IndiaMART InterMesh to debut on July 4; will it be a bumper listing?

Moneycontrol

Most analysts expect IndiaMART to list with at least 10 percent premium over its issue price given strong demand and allotment ratio

After a great response to public issue last week, IndiaMART InterMESH is set to make its debut on bourses on July 4.

The company after consultation with merchant bankers fixed final issue price at Rs 973 per share, the higher end of the price band.

The public issue, which was opened for subscription during June 24-26, was subscribed 36.21 times by receiving bids for more than 9.74 crore shares against IPO size of 26.92 lakh shares.

IndiaMART, India’s largest online B2B marketplace for business and services of mainly MSME segment, raised Rs 476 crore through public issue.

Most analysts expect IndiaMART to list with at least 10 percent premium over its issue price given strong demand and allotment ratio.

“Looking at the demand and allotment ratio we expect IndiaMART to list anywhere around 12-15 percent premium on the issue price,” Prashanth Tapse, AVP Research at Mehta Equities told Moneycontrol.

Kuber Chauhan, Research Analyst at BP Wealth also said IndiaMART being a largest online B2B marketplace for business products and services, is likely to see the listing price at around Rs 1,118.

However, not all recommend buying the scrip. At one hand, Rajnath Yadav, Research Analyst at Choice Broking said one can buy at issue price or 10 percent above issue price; on the other hand, Kuber Chauhan, Research Analyst at BP Wealth asked investors to avoid.

Here are detailed views by analysts who spoke to Moneycontrol:

Tausif Khurshid Shaikh, Research Analyst at Way2Wealth Securities

IndiaMART InterMESH might make a listing debut at around 10-12 percent premium over its issue price, having received a good response.

We advise investors’ not to hurry their buying decision as the stock may see profit booking from short-term investors. The company has recently turned profitable, and it is better to watch its performance for a few quarters to get a clear picture of its growth trajectory and financials.

Prashanth Tapse, AVP Research at Mehta Equities

Looking at the demand and allotment ratio we expect IndiaMart to list at anywhere around 12-15 percent premium.

Investors with a higher risk appetite may consider holding and wait for 3-6 months for more optimistic return on investment. If in any case, the listing is around or below Rs 1,080, one can consider this as buying level.

Astha Jain, Senior Research Analyst at Hem Securities

We are expecting a strong listing of IndiaMART with an upside of almost 12-15 percent above issue price. One should hold the stock in our view and if anyone wants to buy on the listing day then it is a good buy at around issue price or 3-4 percent above issue price.

For one year, we are expecting the stock to give 30-35 percent return as the company has enough cash and a strong balance sheet.

Rajnath Yadav, Research Analyst at Choice Broking

We expect the stock to list with 10-20 percent premium over issue price and the outlook is bright.

One should remain invested for a long term and if one wants to buy, then one can buy at issue price or 10 percent above issue price.

I expect 30 percent return from issue price over a period of one year on strong operating leverage.

Kuber Chauhan, Research Analyst at BP Wealth

We expect the listing price to be Rs 1,118. We have given an avoid rating and one shouldn’t go for it. Looking at the business model, IndiaMart depends on the third party service providers for the major portion of its operations, which can have an adverse effect due to systemic and operational disruptions.

Therefore, we believe the future growth potentials are much more important than profitability. On valuations aspect, we feel IndiaMart is quite expensive.

We have calculated the forward earnings for FY21E and we expect a fair value to buy at a discount of Rs 826 backed by immense completion and dependency on other parties.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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