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On the final day, the IPO was oversubscribed almost 36 times
The general election is finally over and the companies are back in action to raise funds from the capital market. Earlier this week, during the final day of its issue, IndiaMART InterMesh saw an extremely warm response from investors.
According to NSE, on its third day, the IPO was oversubscribed almost 36 times and received bits of 9,66,86,235 equity shares on the final day. The total issue size was 26,92,824 equity shares. As the issue is an OFS, IndiaMART will not receive any proceeds from it.
With the IPO, the company planned to raise around INR 475 crore. The lower band on stocks exchange was at INR 970 per piece and upper band INR Rs 973 per piece.
According to reports, IndiaMART was the second most successful IPO in 2019 and here are the five reasons why IndiaMART IPO could break the ceilings.
The Industry
As per a KPMG report, the digital classifieds market has recorded growth at a CAGR of 29.5 per cent between FY2017 to FY2022, which is mainly driven by the B2B segment along with real estate and automobiles. On the other side, the B2B segment is estimated to touch INR 11.9 billion by FY2022.
“This market size only consists of revenues from online B2B classified websites, which are involved in the listing, discovery and matchmaking of businesses on their platform. However, given the large market of online search in India, the same also represents a large potentially addressable market for online B2B classified platforms,” the report added.
The Company
Started by Dinesh Agarwal with a seed capital of merely INR 40,000 in the year 1999, IndiaMART today is the largest B2B marketplace operating mainly in the MSME space.
As of March 31 2019, IndiaMART recorded 82.70 million registered buyers who have access to 5.55 million suppliers in India. These suppliers list over 60 million products and services across 54 industries. Furthermore, the company has around 1,30,000 customers using its paid services and has clocked in a revenue of INR 507 crore in FY 2019.
ICICI Securities’ Research Analyst Devang Bhatt and Deepti Tayal, in their report, say strong brand recognition and market position creates the following positive effects of a strong network and creating community effects through large numbers of product and service listings on its marketplace.
“IndiaMART’s vast and vibrant network of buyers and suppliers allows it to act as an enabler of scale in the Indian B2B e-commerce sector,” the duo added.
The Target Audience
Presently, there are over 51 million MSMEs in the country and of which, KPMG notes that 10 million are digital ready. As the number is bound to increase, IndiaMART is likely to expand its customer base and register more users.
“Benefits of online listing like enabling access to a customer base beyond local market/ reach and better information on competitors and their offerings may drive the online classifieds demands,” the KPMG report noted.
The Digital First Outlook
IndiaMART’s mobile website and app accounts for more than 70 per cent of its total traffic and the company witnessed more than 396 million in FY2018.
SMC in its reports points out that IndiaMART plans to continue its investment in its mobile platforms by further developing and integrating lead management system applications, user interface and notifications, customer services provided through instant messaging, GPS location capabilities, voice search technologies and other personalization features in its IndiaMART app.
IndiaMART also optimizes data analytics and artificial intelligence to understand the behaviour of suppliers and buyers on its marketplace for improved user experience.