With a market capitalisation of ₹71,949 crores, Info Edge continues to demonstrate operational resilience in its core recruitment business, with net sales reaching a record ₹819.41 crores in Q3 FY26. However, the company faces mounting pressure from elevated valuations and deteriorating technical trends, with the stock underperforming the Sensex by 33.30% over the past year.
| Quarter | Net Sales (₹ Cr) | Net Profit (₹ Cr) | Operating Margin | PAT Margin |
|---|---|---|---|---|
| Dec'25 | 819.41 | 271.71 | 35.92% | 38.65% |
| Sep'25 | 805.45 (+1.84%) | 316.40 (+6.92%) | 34.75% | 43.14% |
| Jun'25 | 790.86 (+5.50%) | 295.92 (-36.14%) | 33.44% | 43.35% |
| Mar'25 | 749.63 (+3.77%) | 463.39 (+91.02%) | 33.09% | 90.43% |
| Dec'24 | 722.40 (+3.08%) | 242.59 (+942.95%) | 37.60% | 39.93% |
| Sep'24 | 700.82 (+3.56%) | 23.26 (-90.01%) | 34.47% | 12.09% |
| Jun'24 | 676.71 | 232.90 | 33.02% | 38.25% |
Financial Performance: Steady Revenue Growth Masks Profitability Volatility
Info Edge's Q3 FY26 financial performance showcased the company's ability to maintain revenue momentum whilst navigating profitability challenges. Net sales for the quarter reached a record ₹819.41 crores, marking a sequential increase of 1.73% from Q2 FY26's ₹805.45 crores and a year-on-year expansion of 13.43% over Q3 FY25's ₹722.40 crores. This consistent top-line growth reflects the sustained demand for the company's recruitment and real estate platforms, particularly as India's job market remains robust.
However, the profitability picture presents a more nuanced narrative. Consolidated net profit of ₹271.71 crores in Q3 FY26 declined 14.12% sequentially from ₹316.40 crores in Q2 FY26, though it remained 12.00% higher year-on-year compared to ₹242.59 crores in Q3 FY25. The sequential decline was primarily attributable to a reduction in other income, which fell to ₹187.54 crores in Q3 FY26 from ₹213.21 crores in Q1 FY26, highlighting the company's dependence on non-operating income streams from its substantial investment portfolio.
Operating margins excluding other income stood at 35.92% in Q3 FY26, representing a 117 basis points sequential improvement from Q2 FY26's 34.75% but a 168 basis points year-on-year contraction from Q3 FY25's 37.60%. The margin compression on a year-on-year basis reflects increased employee costs, which rose to ₹342.39 crores in Q3 FY26 from ₹305.59 crores in Q3 FY25, an increase of 12.04% that slightly outpaced revenue growth.
For the nine-month period ending December 2025 (9M FY26), Info Edge reported consolidated net profit of ₹883.03 crores on net sales of ₹2,415.72 crores, reflecting the company's ability to maintain profitability despite market headwinds. The company's tax rate for Q3 FY26 stood at 19.38%, marginally higher than Q2 FY26's 18.96% but significantly lower than the 22.28% recorded in Q3 FY25, providing some relief to bottom-line performance.
Capital Efficiency Concerns: Weak Returns Raise Questions
Despite Info Edge's strong market position and consistent revenue growth, the company's capital efficiency metrics reveal significant challenges that warrant investor attention. The company's average return on equity (ROE) stands at a modest 5.39%, whilst the latest ROE has further deteriorated to 2.70%, indicating weak capital efficiency and raising concerns about the company's ability to generate adequate returns on shareholder investments. This low ROE is particularly concerning given the company's minimal debt burden and substantial cash reserves.
The company's average return on capital employed (ROCE) paints an equally troubling picture at 2.80%, with the latest ROCE declining to just 1.99%. These anaemic returns suggest that Info Edge is struggling to deploy its capital effectively, despite operating in high-growth digital markets. The weak ROCE is particularly striking given the company's negligible debt levels (average debt-to-EBITDA of 0.25) and net cash position (average net debt-to-equity of -0.03), which should theoretically enable higher returns.
Capital Deployment Challenge
Critical Concern: Info Edge's ROE of 5.39% and ROCE of 2.80% are significantly below acceptable thresholds for a growth company. The company's substantial investment portfolio of ₹36,548.22 crores as of March 2025, whilst providing strategic optionality, has contributed to subdued returns. The company must demonstrate improved capital allocation to justify its premium valuation, particularly as its core recruitment business matures.
