+91-9696969696
Collections stood at ₹223 crore in Q2, up 37% y-o-y
B2B e-commerce marketplace, IndiaMART, is expecting double-digit growth in collections/subscriptions. The firm expects the growth to be in the range of 20-30 percent for FY22 due to improving macroeconomic conditions showing repeat upgrades from subscribers at the premium end.
IndiaMART has a buyer base of 138 million. It operates on a subscription model whereby users pay to list on the marketplaces rather than a commission-based model where revenues for the platform come in on sales made through it.
In the July-September quarter, collections stood at ₹223 crores, up 37 percent year-on-year and 31 percent sequentially. Unique buyer enquiries remain at 26 million. The annualized revenue per paying subscriber stood at around ₹48,400, recording a CAGR growth of 6 percent. These numbers continue to be higher as subscriber additions have been stagnant at 4,500, with exits mostly at the lowest monthly subscription level. Subscriber additions (paying ones) per quarter were in the 6000-odd range during pre-pandemic times.
According to Dinesh Agarwal, Founder, and CEO of IndiaMART InterMESH, the target is to ensure customer additions in the 5,000-6,000 range by December-end and hit these numbers consistently during coming quarters. Although there has been some customer loss annually, the loss is from the lowest end, mostly limited to the silver category. “As of now the trends are positive and premium subscribers are upgrading or renewing their subscriptions. The problem is at the lower end with MSME clients repeatedly changing businesses or not being able to continue because of working capital issues. So they are dropping off in one quarter and coming back in another,” he told BusinessLine, adding that average revenue per paying subscriber is expected to be in the ₹45,000 range as stabilization happens.
For the September quarter, IndiaMART reported an 18 percent y-o-y increase in consolidated net profit at ₹82 crores.
According to Agarwal, there has been a consistent recovery which was mostly broad-based, although the churn (subscriber additions, drops and renewals) is a few notches higher than the pre-Covid levels.
EBITDA margin which stood at 28 percent pre-Covid is expected to stabilize in the 38 percent range going forward. High margins – hovering at 48 percent during Covid times – are unsustainable in the long term.
According to brokerage firm Motilal Oswal, strong collections are a testimony to a recovery in the demand momentum. “We expect the momentum in collections to improve further in the near term. IndiaMART has shown higher resilience on the margin front. While we concur that margin at current levels are not sustainable, it would see positive benefits from cost optimisation and operating leverage in the long term,” it said in a report.
New Avenues
The company, Agarwal said, has also re-worked its sales model. The customer acquisition strategy is more through ‘hybrid modes’. Nearly, 50 percent of subscriptions are coming in from older channels (physical interactions by field sales force) and another 20-25 percent from new channels – telecalling, online ones – while distributor-led sales account for the remaining.
The B2B player is also looking at the MSME financing space, most likely when viability issues are sorted out.