IndiaMart InterMesh, which operates Indiamart.com online listing platform for small and medium businesses in India, is offering shares to the public through its ₹475 crore IPO, which opened for subscription on Monday. The issue would close on June 26. IndiaMart has fixed a price band of ₹970–973 per share for the IPO, which consists of sale of up to 48,87,862 equity shares. At the upper end of the price band, the offer is expected to raise about ₹475 crore. IndiaMart becomes the first company to test the IPO market in the Modi government’s second tenure.
As of 11 am on Day 2, IndiaMart issue was subscribed 55%, according to NSE data.
IndiaMart will not receive any proceeds from the issue. Promoters Dinesh Chandra Agarwal and Brijesh Kumar Agrawal will sell 14,30,109 shares through the issue. Post the IPO, IndiaMart’s promoters holding will fall to 53%, from 58% earlier. Other big investors Intel Capital (Mauritius), Amadeus IV DPF and Accion Frontier Inclusion Mauritius will also offload some of their holdings through this issue.
IndiaMart said on Friday that it has raised more than ₹213 crore from 15 anchor investors by allotting 21,95,038 equity shares at a price of ₹973, the upper band of its IPO. Several mutual funds like ICICI Mutual Fund, HDFC Mutual Fund, SBI Mutual Fund, and Birla Mutual Fund are among the 15 anchor investors.
ICICI Securities, Edelweiss Financial Services and Jefferies India are the book running lead manager to the offer.
IndiaMart IPO lot size
The lot size or minimum order quantity is 15 shares or and in multiples thereafter.
IndiaMart IPO listing and registrar
The equity shares of IndiaMart will be listed on the BSE and the National Stock Exchange. Link Intime India Private Limited is the registrar for the issue.
The maximum number of retail individual investors who can be allotted the minimum bid lot is computed by dividing the total number of equity shares available for allotment to retail individual investors by the minimum bid lot, according to the IndiaMart’s offer document. 10% of the net offer, or 487,786 equity shares, is available for allocation to retail individual investors. Under the retail category, investors can invest up to ₹2 lakh in IndiaMart IPO.
IndiaMart - Company profile and financials
According to KPMG, IndiaMart is India’s largest online B2B marketplace for business products and services with approximately 60% market share of the online B2B classifieds space in India in fiscal 2017. Its online marketplace provides a platform for business buyers to discover products and services and contact the suppliers of such business products and services.
As of March 31, 2018, IndiaMart had 59.81 million registered buyers. According to KPMG, the growth in internet penetration across India is helping companies move their businesses online and reach out to a larger customer base.
IndiaMart earns revenue primarily through the sale of subscription packages (available on a monthly, annual and multiyear basis) to suppliers. It also earns revenue through advertising on its desktop, mobile and app platforms. IndiaMart’s revenue registered a 29% CAGR over FY2014-19 to ₹507 crore while it reported a net profit of ₹20 crore in FY19, according to a note from Angel Broking. Number of paid subscription suppliers grew at a healthy CAGR of 21% over FY2016-19 to 1,30,000 and the company is well diversified across industries and geographies and categories, the note added.
Key risks include general slowdown for the types of products and subscription listed by supppliers on IndiaMart market place and higher competitive intensity.
What brokerages say
Angel Broking has a “neutral" rating on the issue, citing valuation as well as increasing competition intensity in the space. “At the upper end of the price band, IndiaMart demands PE multiple of 33x of FY19 EPS," the brokerage said in a note.
Apart from the presence of a large player like Google, “over the last 4-5 years, a couple of new ventures have come up in the online marketplace space like Ninjacart (connects farmers to retailers), Power2SME (an online wholesale raw material buying platform for SMEs) and recently entered Udan. We believe IndiaMart will face competition in the respective fields where these have presence," the brokerage said in a note.
Canara Securities has a 'subscribe' rating on the issue. "IndiaMart has robust two-way business model and derives subscription based revenue from paid suppliers. We believe that the company is well positioned in the growing B2B digital platform business with unique business model and strong client base. One may subscribe for listing gains," the brokerage said in a note.