The balance sheet as of March 2025 reflects a fortress-like financial position, with shareholder funds of ₹34,903.06 crores and investments totalling ₹36,548.22 crores. However, this massive investment portfolio, which includes stakes in companies like Zomato and PolicyBazaar, has become a double-edged sword. Whilst it provides strategic diversification and potential upside, it also contributes to the company's weak operating returns and creates significant mark-to-market volatility in quarterly earnings.
The Other Income Conundrum: Non-Operating Income Dominance
A critical aspect of Info Edge's financial profile that demands scrutiny is the company's substantial reliance on other income, which comprised 42.17% of profit before tax in Q3 FY26. Other income of ₹187.54 crores in Q3 FY26, whilst lower than the exceptional ₹520.83 crores recorded in Q4 FY25, remains a significant contributor to overall profitability. This heavy dependence on non-operating income, primarily derived from the company's extensive investment portfolio, creates earnings volatility and makes it challenging to assess the true underlying performance of the core business.
The fluctuation in other income across quarters—ranging from ₹151.21 crores in Q1 FY25 to ₹520.83 crores in Q4 FY25—underscores the unpredictability of this income stream, which is largely driven by fair value gains on investments and dividend income from portfolio companies. For the full year FY25, other income totalled ₹1,073.00 crores, representing a staggering 55.18% of the company's profit before tax of ₹1,944.00 crores, highlighting the extent to which Info Edge's profitability is intertwined with the performance of its investee companies rather than its core operations.
| Metric | Q3 FY26 | Q2 FY26 | Q1 FY26 | Q4 FY25 |
|---|---|---|---|---|
| Other Income (₹ Cr) | 187.54 | 161.78 | 213.21 | 520.83 |
| Operating Profit Excl OI (₹ Cr) | 294.36 | 279.87 | 264.48 | 248.04 |
| PBT (₹ Cr) | 392.86 | 428.78 | 431.06 | 741.61 |
| OI as % of PBT | 47.73% | 37.73% | 49.45% | 70.23% |
This structural dependence on investment income raises questions about the sustainability of Info Edge's earnings and the appropriate valuation multiple the stock should command. Whilst the company's investment strategy has created significant value over the years, particularly through early-stage investments in unicorns, the volatility and unpredictability of this income stream make it difficult for investors to model future earnings with confidence.
Industry Leadership: How Info Edge Compares to E-Commerce Peers
Info Edge occupies a distinctive position within India's e-retail and e-commerce landscape, with its business model focused on classified platforms rather than traditional e-commerce transactions. When compared against sector peers, the company demonstrates several competitive advantages, including superior capital efficiency metrics and more reasonable valuation multiples, though all companies in the sector face profitability challenges.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| Info Edge | 55.77 | 1.51 | 5.39 | -0.03 | 0.53 |
| Eternal | 1,192.72 | 8.94 | 1.02 | -0.04 | NA |
| Swiggy | NA (Loss Making) | 9.51 | 0.0 | -0.32 | NA |
| FSN E-Commerce | 508.84 | 55.75 | 3.89 | 0.86 | NA |
| Meesho | NA (Loss Making) | 57.58 | 0.0 | 0.00 | NA |
| Brainbees Solutions | NA (Loss Making) | 2.96 | 0.0 | 0.13 | NA |
Info Edge's relative positioning reveals several key strengths. The company's ROE of 5.39%, whilst modest in absolute terms, significantly outpaces most e-commerce peers, many of whom remain loss-making or generate negligible returns. Similarly, the company's price-to-book value ratio of 1.51x appears reasonable compared to peers like FSN E-Commerce (55.75x) and Meesho (57.58x), reflecting the market's recognition of Info Edge's established profitability and cash-generative business model.
However, Info Edge's P/E ratio of 55.77x, whilst lower than Eternal's stratospheric 1,192.72x and FSN E-Commerce's 508.84x, remains elevated compared to the broader market and suggests limited margin of safety. The company's dividend yield of 0.53% provides minimal income support, particularly given the stock's significant price volatility. With a market capitalisation of ₹71,949 crores, Info Edge ranks as the fourth-largest company in its peer group, trailing only the newly listed food delivery and quick commerce giants.
Valuation Analysis: Premium Pricing Leaves Little Room for Error
Info Edge's valuation metrics paint a picture of a stock trading at substantial premiums across multiple parameters, raising concerns about downside risk in the event of any business disappointments. The company's P/E ratio of 56x significantly exceeds the industry average of 24x, commanding a premium of 133% that appears difficult to justify given the company's modest ROE of 5.39% and decelerating growth trajectory. This valuation disconnect suggests the market is pricing in substantial future growth and margin expansion that may prove challenging to achieve.
