Nuvama Institutional Equities has adjusted the 12-month price target (PT) for IndiaMart InterMESH downward by 5% to INR 2,650 from its previous INR 2,800, attributing the change to the B2B marketplace’s subdued subscriber growth in the quarter that ended March 2024.
In its report, the brokerage highlighted that IndiaMART’s decelerating subscriber growth is impacting its revenue collections. It upheld its ‘HOLD’ rating on the stock, emphasizing the absence of indications for a rebound in subscriber acquisitions.
This comes after the company announced that its consolidated net profit increased by more than 78% to INR 99.6 Cr in Q4 FY24 from INR 55.8 Cr in the same period the previous year. According to IndiaMART, its total customer collections for Q4 of FY24 were INR 484 Cr.
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Nuvama noted that the company’s paid supplier additions remained restrained in the March quarter, with a persistently high turnover rate among new consumers in its ‘silver’ package.
It’s worth mentioning that IndiaMART provides four packages to suppliers – silver, gold, platinum, and diamond. These packages vary in price from INR 1.1 Lakh to INR 6.5 Lakh per annum, with the silver package being the most affordable option.
The subdued turnover of paid subscribers has hindered the startup’s capacity for upselling, specifically in converting paid subscribers from the silver package to higher tiers. Consequently, Nuvama noted, this has had an impact on the overall collections.
The brokerage stated, “Although we recognise the company’s leadership and strong position in the B2B ecommerce market, we think that high churn would keep subscriber addition counts low, thus impacting collection/revenue growth.”
IndiaMART reported 24 million unique business enquiries in Q4 FY24. Commenting on this, the brokerage noted that this growth has been largely consistent over the past three quarters, implying potential challenges on the buyer’s end as well.
Established in 1999, IndiaMART facilitates connections between buyers and suppliers through its online B2B marketplace. It enables buyers to explore a selection of over 10 crore products offered by more than 78 lakh suppliers.
The company witnessed a 17% increase in operating revenue, reaching INR 314.7 Cr in the March quarter of FY24, up from INR 268.8 Cr in Q4 FY23.
In FY24, IndiaMART recorded a consolidated net profit growth of 18%, reaching INR 334 Cr compared to INR 283.8 Cr in FY23. Operating revenue for FY24 stood at INR 1,196.8 Cr, marking a growth of over 21% from INR 985.4 Cr in FY23.
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