IndiaMART InterMESH hits 52-week low; stock slips 43% in six months

Like the preceding quarter, Q1FY23 will also see high costs and margins will be impacted before improving gradually, said analysts.

Shares of IndiaMART InterMESH hit a 52-week low of Rs 3,751, down 2 per cent on the BSE in Monday’s trade on concerns of weak earnings. The stock has fallen below its previous low of Rs 3,790.90 touched on June 30, 2020. In the past six months, it has slipped 43 per cent, as compared to a 11 per cent decline in the S&P BSE Sensex.

IndiaMART InterMESH had bought back 160,000 equity shares of the company from its existing shareholders, through tender offer route at Rs 6,250 per equity share. The buyback had opened on June 2, 2022 and closed on June 15, 2022. The company had utilized Rs 100 crore for the buyback.

IndiaMART is India's largest online B2B marketplace for business products and services. IndiaMART provides ease and convenience to the buyers by offering a wide assortment of products and a responsive seller base while offering lead generation, lead management and payment solutions to its sellers.

IndiaMART ended fiscal 2021-22 (FY22) with 40.9 per cent margins vs 49 per cent in FY21 as it significantly expanded sales and the customer-services team by around 722 in H2FY22. The margin declined primarily due to investments being made for growth in manpower as well as sales and distribution which has resulted into increased customer addition.

Meanwhile, for the fourth quarter ended March of FY22 (Q4FY22) IndiaMART reported a 12 per cent year on year (YoY) growth in consolidated total revenue from operations of Rs 201 crore primarily driven by 11 per cent YoY increase in number of paying subscription suppliers and marginal improvement in realization from existing customers. Ebitda margin for Q4 FY22 stood at 28 per cent as compared to 48 per cent for Q4 FY21. Net profit grew 3 per cent YoY, down 18 per cent sequentially at Rs 57 crore.

After adding 13,000 (net) paying suppliers in Q4FY22, IndiaMart has seen strong traction in subscriber additions and guided to add 8,000-9,000 paying suppliers a quarter in FY23 (earlier, 5,000-6,000). The churn rate has stabilised at pre-Covid levels. Like Q4FY22, the next quarter (Q1 FY23) will see high costs and margins will be impacted, then gradually improve, analysts at Anand Rathi Share and Stock Broker said in a company update.

However, the brokerage firm maintains its positive stance based on greater assurance, given growth in deferred revenue (reported 25 per cent YoY in FY22); strong cash collections (reported 32 per cent YoY growth in FY22); gradual economic recovery leading to better business conditions and healthy, around Rs 2,000 crore, cash reserves.