IndiaMart, one of India’s biggest online marketplaces for businesses, has achieved something that not many other companies have – during the lockdown quarter of April to June, the company has posted over a 100% jump in profits.
The company, which has been listed for just a year now, posted a net profit of ₹74 crore in QFY21, up by 129% from ₹32 crore last year. This spurred a stellar rally with IndiaMart’s shares surging 8% to ₹2327 in morning trade..
And IndiaMart founder Dinesh Agarwal managed to do this even when what his company most dependson couldn’t move due to lockdown – field sales. For the 24-years old company, work from home had never been the norm and most of its revenue comes from its field sales.
But Agarwal and his team were better prepared. From February itself they had anticipated a slowdown due to China shutting down, but a lockdown is not what they had expected. “We started figuring out as the demand for sanitizers and health essentials shot up. By the second half of March, our focus was on how to maintain business continuity and how to ensure employee safety while making sure the website was running and the call centre too was operational,” Agarwal told Business Insider.
IndiaMart has always had ‘medical’ or healthcare as a category, but within the initial weeks of the coronavirus pandemic, Agarwal realised that it would become an on-demand category. And they were quick to turn things around. “We started calling up suppliers, did some innovative thinking. We called up bike helmet suppliers and asked them that since you have a helmet shield can you make a face mask shields and they happily agreed. We went to undergarment manufacturers and asked them to make face masks. So, we really started to build category,” Agarwal said.
The platform has over 68 million product listings across 100,000 categories. “If you can’t find something on IndiaMart, you won’t find it on the internet,” Agarwal told us. But this variety of products available also pumped their revenue, because then companies weren’t just coming on the platform for finished products but also to discover certain elements like bottle caps, elastic among others.
Agarwal believes this also keeps them different from their rising list of B2B ecommerce competitors – Amazon, Alibaba, Walmart wholesale, TradeIndia, ExportersIndia.com among others.
“Our target is also different. The other companies focus on the top 2000 products, which are generally branded, in the FMCG sector. That’s not what IndiaMart is going after. From steel bars to trucks and everything in between is what IndiaMart sells,” he said.
Balancing their costs and their customers’ too
In the beginning of April, their revenues were completely down as most of their customers’ business had hit pause – their buyer traffic was down by 50%. “Only one-third of our sales used to be from online or telecom,” Agarwal said.
So, they went around looking at places where they can cut costs. They turned to the automation of many processes and deferred plans that would have burnt a hole in their pocket. Agarwal said that while many employees offered to give up their salaries, they didn’t lay off anyone. “We are a slow hiring company, so we didn’t want to fire anyone,” he said.
But that wasn’t all. They also had to prepare for their customers, who were in a similar business situation. “We offered moratoriums to customers who said they won’t be able to pay,” he said.
As the economy opened up, things started to look better and because of their initiatives, Agarwal says customers and buyers both saw value in IndiaMart.
IndiaMart, over the recent years, has turned to technology to add layers to its offerings. “We are enabling seller and buyer interaction with a CRM and have also become a price discovery platform for many buyers in India. Even if they don’t end up buying from India, we have been able to democratize prices for buyers,” he said.
Out of their total expenses, 20% of it goes into investing in products and technology, while out of the 4500 employees, 20% of them are in product and technology.
New Delhi, Jul 21 (PTI) B2B e-commerce company Indiamart Intermesh on Tuesday posted an over two-fold jump in its consolidated profit at Rs 76.4 crore in the first quarter ended June 30, 2020.
The company had recorded Rs 32.1 crore profit in the same period a year ago. “I am pleased to report a modest financial performance this quarter as the ongoing adverse market conditions had an anticipated impact on our customers, revenue, deferred revenue and cash flow from operations,” Indiamart Intermesh Chief Executive Officer Dinesh Agarwal said in a statement.
The total income of the company increased 16.4 per cent to Rs 184.65 crore during the reported quarter from Rs 158.57 crore in the corresponding quarter of 2019-20. PTI PRS SHW SHW
Noida, India, July 21, 2020: IndiaMART InterMESH Limited (referred to as “IndiaMART” or the
“Company”), today announced its financial results for the first quarter ending June 30, 2020.
IndiaMART reported consolidated Total Revenue from Operations of Rs. 153 Crore in Q1 FY21, a growth
of 4% y-o-y, primarily driven by marginal improvement in realization of existing customers. Number of
paying subscription suppliers were same as last year due to the challenging economic and market conditions
amidst the Covid-19 pandemic. Consolidated Deferred Revenue grew by 3% from Rs. 610 Crore in Q1
FY20 to Rs. 628 Crore in Q1 FY21.
Consolidated EBITDA was Rs. 73 Crore as compared to Rs. 37 Crore in Q1 FY20, representing a growth
of 100 % y-o-y. EBITDA margins increased to 48% in Q1 FY21 from 25% in Q1 FY20 primarily driven
by various cost optimization measures leading to sustained and temporary rationalization of expenses.
Consolidated EBIT was Rs. 69 Crore as compared to Rs. 32 Crores in Q1 FY20, representing a growth of
113% y-o-y. EBIT margin increased to 45% in Q1 FY21 from 22% in Q1 FY20.
