IndiaMART InterMESH hits fresh high, zooms 103% against issue price

Shares of IndiaMART InterMESH continued their dream run at the bourses and hit a new high on the BSE on Wednesday in an otherwise weak market. The shares now trade at more than double the value of its issue price.

The stock of India's largest online business-to-business marketplace was trading 6 per cent higher at Rs 1,971, extending its previous day’s 10 per cent rally on the BSE. It was quoting at its highest level since its listing on July 4, 2019.

The market price of IndiaMART InterMESH has appreciated 103 per cent against its issue price of Rs 973 per share. In the past one month, the stock has outperformed the frontline index and has soared 71 per cent, as against a 6 per cent rise in the benchmark S&P BSE Sensex.

The online B-2-B company posted strong set of earnings for the first quarter (April-June) of the financial year 2019-20 (Q1FY20). The company reported a consolidated net profit of Rs 32 crore, as against a net loss of Rs 56 crore during same quarter of the last fiscal.

Consolidated revenue from operations grew by 30 per cent on year on year basis to Rs 147 crore due to an increase in the number of paying subscribers as well as higher realization from existing customers. Earnings before interest, tax, depreciation and amortization (Ebitda) margin, too, more than doubled to 25 per cent from 11 per cent in previous year quarter.

"The Indian Tech space is growing and companies are turning profitable because of the impressive digital program in the country. The classifieds business model has found its feet in the Indian market. Investors are trusting the tech sector and starting to give the desired valuations to companies now," the management said after the company made bumper debut on July 4.

As on FY19, IndiaMART InterMESH had 129,589 paying subscription customers on IndiaMART platform. Suppliers on IndiaMART include: Indian SMEs and large businesses who are manufacturers, wholesalers, exporters and retailers.

Reliance Securities, however, believe that internet penetration among Indian SMEs remains low, at only 32 per cent in India in 2017, and 17 per cent of Indian SMEs used internet for business purposes. 

"In comparison, around 34 per cent of all SMEs in China were engaged in online marketing in 2015, indicating a possibly greater number engaged in e-commerce. Nonetheless, Internet penetration and mobile usage is expected to grow rapidly, driven by greater smartphone penetration and relatively affordable mobile data cost," the brokerage firm said in an IPO note.

At 10:00 am, IndiaMART InterMESH was trading 3 per cent higher at Rs 1,918 on the BSE, as against a 0.75 per cent decline in the S&P BSE Sensex. Around 10,000 shares have changed hands on the counter till the time of writing of this report.