The company's price-to-book value ratio of 1.51x, whilst appearing reasonable in isolation, must be viewed in the context of its weak return on equity. A P/BV ratio of 1.51x combined with an ROE of 5.39% implies the market is willing to pay a significant premium for a business generating below-average returns on capital. The company's EV-to-EBITDA multiple of 67.61x and EV-to-EBIT multiple of 76.40x further underscore the expensive nature of the valuation, particularly when compared to the broader market.
The company's valuation grade history reveals a persistent pattern of expensive pricing, with the stock classified as "Very Expensive" since March 2017, with only brief interludes of slightly less stretched valuations. This prolonged period of elevated valuations reflects the market's enthusiasm for India's digital economy and Info Edge's dominant position in online recruitment, but it also suggests limited upside potential at current prices. The stock's current trading price of ₹1,143.75 represents a 26.99% decline from its 52-week high of ₹1,566.57, indicating that the market has already begun to reassess the valuation premium.
One bright spot in the valuation picture is the company's PEG ratio of 0.37x, which suggests the stock may not be as expensive as traditional metrics indicate when growth is factored in. With five-year sales growth of 20.48% and EBIT growth of 26.15%, Info Edge has demonstrated consistent expansion that could justify some valuation premium. However, investors must question whether historical growth rates are sustainable given the maturation of the core recruitment business and increasing competition in the real estate classifieds space.
Shareholding: Institutional Confidence Remains Strong Despite Price Decline
Info Edge's shareholding pattern reveals a stable ownership structure with high institutional participation, suggesting confidence in the company's long-term prospects despite near-term valuation concerns. Promoter holding has remained remarkably stable at 37.59% as of December 2025, with minimal fluctuation over the past five quarters. The promoter group, led by founder Sanjeev Bikhchandani (24.15%) and CEO Hitesh Oberoi (4.94%), maintains a significant stake with zero pledging, demonstrating strong alignment with minority shareholders.
| Shareholder Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 37.59% | 37.59% | 37.63% | 37.63% | 0.00% |
| FII | 29.66% | 30.33% | 32.99% | 33.25% | -0.67% |
| Mutual Funds | 14.55% | 13.85% | 10.69% | 10.61% | +0.70% |
| Insurance | 5.69% | 5.73% | 6.39% | 6.28% | -0.04% |
| Other DII | 2.25% | 2.09% | 1.94% | 1.95% | +0.16% |
| Non-Institutional | 10.26% | 10.41% | 10.37% | 10.29% | -0.15% |
Foreign institutional investors (FIIs) hold 29.66% of the company as of December 2025, down from 33.25% in March 2025, representing a cumulative reduction of 3.59 percentage points over three quarters. This gradual FII selling suggests some global investors are taking profits or reallocating capital away from expensive Indian internet stocks. The sequential decline of 0.67 percentage points from September to December 2025 indicates the selling pressure has moderated but not reversed.
In contrast, domestic mutual funds have emerged as net buyers, increasing their stake from 10.61% in March 2025 to 14.55% in December 2025, a substantial increase of 3.94 percentage points. The sequential increase of 0.70 percentage points from September to December 2025, with a particularly sharp jump of 3.16 percentage points from June to September 2025, suggests domestic institutional investors view the recent price correction as an opportunity to accumulate shares. With 34 mutual fund schemes holding Info Edge shares, the stock enjoys broad-based domestic institutional support.
Overall institutional holdings stand at 52.15%, reflecting strong professional investor interest despite valuation concerns. The combination of stable promoter holding, increasing domestic mutual fund participation, and gradually declining but still substantial FII ownership suggests a balanced shareholder base with no immediate red flags regarding ownership concentration or aggressive selling by informed investors.