Profit before Tax was at Rs. 100 Crore and Net Profit was Rs. 74 Crores, representing margins of 54% and
Consolidated Cash Flow from Operations for the quarter was at Rs. 3 Crore. Cash and Investments balance
stood at Rs. 954 Crore as on June 30, 2020 as compared to Rs. 746 Crore on June 30, 2019, an increase of
Traffic grew to 191 million in Q1 FY21 from 184 million in Q1 FY20, an increase of 4% YoY and total
business enquiries delivered increased to 131 million from 113 million, a growth of 16%. Supplier
Storefronts grew to 6.1 million in Q1 FY21 an increase of 8% YoY and paying subscription suppliers were
133 thousand, same as Q1 FY20.
Commenting on the performance, Mr. Dinesh Agarwal, Chief Executive Officer, said:
“I am pleased to report a modest financial performance this quarter as the ongoing adverse market
conditions had an anticipated impact on our customers, revenue, deferred revenue and cashflow from
operations. While we managed to improve profitability due to cost optimization measures, our focus
remained to stand by our employees and customers during these testing times. Given the overall uncertainty
of how long this continues, our strong balance sheet and a resilient business model will help us to navigate
through the ongoing crisis and as the businesses realize the need of transforming themselves to online, our
strong value proposition will help us in getting back to growth soon.”
IndiaMART is India’s largest online B2B marketplace for business products and services. IndiaMART
makes it easier to do business by connecting buyers and sellers across product categories and geographies
in India through business enablement solutions. IndiaMART provides ease and convenience to the buyers
by offering a wide assortment of products and a responsive seller base while offering lead generation, lead
management and payment solutions to its sellers.
Noida-headquartered B2B ecommerce company IndiaMART said it is investigating the report by cybersecurity startup CloudSEK which claimed that sensitive information of over 40K suppliers registered on IndiaMART was being sold on hacker forums.
CloudSEK researcher Ashok Krishna discovered posts on two forums advertising a database of 43,920 suppliers registered on IndiaMART. “On one forum the post was published on 20 June 2020 at 11:03 AM. The poster claims to have over 49K ‘Indiamart business data.’ In response to this post, another forum member commented that the dump contains 42,985 records, including email addresses,” the report said.
On the second forum the post was published on June 22, 2020 at 6:11 AM. “The poster claims to have 43,920 records, even though the sample filename is ‘Indiamart 01 (Business) – 49000.xlsx.’ In response to this post, another forum member commented that he/she has a total of 700k of this data and has shared a sample as well. We couldn’t verify the commenter’s claim,” the report further said.
The report said that the sample file consisted of 44 records with details like name, user ID, email address, mobile number, address, country etc.
An IndiaMART spokesperson told Inc42 said that basic contact information of sellers is publicly available on many B2B ecommerce platforms and is also advertised on IndiaMART as well as directories, internet portals and search engines. “Neither any sensitive personal information of the Suppliers is displayed on our platform nor it is leaked,” the company said.
It further said that its cybersecurity and technical teams are evaluating CloudSEK’s report and is trying to find out the authenticity of the said report wherein it is claimed that the certain basic information like name, email address, contact number etc. of its listed suppliers are leaked.
“Accordingly, at present, we are not in a position to acknowledge the authenticity of such a report. In case any leakage of even the smallest level is identified by our Cyber Security team post-investigation, we will take the best possible steps to avoid such repetition in future,” the company added.
IndiaMART, which was incorporated in 1999 by Brijesh Agrawal and Dinesh Agarwal, recently got listed on BSE. After starting 2020 on a positive note and with 10 Cr active users, the company also recorded a post-tax profit of INR 44 Cr in Q4 FY20, representing a 55% YoY hike versus INR 28 Cr in the previous quarter and a 33% profit margin.
Besides monetary gains, the company also added over 6 Mn supplier storefronts and 147K paying subscription suppliers in Q4. In FY20, the company had registered a net profit of INR 149 Cr showcasing a 635% YoY hike. The profit before tax was INR 213 Cr, representing a 292% year-on-year (YoY) growth.
Recently, user data from two Indian startups — Zoomcar and Unacadamy — was leaked onto the dark web. This was not the first instance of data leaks among Indian startups — there have been cases of security holes in startups such as Skolaro, Justdial and others — but it comes at a time when India’s cyber-infrastructure is at its most vulnerable.
A breach at online marketplace IndiaMART has leaked the sensitive data of more than 40,000 suppliers.
IndiaMART is a business-to-business e-commerce site, connecting suppliers from across India. Last year, the official app had 10 million downloads. Researcher Ashok Krishna from threat monitoring platform CloudSEK discovered that data belonging to thousands of suppliers was being sold on online forums. The same set of information, estimated to be around 44,000 records, appears to be for sale on two separate underground websites.
Krishna investigated a sample of one of the datasets, posted for sale on June 20, and found it contained 44 separate records. Each record was said to consist of sensitive information including suppliers’ user IDs, full names, addresses, email addresses, and phone numbers. Krishna says he used publicly found sources to verify that the data was legitimate. The sample contains records registered in February 2016, primarily from the Indian state of Gujarat.
