According to media reports, Udaan did revenue of ₹65 crore and incurred a loss of ₹60 crore in FY18
India-MART InterMESH has doubled from its IPO price, but higher valuations for a rival web platform could see the shares of the NCR-based company soar.
Udaan, another ecommerce platform for businesses, successfully raised capital at a much higher valuation recently, and that could become a benchmark for entities with similar revenue streams.
A three-year-old startup, Udaan raised $585 million, valuing itself at about $2.8 billion. IndiaMART, which is more established, has revenue almost 7 times of Udaan and is profitable. It is valued at about $800 million at its current price. Further, IndiaMART is the country’s largest online B2B marketplace, with a share of nearly 60 per cent in online B2B classifieds.
According to media reports, Udaan did revenue of ₹65 crore and incurred a loss of ₹60 crore in FY18. In the same fiscal,
IndiaMART did net profit of ₹63 crore and revenue of ₹411 crore. In FY19, India-MART’s revenues grew 24 per cent to ₹507 crore and net profit to ₹85.3 crore, 36 per cent higher. For the current fiscal, analysts expect ₹640 crore of revenue and ₹140 crore in net profit.
At the current price of ₹1,920.6, IndiaMART’s stock is trading at 39 times FY20 estimated earnings, which is fair given the growth opportunity and scalability of the business model. In terms of EV/Ebitda, it is trading at 29 times.
“IndiaMART is all set to sustain its strong growth momentum as businesses are increasingly leveraging online channels for efficient procurement. A large and growing number of buyers and suppliers on the platform are driving up business enquiries, further increasing its attractiveness,” said Pranav Kshatriya, an analyst with Edelweiss Securities.
Valuations also appear attractive. For instance, the stock of Info Edge, which owns the jobsite naukri-.com and is investee in many other companies including Zomato, is trading at over 60 times its FY20 estimated earnings and FY20 estimated EV/Ebitda.
What is further commendable is that unlike most other startup ecommerce companies whose survival depends on their ability to raise funds, leading to multiple equity dilutions, IndiaMART has a cash-surplus balance sheet and a very high promoter holding.
At the end of FY19, cash and cash equivalent was almost ₹700 crore. The promoter holding was also 53 per cent, which is a major comforting factor for the investors.