Stock Performance: Significant Underperformance Raises Concerns
Info Edge's stock performance over the past year presents a sobering picture for investors, with the shares declining 24.78% compared to the Sensex's gain of 8.52%, resulting in significant underperformance of 33.30 percentage points. This dramatic underperformance reflects growing investor concerns about the company's valuation premium, slowing growth in the core recruitment business, and uncertainty regarding returns from the investment portfolio. The stock's current price of ₹1,143.75 represents a substantial retreat from the 52-week high of ₹1,566.57, though it remains only 3.51% above the 52-week low of ₹1,105.00, suggesting limited downside cushion.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +1.33% | -1.14% | +2.47% |
| 1 Month | -14.10% | -1.20% | -12.90% |
| 3 Months | -15.09% | -2.19% | -12.90% |
| 6 Months | -13.76% | +2.59% | -16.35% |
| YTD | -14.24% | -3.04% | -11.20% |
| 1 Year | -24.78% | +8.52% | -33.30% |
| 2 Years | +7.14% | +15.47% | -8.33% |
| 3 Years | +65.08% | +36.73% | +28.35% |
| 10 Years | +688.68% | +259.46% | +429.22% |
The pattern of returns across different time horizons reveals accelerating weakness in recent months. The stock has declined 14.10% over the past month and 15.09% over the past three months, with both periods showing significant underperformance versus the Sensex. The six-month return of -13.76% against the Sensex's gain of 2.59% highlights the mounting pressure on the stock as investors reassess growth expectations and valuation multiples. The year-to-date decline of 14.24% suggests 2026 has started poorly for Info Edge shareholders.
However, the longer-term picture provides some comfort, with the stock generating positive returns of 7.14% over two years and a robust 65.08% over three years, both outperforming the Sensex over these extended periods. The 10-year return of 688.68% demonstrates the exceptional wealth creation the company has delivered to long-term shareholders, with an alpha of 429.22 percentage points over the Sensex. This long-term outperformance reflects Info Edge's successful transition from a traditional recruitment advertising business to a diversified internet platform company with valuable investments in India's startup ecosystem.
From a technical perspective, the stock finds itself in a confirmed bearish trend since January 22, 2026, trading below all key moving averages. The stock trades 8.10% below its 200-day moving average of ₹1,375.27, indicating sustained selling pressure. The bearish technical setup, combined with a high beta of 1.36, suggests the stock is likely to remain volatile and potentially vulnerable to further declines if broader market sentiment deteriorates. The risk-adjusted return of -0.84 over the past year, with volatility of 29.51%, places Info Edge in the "medium risk, low return" category, an unattractive profile for most investors.
Investment Thesis: Quality Business Trapped in Valuation Prison
Info Edge presents a complex investment case that exemplifies the tension between business quality and valuation reasonableness. The company's Mojo score of 43 out of 100, resulting in a "SELL" recommendation, reflects this fundamental disconnect. The investment thesis rests on four key pillars: valuation, quality, financial trends, and technical momentum, each telling a different part of the story.
The quality assessment reveals a fundamentally sound business with several attractive characteristics. Info Edge operates with negligible debt (debt-to-EBITDA of 0.25) and maintains a net cash position (net debt-to-equity of -0.03), providing significant financial flexibility. The company has demonstrated consistent profitability with five-year sales growth of 20.48% and EBIT growth of 26.15%, reflecting its dominant position in online recruitment and real estate classifieds. Strong interest coverage of 45.02x and zero promoter pledging further underscore the quality of the business and management.
However, the "Very Expensive" valuation grade represents a critical headwind that overshadows these quality attributes. With a P/E ratio of 56x compared to an industry average of 24x, the stock trades at a premium that appears unjustified given the company's modest ROE of 5.39%. The company's valuation has remained in expensive territory since 2013, with only brief periods of relative reasonableness, suggesting the market has consistently priced in substantial future growth that may prove difficult to achieve. The current price offers limited margin of safety, particularly given the stock's high beta of 1.36 and elevated volatility.
The financial trend assessment provides some near-term optimism, with the company classified as "Positive" based on Q3 FY26 results. Net sales reached a record ₹819.41 crores, operating profit excluding other income hit a quarterly high of ₹294.36 crores, and profit before tax less other income achieved ₹257.21 crores, all representing quarterly peaks. However, this positive trend is tempered by the concerning observation that non-operating income constituted 42.17% of profit before tax in Q3 FY26, highlighting the company's dependence on investment portfolio performance rather than core business strength.
The bearish technical trend since January 22, 2026, combined with the stock trading below all major moving averages, suggests momentum has turned decidedly negative. The one-year underperformance of 33.30 percentage points versus the Sensex indicates investors are losing patience with the valuation premium, and the technical setup suggests this selling pressure may persist in the near term. For risk-averse investors, the combination of expensive valuation and bearish technicals creates an unattractive risk-reward profile.
