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India’s biggest online B2B marketplace, IndiaMART reported stellar earnings in the December quarter. The results beat street expectations as paid subscribers grew by nearly 7000 in the quarter.
Key Highlights
- Deferred revenues are likely to provide visibility for next 18-20 months.
- Employee cost and other expenses were down by 25% and 31% year on year, respectively, on the back of reduced headcount, lower variable salary, reduced travel cost and tight cost control measures.
With COVID-19 driving the shift to digitization, there lies a huge opportunity for IndiaMART which owns platforms for MSME engagement online.
Dinesh Agarwal, CEO of IndiaMART, describes the company as a primary marketplace for small, medium and large business. IndiaMART currently has 100,000 product categories and nearly 6 million plus suppliers from thousands of towns and cities.
“On the online platform, we have 120 million registered buyers displaying close to 70 million products spread across 50 different industry segments. Real utility of the internet for IndiaMART has been discovered during the lockdown,” says Agarwal.
In the absence of marketing and advertising expenses, the organic traffic flowing to the company’s platform is at a skyrocketing rate. Agarwal claims that out of 600-700 million overall internet population in India, IndiaMART receives about 50-60 million monthly visits.
“90% traffic on the platform is from the buyer’s side. All our 1.48 lakh customers come to the platform on a daily basis. This can be to check their inquiries, prices and updates on their orders and new products. Daily unique business inquiries are to the count of 25 million,” Agarwal points out.
IndiaMART’s key focus is taking small businesses online, collating hard to find products, democratizing prices of products which are available in the wholesale markets of the Delhi, Mumbai and Chennai and other metros. About 40% of the company’s online traffic comes from Tier-3 onwards towns, which is over thousands of pin codes across the nation. There’s a far deeper penetration in terms of industry, geography and buyer spread.
Talking about its competitor Just Dial in terms of style, vast difference in perception of value and service overlap, CEO Dinesh Agarwal points out certain differentials.
“To put in plain words, IndiaMART is a product catalogue. We work on hard-to-find products and our supplier directory is far more useful than any player and that is the most important differential. Ours is not a hyperlocal business,” he says.
Meanwhile, in order to increase profitability by means of increasing monetization across the platform, IndiaMART continues to focus on increasing the breadth and depth of products, suppliers and buyers across categories and geographies. Agarwal is of the view that advertising their products and services remains their core engine of optimum monetization and providing value.
Other monetization opportunities that IndiaMART is looking to expore is slowly building an ecosystem of products and services of which some are bundled together whereas some are charged separately. With increasing adoption of internet, the company is also mulling a foray into mobile-based accounting softwares for ease of doing business. No opportunity is currently being explored on the buyer side. Going forward, IndiaMART is exploring opportunities in receivables management, cloud communication, logistics, aggregation, tracking payment facilitation, credit facilitation as well as SaaS and Fintech.
In terms of outlook and valuation, IndiaMART has a dominant market share in the B2B online space, debt-free balance sheet and upfront collection of revenues from subscribers. A spike in online penetration from both buyers and sellers across different industries is bound to take place. The stock recently hit a new 52-week high and has delivered more than 350% from its 52-week low.