B2B platforms provide India's large MSME players a better alternative to traditional channels for connecting with buyers and sellers.
Insurance space could also be he helped by the pandemic which is expected to drive up the opportunity in protection.
Classified search company Just Dial has seen its share price skyrocket 65% in the last nine trading sessions to now sit at Rs 671 per share. However, this small cap company might not have run out of steam even after such a run up in the stock price. Just Dial, recently showcased its business-to-business (B2B) specific offering called the JD Mart, which will be independent of its current business. With JD Mart, the company will look to enter B2B classified space and compete with IndiaMART. The world of internet advertising has scaled to new heights in recent years with the advent of cheaper internet prices in India.
In a recent note, global brokerage and research firm UBS said that JD Mart, aided by interactive content, appears superior to competing platforms and offers significant depth. “We believe JD will leverage its existing platform that attracts 140m quarterly unique users and has 100,000 paid B2B subscribers to upsell JD Mart. JD’s core strength is its large sales force (9,000), which should help monetize JD Mart,” UBS said. The brokerage firm has increased its target price for Just Dial from Rs 640 per share to Rs 800 apiece now.
B2B platforms provide India’s large MSME players a better alternative to traditional channels for connecting with buyers and sellers. Using these channels that link sellers to buyers, MSMEs save on commission payable to distributor/trade agents and the cost of working capital. “While IndiaMART is the leader with 150,000 paid subscribers and US$90m in revenue in the previous fiscal year, this is a fraction of the number of MSMEs in India. Given room for growth, we think two or more B2B platforms can co-exist,” UBS noted.
Domestic brokerage JM Financial said that while JD Mart is yet to finalise the supplier package pricing, the platform will operate on a ‘freemium’ business model. Pre-Covid, B2B suppliers accounted for around 100,000 paid campaigns of Just Dial. Of the Rs 950 crore that Just Dial reported as revenue in the previous financial year B2B focussed paid campaigns contributed around Rs 200 crore.
Currently Just Dial trades at 13x FY22E PE compared to 60x for IndiaMART indicating the market is ignoring JD Mart’s potential to become a relevant B2B platform, analysts at UBS said.