The brokerage said that even as the company reported in-line Q2 results, subscriber growth remains weak, leading to a moderation in collections growth to just 5% year-on-year, a key negative from the quarter. The broker forecasts collections growth to range between 10-15% unless subscriber additions improve. The firm has also cut its estimates by 4-12%, citing a continued rise in subscriber churn despite multiple management interventions, which has been a negative surprise.
Meanwhile, another foreign broker maintained a 'neutral' stance with a target price of Rs 3,150, pointing to weak collections and low subscriber additions as major factors dampening near-term prospects. The brokerage highlighted that, unlike previous trends, weak collection per customer growth is now coinciding with consistently low subscriber additions, averaging around 2,000 per quarter over the last five periods.
On a standalone basis, IndiaMART InterMESH's revenue from operations increased to Rs 332 crore as compared to Rs 281 crore last year, representing a YoY growth of 18%. The growth was primarily driven by around 14% improvement in realization from paying suppliers and the remaining by increase in number of paying suppliers.
Collections from customer grew to Rs 337 crore for the quarter (+5% YoY) and deferred revenue as on 30 September 2024 increased to Rs 1,426 crore (+18% YoY). EBITDA for the quarter was at Rs 120 crore (+48% YoY), representing margin of 36% (vs. 29% last year). Net profit for the quarter was at Rs 127 crore (+53% YoY), representing margin of 32% (vs. 26% last year).
IndiaMART registered Unique business enquiries of 28 million in Q2FY25, representing a YoY growth of 14%. Supplier Storefronts grew to 8 million, an increase of 5% YoY and paying suppliers grew to 218K representing net addition of 2.4K subscribers during the quarter.
Commenting on the performance, Dinesh Agarwal, chief executive officer, said: "We have closed the second quarter with healthy growth in revenue and operating margins along with modest growth in deferred revenue and cash flows. We stay committed to the vision of “Make Doing Business Easy” and enable businesses to grow online. We continue to focus on improving the experience of buyers as well as suppliers and strengthen our value proposition further. On the back of healthy cash flows and increasing internet adoption by businesses, we stay confident of the sustained profitable growth for the times to come."
IndiaMART is India's largest online B2B marketplace for business products and services. IndiaMART makes it easier to do business by connecting buyers and sellers across product categories and geographies in India through business enablement solutions. 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.