Key Strengths & Risk Factors
✓ Key Strengths
- Market Leadership: Dominant position in online recruitment through naukri.com with strong brand equity and network effects
- Debt-Free Balance Sheet: Net cash position with negligible debt provides financial flexibility and strategic optionality
- Consistent Revenue Growth: Five-year sales CAGR of 20.48% demonstrates ability to capitalise on India's digital transformation
- Strategic Investment Portfolio: Holdings in Zomato, PolicyBazaar, and other startups provide diversification and potential upside
- Strong Institutional Support: 52.15% institutional holdings with increasing domestic mutual fund participation signals confidence
- Zero Promoter Pledging: Promoters with 37.59% stake and no pledging demonstrates strong alignment with shareholders
- Positive Financial Trend: Q3 FY26 showed record quarterly revenues and improving operating margins
⚠ Key Concerns
- Extremely Weak ROE: Return on equity of 5.39% (latest 2.70%) indicates poor capital efficiency despite minimal debt
- Anaemic ROCE: Return on capital employed of 2.80% (latest 1.99%) suggests ineffective capital deployment
- Excessive Valuation: P/E of 56x versus industry 24x leaves no margin of safety; stock classified as "Very Expensive" since 2013
- Heavy Other Income Dependence: 42.17% of PBT from non-operating income creates earnings volatility and sustainability concerns
- Severe Stock Underperformance: Down 24.78% over one year versus Sensex gain of 8.52%; alpha of -33.30%
- Bearish Technical Setup: Trading below all moving averages with confirmed bearish trend since January 2026
- High Beta Volatility: Beta of 1.36 with 29.51% volatility creates significant downside risk in market corrections
Outlook: What to Watch in Coming Quarters
Positive Catalysts
- ▲ Sustained improvement in operating margins above 36% demonstrating pricing power and operational efficiency
- ▲ Acceleration in revenue growth beyond current 13-14% YoY as white-collar hiring recovers
- ▲ Significant gains in investment portfolio, particularly from Zomato stake, boosting other income
- ▲ Market share gains in recruitment or real estate segments driving above-industry growth
- ▲ Successful monetisation of newer platforms like AmbitionBox or BigShyft adding revenue streams
Red Flags to Monitor
- ▼ Sequential revenue growth slowing below 1-2% indicating demand weakness in recruitment market
- ▼ Operating margins falling below 34% due to competitive pressure or increased marketing spend
- ▼ Continued FII selling pushing institutional ownership below 50% threshold
- ▼ Negative surprises in investment portfolio valuations leading to mark-to-market losses
- ▼ Stock breaking below ₹1,100 support level on high volumes signalling further downside
Looking ahead, Info Edge faces a critical juncture where it must demonstrate that its core business can generate returns commensurate with its premium valuation. The company's ability to maintain revenue momentum whilst expanding operating margins will be crucial in justifying investor confidence. Management's capital allocation decisions, particularly regarding the investment portfolio and potential monetisation of stakes, will also be closely scrutinised as investors seek evidence of improving returns on equity.
The broader macroeconomic environment for white-collar hiring in India will significantly influence Info Edge's near-term performance. Any slowdown in IT services hiring or broader economic uncertainty could pressure the recruitment business, whilst a robust job market recovery could provide upside to current estimates. The company's success in diversifying beyond core recruitment into adjacent areas like real estate, education, and matrimony will determine its long-term growth trajectory and ability to sustain premium valuations.
The Verdict: Quality Business at Wrong Price
Score: 43/100
For Fresh Investors: Avoid initiating positions at current levels. The combination of expensive valuation (P/E 56x), weak returns (ROE 5.39%, ROCE 2.80%), and bearish technical momentum creates an unfavourable risk-reward profile. Wait for a meaningful correction below ₹1,000 or evidence of substantial improvement in capital efficiency before considering entry.
For Existing Holders: Consider reducing positions on any technical bounce towards ₹1,200-1,250 levels. Whilst the company's quality fundamentals and market leadership remain intact, the stock has underperformed the Sensex by 33.30% over the past year, and the valuation premium appears unsustainable given current return metrics. Long-term investors with multi-year horizons may hold but should reassess if ROE fails to improve meaningfully over the next 2-3 quarters.
Fair Value Estimate: ₹950-1,000 (12-17% downside from current levels), based on normalised P/E of 45x applied to sustainable earnings excluding volatile other income, with adjustment for weak ROE profile.
Rationale: Info Edge operates a high-quality business with strong market positions, negligible debt, and consistent profitability. However, the stock's "Very Expensive" valuation, combined with weak capital efficiency metrics (ROE 5.39%, ROCE 2.80%), bearish technical trends, and significant recent underperformance, creates an asymmetric risk profile favouring caution. The company must demonstrate substantial improvement in return metrics to justify its premium valuation, and current price levels offer limited margin of safety for investors.
Note— ROCE = (EBIT - Other income) / (Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance does not guarantee future results, and all investments carry risk of loss.
