Here's why IndiaMART InterMESH tanked 10%, hit 52-wk low on Jan 22; details

Online marketing company IndiaMART InterMESH announced its December quarter (Q3FY25) results after market hours on Tuesday, which fell short of market expectations. 

 

IndiaMART InterMESH shares plummeted 9.99 per cent to hit a 52-week low of Rs 2,064.10 per share, on Wednesday, January 22, 2025. 

 

According to analysts at Nuvama, the company reported an unexpected decline in paid subscribers, with a net reduction of 3,715. The growth in collections for its standalone business remained weak at 8 per cent year-on-year, with the management forecasting less than 10 per cent growth in the upcoming quarters. 

 

Considering this, Nuvama revised its earnings per share estimates for FY25, FY26, and FY27 by +14.3 per cent, +6.2 per cent, and -1.1 per cent, respectively, citing lower sales and marketing costs that may support short-term profitability, though medium-term growth is expected to remain under pressure. 

 

Consequently, the brokerage reduced the target valuation from 30x to 22x, reflecting a lower growth outlook, and revised the target price to Rs 1,970 from the earlier Rs 2,500 while maintaining a ‘Reduce’ rating.

 

Foreign brokerage Nomura also revised its profit estimates for FY25-27 downward by 4-13 per cent, stressing that a meaningful increase in subscriber additions is essential for the stock to witness major growth. 

 

The brokerage firm now values IndiaMART’s core business at 20x FY27 forward price-to-earnings ratio, down from 30x previously, and applies a 50 per cent discount to InfoEdge’s core business, compared to the earlier 25 per cent discount. 

 

Assigning 1x book value to its recent investments, Nomura downgraded the stock from ‘Neutral’ to ‘Reduce,’ lowering its target price to Rs 1,900 from the earlier Rs 3,150. However, analysts highlighted the possibility of upside risks if subscriber additions exceed expectations, leading to improved customer collections.

 

On a more optimistic note, Motilal Oswal reaffirmed its ‘Buy’ recommendation, citing the stock's attractive valuations. However, it revised the target price downward to Rs 2,600, acknowledging ongoing challenges related to subscriber churn in silver accounts and a sluggish recovery in cash collections.

 

Despite the concerns surrounding subscriber and collection growth, IndiaMART InterMESH reported a 47.9 per cent year-on-year increase in consolidated profit at Rs 121 crore in Q3FY25 compared to Rs 81.8 crore in Q3FY24. Revenue from operations, meanwhile, surged 16.1 per cent to Rs 354.2 crore from Rs 305.2 crore in the corresponding quarter of the previous fiscal year.

 

About IndiaMART InterMESH

 

IndiaMART InterMESH Limited is India's largest online business-to-business (B2B) marketplace, facilitating connections between buyers and suppliers across various industries. Established in 1996 by Dinesh Agarwal and Brijesh Agrawal, the platform primarily caters to small and medium enterprises (SMEs), large enterprises, and individual entrepreneurs, offering them access to a wide range of products and services. 

 

Headquartered in Noida, the company offers a suite of solutions designed to support business growth, including IM Leader, IM Star, TrustSEAL, Maximiser, and IndiaMART Paid Service (MDC), among others. These services help suppliers establish a credible online presence, manage their business operations effectively, and expand their reach to potential customers. 

 

Additionally, IndiaMART develops and markets integrated business accounting software, further empowering businesses to streamline their processes and improve productivity.

 

At 10:31 AM, IndiaMART InterMESH share price was trading 6.82 per cent lower at Rs 2,136.90 per share. In comparison, BSE Sensex was trading  0.43 per cent higher at 76,166.87 levels.