IndiaMART InterMESH shares surge 9.5% on Q3 earnings beat but some brokerages cut target; here’s what they say

  • IndiaMART InterMESH share price jumped 9.5% on Friday's session following the release of IndiaMART InterMESH Q3 earnings that met Street forecasts.

Dhanya Nagasundaram
Published19 Jan 2024, 01:09 PM IST
IndiaMART InterMESH share price today opened at  <span class='webrupee'>₹</span>2,515 apiece on BSE. IndiaMART InterMESH stock price touched an intraday high of  <span class='webrupee'>₹</span>2706.45 and an intraday low of  <span class='webrupee'>₹</span>2,500.05.
IndiaMART InterMESH share price today opened at ₹2,515 apiece on BSE. IndiaMART InterMESH stock price touched an intraday high of ₹2706.45 and an intraday low of ₹2,500.05.

IndiaMART InterMESH share news: IndiaMART InterMESH share price jumped 9.5% on Friday's session following the release of IndiaMART InterMESH Q3 earnings that met Street forecasts. IndiaMART InterMESH share price today opened at 2,515 apiece on BSE. IndiaMART InterMESH stock price touched an intraday high of 2706.45 and an intraday low of 2,500.05.

According to Rajesh Bhosale, Equity Technical and Derivative Analyst, Angel One, IndiaMART InterMESH stock prices have seen volatile moves in the last two sessions. Yesterday it was under pressure, however, today it has strongly bounced back, recovering from the last two sessions of losing ground. 

"Considering the volatility, one can skip this counter and wait for stability before taking the next trading step. In the event of a further bounce, 2,800 would be the next resistance, whereas any dip towards 2500 may attract support," advised Bhosale. 

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IndiaMART reported a consolidated revenue from operations of 305 crore in the quarter ended December (Q3FY24), up 21% from 251 crore in the same period the previous year, according to the company's filing. The net profit for the quarter was 82 crore, or a 24% margin.

Deferred revenue as of December 31, 2023, jumped to 1,270 crore, marking a YoY gain of 25%, while the company's customer collections climbed to 332 crore for the quarter.

“We are pleased to report modest growth in revenue, deferred revenue, and healthy operating margins in the third quarter. We continue to focus on enhancing customer experience on our platform and drive deeper penetration of paying customers across cities, enabling businesses to grow online. We remain confident of sustained profitable growth and cash flows as we leverage market opportunities amidst increasing digital adoption by businesses,” said Dinesh Agarwal, Chief Executive Officer in the company's exchange filing.

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Here's what the brokerages say 

Nuvama Institutional Equities

According to broker Nuvama Institutional Equities, IndiaMART recorded 21.4% on-year standalone revenue growth, led by a 9% rise in paying subscriptions and an 11% improvement in annualised revenue per user (ARPU).

The margin, which was 28.1%, exceeded Street's prediction of 27.6%. At 1,826 paid subscribers, the growth is still somewhat slow. The brokerage estimates that after growing at a rate of more than 25% each quarter for the previous four quarters, collections growth significantly slowed down to 17% in Q3FY24.

“Finally slowing subscriber addition began to catch down with collection growth. We believe consistent higher churn and lower unique business enquiries would lead to slower growth in coming quarters. All in all, we are revising FY24E/25E/26E EPS by +5.7%/- 0.8%/-6.9% to factor in lower growth. Maintain ‘HOLD’ with a revised target price of 2,800 (earlier 2,930) at 40x PE,” the brokerage said.

The brokerage believes that the firm has difficult days ahead. Higher realisation has been the main driver of growth over the last three quarters. Prices started to "catch down" as they were consistently raised, which increased turnover overall and especially among Silver customers.

Furthermore, there is still cause for considerable worry regarding the steadily decreasing increase in buyer-side indicators like Registered Buyers, Unique Business Enquiries, and Business Enquiries Delivered, which need a significant course correction.

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JM Financial

For the third straight quarter, IndiaMART's paid subscriber addition trends were unsatisfactory, with 1.8k QoQ, according to brokerage JM Financial. Subscription growth was further hindered by price increases (in mid-May) and unusually high churn rates in the Silver category.

Additionally, the trend in collections slowed to 17% YoY (-1.5% QoQ) from 27% YoY in 1HFY24, resulting in a 4.6% miss on JMFe. Fortunately, there was a robust realisation trend once more, particularly for the top 10% of subscribers. Due to significant operating leverage, the consolidated EBITDA margin also increased 90bps QoQ.

“While we trim our PAT estimates over FY24-26 by 1.6%-4.6% due to lower topline assumptions, we believe the company can deliver 24% EBITDA CAGR, supported by topline growth of c.20% and margin expansion. We continue to value IndiaMART on DCF and roll forward to Mar’25 for a revised target price of 3,150 from 3,300,” the brokerage said. 

Also Read: UltraTech Cement Q3 Result Preview: Lower costs, better realizations to aid profitability improvement, earnings

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.

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First Published:19 Jan 2024, 01:09 PM IST

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