IndiaMart Intermesh made a blockbuster debut on the exchanges on Thursday, as the shares listed at a 21% premium to issue price. IndiaMart Intermesh which operates Indiamart.com online listing platform for small and medium businesses in India, listed at Rs 1,180 on BSE, implying a premium of 21.27% as compared to its issue price of Rs 973. IndiaMart Intermesh IPO which opened for subscription during June 24-26, recived a stellar response and was subscribed 36.21 times, receiving bids for more than 9.74 crore shares against issue size of 26.92 lakh shares. Notbly, the firm is India’s largest online B2B marketplace for business and services of mainly MSME segment. Through the public offer, IndiaMart Intermesh raised Rs 476 crore.
IndiaMart had fixed a price band of Rs 970-973 per equity share for the IPO. The public offer consisted of sale of up to 48,87,862 equity shares. Notably, this is the first IPO after Narendra Modi-led government won the LOk Sabha polls for the second time in July this year. Since the IPO was structured as an offer for sale by the promoters, IndiaMart will not receive any proceeds from the issue. Promoters Dinesh Chandra Agarwal and Brijesh Kumar Agrawal have successfully sold 14,30,109 shares through the issue. Post the IPO, IndiaMart’s promoters holding will fall to 53%, from 58% earlier. Other big investors Intel Capital (Mauritius), Amadeus IV DPF and Accion Frontier Inclusion Mauritius also offloaded their stake partly, as a part of the public offer.
As of March 31, 2018, IndiaMart had 59.81 million registered buyers. According to consulting giant KPMG, the growth in internet penetration across India is helping companies move their businesses online and reach out to a larger customer base. IndiaMart earns revenue primarily through the sale of subscription packages (available on a monthly, annual and multiyear basis) to suppliers.
“Based on FY20E and FY21E EPS, the stock is valued at a P/E multiple of 35.1 times and 25.9 times, respectively, which again is at a premium to the peer average of 21.5 times and 15.3 times. But considering the growth outlook coupled with dominant market position and expected benefit from the operating leverage, we feel that the future benefits outweigh the target share price derived from various traditional valuation multiples,” Choince Broking had noted in its IPO note.