about 8.4x the invested capital and a 33 per cent rate of return.
Among the key segments, the company has invested Rs 610 crore across 28 AI startups, and the portfolio is valued at Rs 1,270 crore, with a 2.1x return and a 33 per cent rate of return.
Other investments include Rs 460 crore in 30 deeptech startups. Consumer tech and consumer AI are the largest contributors to portfolio value, with Rs 2,760 crore invested across 45 companies.
The portfolio is valued at Rs 37,220 crore, translating into a 34 per cent return and a 13.5x gain.
The company indicated that AI, deeptech, and consumer tech would be the key drivers of future value creation.
Recruitment Business Faces Headwinds
While its investments are doing well, stress in the recruitment business due to weak hiring trends and uncertainty in the information technology (IT) sector saw the stock shed over 25 per cent in the last six months and 32 per cent in one year.
The Street will thus track progress on the operational front, especially any recovery in the recruitment business.
Recruitment billings in the fourth quarter (January-March/Q4) of 2025-26 (FY26) were up 9.5 per cent compared to the third quarter (October-December/Q3) of FY26 growth of 11 per cent and the historical average of 14-15 per cent.
Sectors such as technology, IT services, and business process management grew 6 per cent year-on-year (Y-o-Y).
The company indicated that the hiring environment remains subdued as companies continue to adopt a cautious stance amid economic and geopolitical uncertainties. However, demand for AI and machine learning-related hiring remains healthy.
Brokerage Outlook and Other Segments
Given the headwinds in the recruitment space, most brokerages have either reduced their target prices or maintained a "reduce"/ "sell" rating on the stock.
Mirae Asset Sharekhan Research has trimmed its price target and valuation multiple to reflect near-term risks from AI-led disruption, a potential slowdown in revenue growth driven by softer hiring trends, slower billings momentum, and ongoing headwinds in segments such as education (impact of AI on traffic) and real estate, which could weigh on revenue visibility.
Revenues of the real estate segment 99acres grew 21.2 per cent Y-o-Y due to the reversal of warranty-related provisions amounting to Rs 20 crore, even as billings growth remained muted at 1.9 per cent.
The company remains confident of market share gains, which will aid the recovery in billings growth.
Billings in the education portal (Shiksha) declined 12.9 per cent Y-o-Y as AI-related impact was visible from AI-driven search changes (Google AI summaries and AI bots). Jeevansathi revenue was up 18.8 per cent Y-o-Y, and billings were up 21 per cent Y-o-Y.
Nuvama Research expects moderate billings growth to translate into lower revenue growth with a lag, while growth in non-recruitment businesses shall partially offset the moderation.
Margins are likely to remain stable at current levels.
The brokerage has tweaked 2026-27 and 2027-28 earnings lower by a tad, factoring in lower growth.
The brokerage has, however, retained a "buy" rating due to attractive valuations, with a revised target price of Rs 1,320, down Rs 70 from the earlier Rs 1,390.
