IndiaMART InterMESH shares gain 96% in two months, reach all-time high; should you ‘buy’ or ‘sell’?

By: |
September 2, 2020 2:19 PM

IndiaMART InterMesh share price gained over 8.5% during Wednesday's trading session, despite a muted equity market.

The company is also India’s largest B2B classified marketplace with over 70% market share, catering to a large audience spread over 1000 cities.

IndiaMART InterMesh share price gained over 8.5% during Wednesday’s trading session, despite a muted equity market. The stock was trading at Rs 4,158 per share, which is 98% higher from where it was just two months back. The leading E-commerce company caters to the business-to-business model and has seen a rapid growth since getting listed on the stock exchanges a year ago. The recent spike in the share price, that has taken the stock up 10%, comes after IndiaMART disinvested 70% of its stake in its subsidiary Ten Times Online Private Limited.

Incorporate in 2014, Ten Time Online generated a revenue of Rs 13 crore in the year ending March 2020, translating to a 2% contribution to IndiaMAERT’s total revenue on a consolidated basis. The company is also India’s largest B2B classified marketplace with over 70% market share, catering to a large audience spread over 1000 cities. “The Company has been riding on the tailwind of digitisation of industry where SME using the digital platform itself is low for business promotion and orders,” Pritam Deuskar, Founder of Wealthyvia.com told Financial Express Online. Although the e-commerce space has heated up globally, with the entry of cash rick players, threats like amazon b2b US , Alibaba, Udaan have not been so far able to crack like Indiamart which has more ground work, according to Pritam Deuskar.

Brokerage and research firm Motilal Oswal recently initiated the coverage of IndiaMART InterMESH, calling it a play on digitizing MSMEs. The brokerage firm said that IndiaMART banks on increased digital adoption among SMEs, which constitute the majority of the sellers on the platform. “The underlying market is expected to grow at a 25% CAGR over the next five years,” it added. IndiaMART earns its revenue through monetizing listings and subscription packages. Analysts say, a subscription based model reduces the risks for the company. “Subscription model works best with multiple plans so the chance of upgrade revenue is also there. No supplier storefronts, registered buyers, average revenue generated per subscriber have been growing continuously in the last 4-5 years,” said Pritam Deuskar. 

IndiaMART has been witnessing buoyant realizations and with the classified industry still having the potential to grow, IndiaMART stands to benefit. In the near term subscriptions may fall for the company, it is expected to recoup in the coming quarters. “Company is in positive FCF and valuation for platform businesses can be different than other businesses. So in whichever way if 15% average revenue growth over a couple of years even after considering 2-3 quarters slower run rate, one may come to 85-90 Rs EPS,” added Pritam Deuskar. Although the stock has already crossed the target price set by Motilal Oswal last month, the share price continues to surge. “We foresee a near-term impact on the company, weighed by closures across the country. However, we are confident of strong fundamental growth, driven by high growth in digitization among SMEs,” Motilal Oswal said.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Brookfield REIT files papers with Sebi for IPO
2Govt cuts gas price by 25% to lowest on record
3Share markets fall 2% in the worst month since May; Sensex, Nifty close flat again on Wednesday