Nuvama Slashes IndiaMART’s PT By 5% To INR 2,650 On Subdued Subscriber Addition

Nuvama Institutional Equities has cut the 12-month price target (PT) for IndiaMART InterMESH by 5% to INR 2,650 from INR 2,800 earlier, citing the B2B marketplace’s subdued subscriber addition during the quarter ended March 2024.

In a report, the brokerage said that IndiaMART’s slowing subscriber additions are affecting its collections. It maintained its ‘HOLD’ rating on the stock, saying there are no signs of recovery in subscriber additions.

This comes a day after the startup reported an over 78% increase in its consolidated net profit in Q4 FY24 at INR 99.6 Cr from INR 55.8 Cr in the year-ago quarter. IndiaMART said its consolidated collections from customers for Q4 FY24 stood at INR 484 Cr.

Nuvama said that paid supplier addition for the company remained subdued in the March quarter, while the churn of new consumers in its ‘silver’ package continued to be elevated. 

It is pertinent to note that IndiaMART offers four packages to suppliers – silver, gold, platinum, and diamond. These packages range from INR 1.1 Lakh to INR 6.5 Lakh per annum, with the silver package being the lowest priced. 

The muted churn of paid subscribers has impacted the startup’s upselling ability, that is converting paid subscribers from silver package to above. Thus, it has impacted the overall collection, Nuvama observed. 

“While we appreciate the company’s strong position and leadership in the B2B ecommerce marketplace, we believe that elevated churn would keep subscriber addition counts lower, thereby impacting collection/revenue growth,” the brokerage said.  

IndiaMART said it registered 24 Mn unique business enquiries in Q4 FY24. On this, the brokerage said the increase has been broadly consistent over the past three quarters. “This suggests potential challenges on the buyer’s side as well.” 

Founded in 1999, IndiaMART connects buyers with suppliers via its online B2B marketplace. It lets buyers search from over 10 Cr products from over 78 Lakh suppliers.

The company saw its operating revenue rise 17% to INR 314.7 Cr in the March quarter of FY24 from INR 268.8 in Q4 FY23. 

For the full FY24, IndiaMART’s consolidated net profit grew 18% to INR 334 Cr from INR 283.8 Cr in FY23. Operating revenue stood at INR 1,196.8 Cr in FY24, an over 21% increase from INR 985.4 Cr in FY23.