Are Info Edge (India) Ltd latest results good or bad?

Info Edge (India) Ltd's latest financial results for Q2 FY26 indicate a notable performance in terms of revenue and profit growth. The company reported consolidated net sales of ₹805.45 crores, marking a year-on-year increase of 14.93% and a sequential growth of 1.84%. This performance reflects the ongoing recovery in India's white-collar job market, with the recruitment business demonstrating sustained momentum. The consolidated net profit for the quarter was ₹316.40 crores, which represents a significant year-on-year increase of 1,260.28%. However, this surge is largely attributed to a base effect from the previous year, where exceptional tax provisions impacted profitability. When normalizing for this anomaly, the operational progress appears steady rather than indicative of a fundamental transformation. Operating margin, excluding other income, stood at 34.75%, showing a slight improvement from the previous quarter. This margin expansion, achieved despite rising employee costs, suggests effective cost management within the company. Employee costs rose to ₹340.39 crores, reflecting an 11.31% year-on-year increase, slightly outpacing revenue growth. Despite these operational strengths, Info Edge continues to face challenges related to capital efficiency, as evidenced by a return on equity (ROE) of 2.71%, which is below industry standards. This indicates underutilization of shareholder capital, primarily due to substantial investments in ventures like Zomato that have yet to yield significant returns. The company's financial performance also reveals a heavy reliance on other income, which constituted a notable portion of profit before tax. This dependency raises questions about the true profitability of the core business, as nearly 40.08% of profit before tax derived from non-operating sources. In the most recent quarter, the company experienced a revision in its evaluation, reflecting the complexities of its financial profile amid strong operational results. The balance sheet remains robust, with a virtually debt-free status, providing flexibility for strategic investments. However, the stock has underperformed in the market, indicating potential investor caution despite the positive operational metrics. Overall, Info Edge's Q2 FY26 results highlight a company with strong revenue growth and operational efficiency, yet it grapples with challenges in capital deployment and market valuation.