IndiaMART InterMESH Ltd. share price target

In Q2FY24, IndiaMart added ~2K (net adds.) paying subscribers (~4.7K in Q1FY24). This was significantly lower than expectations (I-Sec est.: 5.5K) and management outlook shared in Q1FY24 conference call. The shortfall was attributed to muted gross additions in response to price hikes taken in May’23.

Recommendation: We recommend a BUY with TP of Rs. 3,430/share, implying an upside of 11% from the CMP.

Quarterly Update Q1FY24

Given the company's strong growth potential backed by a robust product profile with leading market share and superior execution capabilities, we maintain our BUY recommendation on the stock

IndiaMART’s strong revenue growth trajectory was maintained in Q1FY24 with ~26% YoY revenue growth. However, new subscriber addition was significantly lower than expectations (4,993 vs I-Sec. est. of 8,000). Our channel checks indicate >10% price increases were taken in base packages (price sensitive) mid-Q1FY24.

IndiaMART’s Q4FY23 revenue growth was driven by a combination of increasing
ARPU (led by mix improvement) and paying subscribers (increasing penetration). Management also indicated robust renewals in the premium subscriber segments and sounded confident (more than earlier) of continued strong growth in FY24 (addition of 8k-9k paying suppliers expected per quarter).

IndiaMART’s Q4FY23 revenue growth was driven by a combination of increasing
ARPU (led by mix improvement) and paying subscribers (increasing penetration). Management also indicated robust renewals in the premium subscriber segments and sounded confident (more than earlier) of continued strong growth in FY24 (addition of 8k-9k paying suppliers expected per quarter).

Company Outlook & Guidance: Employee cost to moderate going ahead which will help the company in improving its operating margins profile. The outlook on revenue growth momentum still remains strong.

Quarterly Update Q4FY23

Given the company's strong growth potential backed by a robust product profile with leading market share and superior execution capabilities, we maintain our BUY recommendation on the stock.