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Is InfoEdge, a Large Cap Multibagger Stock? What are the current development and prospects of the company? Read this article to develop a thought process about the business.
Info Edge India Limited is an Internet-based company founded by Sanjeev Bikhchandani. The company has a portfolio of brands in its online business like Naukri.Com, 99acres, Jeevansathi.com, FirstNaukri.com, policybazaar.com, shiksha.com, and many more subsidiaries.
There are 2 approaches to investing in a company:
i) In the first case, where profits, cash flows, and other parameters are measured, the investment is made by the investor.
ii) Now, another angle of investment is that investors look for the companies or sectors that will outperform in the future. Accordingly, investment is based on Start-Ups, filled with Ideas at very early stages and take their stake. In this approach, Private Equity Investors are the special players here.
InfoEdge is a debt-free company.
The Profit earned by the company is reinvested into its different startups, which may turn into Unicorns in the future. Unicorn refers to a company with a valuation of $1 billion and above.
At the initial stage, millions of dollars are needed to be infused in the startup, yielding returns in Billion dollars if the business model becomes successful.
This journey also includes the failure of many startups, but any start-up which is turned into a unicorn, then all the losses can be covered up along with a hefty amount of returns.
In the context of InfoEdge, Sanjeev Bikhchandani is a successful entrepreneur. He knows how to invest in success, which can work as a unique characteristic of InfoEdge.
If one is looking for investment in InfoEdge share, one should have another approach of investment where one believes how a particular sector will perform in the future.
InfoEdge has made two significant investments in 2 successful unicorns, i.e., Policybazaar and Zomato.
As per Bloomberg Report, InfoEdge holds a 13.5% stake in Policybazaar and an 18.4% stake in Zomato.
PPG Global, a Private Equity Investment firm, has also invested in Zomato. At the time of this investment, the valuation of Zomato was around $5.4 billion at the end of 2020.
Looking at the present domestic and global presence of Zomato, the value unlocking of this company can be multi-fold from this level.
InfoEdge is currently having a valuation of around $7 billion - $8 billion.
The Infoedge share price has come down from Rs. 5,800 to Rs. 4,200 in the recent past.
The story of Info Edge will be a volatile one, as there will be great speculation on this stock on their long-term story. But an Investor should look for underlying growth and the vision of the company.
Since this stock is very highly subject to Volatility, a staggered form of investment in this stock can be the right approach.
FIIs stake in Zomato is quite encouraging. It is increasing on every quarterly basis; also, it adds a lot to investors’ comfortability.
Furthermore, Info Edge has an 18.4% stake in Zomato. If this company is listed in Domestic or Foreign Stock Exchanges, it will be an impressive value creation of the parent company.
And, in case Zomato lists at Foreign Stock Exchanges, the company can be listed at a higher valuation. Also, companies need to follow stringent accounting practices in a foreign market, which is a good point.
Zomato will be a Food-Tech company in the future, and its growth will be a very long-term story and interesting to witness.
The other Successful Unicorn of InfoEdge is PolicyBazaar which is currently valued at $1-$1.5 billion.
Policybazaar.com may also list in India very soon as this business has an extreme focus on the Indian market.
Listing of Policybazaar also may work great for InfoEdge and might unlock some value also.
InfoEdge has invested in more than 20 StartUps.
This stock is performing well, and if any of the startups turn into a Unicorn, it can add more value to the valuation of InfoEdge.
InfoEdge is an Indian Internet company with numerous Startups and Unicorns like Policybazaar and Zomato. For an Investor planning to have an allocation in this stock, then he/she should have to keep aside the traditional approach of investing and need to look the way forward, i.e. How will the Company and its subsidiaries perform in the future? Also, the stock's price may face fluctuations over the period, but one’s conviction should be strong enough to stay invested in this business. An individual should thoroughly go through the business models and future growth and earning visibility of the business.
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