IndiaMART Faces 5% PT Slash by Nuvama; Now at INR 2,650

Nuvama Institutional Equities has revised down the 12-month price target (PT) for Indiamart InterMESH by 5% to INR 2,650, down from INR 2,800 previously, pointing to the B2B marketplace’s slower growth in subscribers during the quarter ended March 2024.

According to a report from the brokerage, the sluggish increase in subscribers is impacting Indiamart’s overall earnings. Despite this, they have decided to maintain their ‘HOLD’ rating on the stock, highlighting the absence of any noticeable signs of improvement in subscriber growth.

Related: B2B Marketplace IndiaMART Records 78% Year-on-Year Profit Rise, INR 99.6 Cr Q4 Earnings

Interestingly, this adjustment follows shortly after the company announced a substantial 78% surge in its consolidated net profit for Q4 FY24, reaching INR 99.6 Cr compared to INR 55.8 Cr in the same period last year. Additionally, Indiamart disclosed that its consolidated customer collections for Q4 FY24 amounted to INR 484 Cr.

In the March quarter, Nuvama noted that there was a restrained increase in paid suppliers for the company, while there was still a considerable turnover of new customers in the ‘silver’ package.

It’s worth mentioning that IndiaMART provides four packages for suppliers – silver, gold, platinum, and diamond. These packages vary in price from INR 1.1 Lakh to INR 6.5 Lakh per year, with the silver option being the most affordable.

The subdued flow of paying customers has affected the startup’s knack for persuading subscribers to upgrade, shifting them from the silver package to higher tiers. Consequently, this has put a dent in the total earnings, according to Nuvama’s observations.

“Though we commend the company’s solid standing and expertise in the B2B ecommerce sector, we foresee that increased churn would limit the number of new subscribers, ultimately affecting revenue growth,” remarked the brokerage.

IndiaMART revealed that it received 24 million distinct business inquiries in the fourth quarter of the financial year 2024. The brokerage firm noted that this rise has been consistently noticeable for the past three quarters, indicating potential challenges on the buyer’s end as well. Established in 1999, IndiaMART serves as a bridge between buyers and suppliers through its online B2B marketplace. It offers buyers access to a vast array of products, totaling over 100 million, sourced from more than 7.8 million suppliers. During the March quarter of the financial year 2024, the company experienced a 17% increase in operating revenue, reaching INR 314.7 crore from INR 268.8 crore in the same period of the previous fiscal year.

In the entirety of the financial year 2024, IndiaMART’s combined net profit surged by 18% to INR 334 crore from INR 283.8 crore in the preceding fiscal year. The operating revenue for the fiscal year 2024 stood at INR 1,196.8 crore, marking a growth of over 21% compared to INR 985.4 crore in the fiscal year 2023.

Nuvama Institutional Equities revised down the 12-month price target for Indiamart InterMESH due to a slower growth in subscribers, impacting the company’s earnings. Despite this, the brokerage maintained a ‘HOLD’ rating on the stock. Indiamart reported a substantial 78% surge in consolidated net profit for Q4 FY24, reaching INR 99.6 Cr. However, Nuvama observed challenges in attracting paying customers to upgrade, affecting the company’s earnings. Additionally, IndiaMART’s consistent rise in business inquiries presents potential challenges in the B2B marketplace. Amidst this, the company showed a positive 21% growth in operating revenue for the fiscal year 2024, reaching INR 1,196.8 crore.