IndiaMART hits over 3-month low

Indiamart

Shares of IndiaMART InterMESH hit an over three-month low at Rs 7,220, which is a dip of 6.6 per cent on the Bombay Stock Exchange in intra-day trade today. The stock has declined 18 per cent in three days due to the announcement of its March quarter (Q4FY21) results on Thursday, April 29. The stock was trading at its lowest level since January 7.

It is India’s largest online B2B marketplace for business products and services. IndiaMART’s consolidated net profit during the quarter decreased 31 per cent to Rs 56 crore over the December quarter (Q3FY21). Total income was fall 4 per cent quarter on quarter (QoQ) at Rs 190 crore as compared to Rs 198 crore in the last quarter. Earnings before interest, taxes, depreciation and amortization (Ebitda) margins shrank 300 basis points (bps) QoQ to 48 per cent due to an increase in manpower and outsourced sales cost.

According to analysts at HDFC Securities, “In Q4FY21, the company’s business enquiries were down 2.6 per cent QoQ but business enquiries per paying supplier were up 27 per cent year-on-year (YoY). They also noted that the paying supplier net addition was around 4,000 versus the target of around 5,000 quarterly addition; the churn rate increased in platinum packages due to the pandemic,”
Despite weak performance in Q4FY21, the brokerage has a positive view on IndiaMART based on strong scalability in the business (+22 per cent revenue CAGR over FY21-24E), robust network effect leading to 28/23/32 per cent YoY increase in traffic/registered buyers/business enquiries on the platform.

The company has a multi-year growth opportunity as only around 1.2 per cent of the addressable MSMEs pay for listing services, superior execution capabilities with continued margin expansion over the past four years (doubled in FY21), an asset-light business model with embedded non-linearity, and 100 per cent organic traffic leading to negligible spends on advertising, the brokerage firm added.