3 reasons why Axis Securities slashed IndiaMART Intermesh target price

IndiaMART Intermesh outlook: Analysts remain optimistic about the broader digital B2B marketplace opportunity and believes IndiaMART is well-placed to sustain growth as MSME digitisation deepens.

Domestic brokerage Axis Securities has cut its target price on online marketing company IndiaMART Intermesh stock to ₹2,530 per share from ₹2,800, reflecting near-term headwinds in profitability despite steady revenue growth and stable operational performance. The brokerage has maintained its ‘Hold’ rating on the stock, citing margin pressures driven by higher advertising spends and elevated customer churn, even as the company continues to invest in platform enhancement and AI-led initiatives.

 

“We value the stock at 21x P/E multiple to its FY27E earnings to arrive at a target price of ₹2,530/share, implying an upside of 8 per cent from the CMP. We continue to maintain our ‘Hold’ rating on the stock,” wrote Kuber Chauhan and Abhishek Bhalotia of Axis Securities in a note.

Subdued Q2 show

 

For the quarter ended September 2025 (Q2FY26), IndiaMART reported revenue of ₹391 crore, up 12.5 per cent year-on-year (Y-o-Y) and 5.1 per cent quarter-on-quarter (Q-o-Q), in line with analysts’ estimates. 

 

However, profitability missed projections due to higher operating expenses. Ebitda came in at ₹130 crore, down 3.6 per cent Y-o-Y, with margins contracting 554 basis points (bps) to 33.2 per cent. Ebit declined 3.1 per cent Y-o-Y to ₹123 crore, while net income fell sharply by 38.8 per cent Y-o-Y to ₹83 crore, hit by mark-to-market losses in treasury investments.

 

Following the results, analysts at Axis Securities revised its FY26E and FY27E forecasts marginally downward – revenue by 0.1 per cent and 0.4 per cent, Ebit by 1.4 per cent and 0.6 per cent, and PAT by 10.3 per cent and 0.5 per cent, respectively – to account for sustained margin pressure. The stock now trades at 21x FY27E P/E, down from 25x earlier.  ALSO READ | Nuvama retains 'Buy' on Sunteck Realty, trims target to ₹531 on MMR caution

Three reasons behind the target cut:

 

First, IndiaMART’s higher advertisement spending continues to weigh on profitability. The company has allocated ₹6-10 crore per quarter toward marketing to boost platform visibility, drive unique business inquiries, and enhance buyer-seller engagement. While these efforts support long-term growth, they are expected to keep costs elevated and margins subdued in the near term. In Q2, performance marketing spend of ₹6 crore contributed significantly to the 12 per cent Y-o-Y rise in unique business inquiries.

 

Second, persistent customer churn and retention challenges among silver-tier subscribers remain a key concern. The churn rate stands at 7 per cent for monthly and 4 per cent for annual silver members, while retention is much stronger for gold and platinum subscribers. Management expects improvement only after a few quarters, as the company works to enhance lead quality, address non-local inquiries, and refine customer engagement.

 

Third, while AI and automation initiatives are underway, their monetisation potential remains limited at this stage. IndiaMART is using generative AI for audit and classification improvements, leveraging proprietary buyer-seller data to improve operational efficiency. However, revenue contributions from these technological investments in the B2B space are yet to materialise meaningfully.

Operational highlights

 

IndiaMART continued to expand its supplier base, adding 3,951 new suppliers during the quarter, including a one-time benefit of 1,200 additions following process simplification. Subsidiary Busy Infotech reported billings of ₹38 crore, up 57 per cent Y-o-Y, and sold 12,000 new licences during the quarter. The company also implemented a long-pending price hike for its Silver plan, which could temporarily impact gross additions over the next few quarters.

 

Average Revenue Per User (ARPU) has historically grown at a 7–8 per cent CAGR, and management expects this trend to sustain at 6–8 per cent in the coming quarters. The company reaffirmed its long-term Ebitda margin guidance of 30–35 per cent, with sustainable margins expected to stabilise in the 30–33 per cent range through improved retention and focused sales efforts.

Indiamart Intermesh outlook

 

Analysts at Axis Securities remains optimistic about the broader digital B2B marketplace opportunity and believes IndiaMART is well-placed to sustain growth as MSME digitisation deepens. However, near-term earnings will likely remain constrained by high ad spends, retention costs, and limited AI-driven monetisation.