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IndiaMart Intermesh shares rally 5% post Q4 results; here are new target prices
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
Brokerage Nuvama has slashed its target multiple from 40 times to 35 times given the company’s lower growth profile. It has maintained a ‘hold’ rating with a revised target price of ₹2,650 per share from ₹2,800 apiece earlier.
Shares of IndiaMart Intermesh Ltd. zoomed 5% in Thursday’s trading session even as domestic brokerage firm Nuvama Institutional Equities cut its earnings estimates for FY25 and FY26 by -3.7% and -2.9%, respectively, to factor in lower growth post the March quarter results.
Nuvama has also slashed its target multiple from 40 times to 35 times given the company’s lower growth profile. The brokerage has maintained a ‘hold’ rating with a revised target price of ₹2,650 per share from ₹2,800 apiece earlier.
IndiaMart’s consolidated net profit jumped 79% year-on-year to ₹99.6 crore in the fourth quarter of financial year 2024, compared to ₹55.8 crore in the same period last fiscal.
In a quarter that is typically slow for the e-commerce sector, the company’s revenue rose 17% to ₹315 crore from ₹269 crore in the year-ago period. This includes Indiamart’s standalone revenue of ₹299 core and its subsidiary Busy Infotech’s revenue of ₹14 crore, registering a growth of 17% and 24%, respectively, on a YoY basis.
Nuvama in its report said that IndiaMart has delivered consistent growth since Covid-19, with a mix of volume and higher realisation. However, over the last three quarters, this growth has largely been driven by higher realisation.
The management expects paid supplier growth to bounce back to 5,000–6,000 quarterly additions in the coming quarters.
IndiaMart’s paid subscriber addition witnessed an uptick and stood at 2,683. Slowing subscriber addition is affecting collections, according to Nuvama.
The brokerage said that paid supplier addition continues to remain subdued as churn in the silver category remains elevated.
“While we appreciate the company’s strong position and leadership in the B2B e-commerce marketplace, we believe that elevated churn would keep subscriber addition counts lower, thereby impacting collection/revenue growth,” it noted.
The stock rose despite mixed management commentary. On the question related to the company getting back to 5,000-6,000 customer additions per quarter, IndiaMART CEO Dinesh Agarwal says, “We have been trying, can only say we’re trying”.
For the entire year, Agarwal said he’s trying to target upwards of 20% growth in the collections, and that should reflect in the revenue going forward, maybe after two quarters.
“For the entire year and actually targeting about 20,000,” he said in an interaction with CNBC-TV18.
On Thursday, the stock was trading 3.85% higher at ₹2,745.80 apiece on the NSE. The stock has almost given flat returns on a year-to-date basis.
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