These details could be used in a number of ways, including being utilized for phishing campaigns, scams, and even identity theft, explains CloudSEK. “Usually our mobile numbers and email IDs are linked to banking, mobile wallet, and other online accounts,” a blog post explains. “Having these details makes it easier for threat actors to compromise the victims’ accounts.”
Deepanjli Paulraj, lead cyber intelligence editor at CloudSEK, told The Daily Swig: “We have been able to validate the data. It does belong to active IndiaMART vendors.”
“Whether a bug in the IndiaMART website or an unsecured database, if not remediated, could put six million-plus suppliers on the platform at risk,” the post explains.
The second set of data contains 43,920 records, the person posting it claims, however the researchers were not able to verify this data.
Suppliers using the IndiaMART platform should immediately check whether their accounts have been tampered with, CloudSEK advises.
Other recommendations include reviewing all online accounts and financial statements, cautioning friends and family against anyone impersonating you or your business, and enabling multi-factor authentication.
Researchers also urged suppliers never to share their one-time passwords (OTPs) generated by multi-factor authentication devices.
“While this is a rule of thumb, it is especially relevant in this case, because threat actors already have email IDs and phone numbers. So, the OTP is the only thing standing between threat actors and the victims’ accounts,” reads the blog.
CloudSEK also advised IndiaMART to perform an audit to uncover the full extent of the leak.
IndiaMART told The Daily Swig it was investigating the claims, but downplayed the incident as it says the data was readily available.
“At the outset, we would like to clarify that sellers basic contact information is a public information and is advertised on IndiaMART and other places like a printed directory, other internet portals and search engines. Neither any sensitive personal information of the suppliers is displayed on our platform nor it is leaked.
Our Cyber Security and Technical Team is evaluating the report of CloudSEK which has been recently notified and is trying to find out the authenticity of the said report wherein it is claimed that the certain basic information like name, email address, contact number etc. of our listed suppliers are leaked.
Accordingly, at present, we are not in a position to acknowledge the authenticity of such a report. In case any leakage of even the smallest level is identified by our cybersecurity team post-investigation, we will take the best possible steps to avoid such repetition in future.”
Covid-induced lockdown has badly hit the B2B e-commerce player’s average revenue per user
B2B e-commerce company IndiaMART is looking at protecting current revenues and customers in the coming year. The company’s average revenue per user has already been “substantially” hit and collections to have come down to “near zero” for at least two months, since the lockdown began.
Collection growth, which stood at 32 per cent in FY18/FY19; came down to 10 per cent in FY20 (₹738 crore) indicating the economic stress on micro, small and medium businesses (MSMEs). For IndiaMART, maintaining similar numbers “will be a miracle” in FY21, with uncertainty around Covid-19 looming large.
According to Dinesh Agarwal, MD and CEO, IndiaMART InterMesh Ltd, its e-commerce platform is not adding any new customers especially because of the lockdown. Moreover, the very few who are coming, are primarily for particular product categories. This in turn will impact subscriber base.
Subscriptions account for 95 per cent of the BSE-listed company’s revenue from operations.
“We are not adding any new customers. Whatever little we have done is in sectors that are working despite the Covid pandemic,” he told BusinessLine.
Subscriptions (of suppliers who list products on the site) can come down and there may be downgrades too. IndiaMART incidentally has 1,47,000 paying subscribers, and nearly 50 per cent of them had made one-year subscriptions, Agarwal had said in an earnings call.
Market sources say B2B e-commerce players are losing subscribers (suppliers) as many MSMEs are going out of business or changing their business models to adopt the new normal.
“In the next three months, (if) all of this is over, I may lose 20 per cent of my customer base and as things return to normalcy (in) over another six months, we will start to adding say 1,000 customers per quarter and then 2,000 and then 5,000 customers in sometime,” Agarwal had said during the earnings call. But these numbers depend on “how the lockdown is lifted and the economy plays out after that”, he further added.
In order to retain customers, the B2B e-commerce player has already offered discounts, shorter duration renewals, and relaxed payment terms.
Incidentally, an unintended consequence of the lockdown is likely to be increased Internet adoption.
According to Agarwal, with a greater thrust on manufacturing (in India) and this the increased Internet adpoption, the company’s market size could see an expansion. Online and tele-sales could grow; physical meetings may decrease leading to more efficient operations across segments including in the B2B space.
Traffic in April is “50 per cent of what it was”, but there have been buyer inquiries and calls and request for quotes,indicating a pent-up demand in the system. Queries are seen across categories such as sanitisation, safety items, hospital, pharmas and food supplies, chemicals, packaging and so on.
“We are identifying these new categories and are working on increasing our supplier base across India,” he said.
Indicating that the company was open to acquisitions if they were a strategic fit, Agarwal said: “There may be certain opportunities for us to consolidate. We also have a cash balance with us.”
Navbharat Times (Hindi)
“It will take some longer period before we can look at that kind of grown [20%] again,” IndiaMART CEO and MD Dinesh Agarwal said during the company’s earnings call for Q4FY20 on May 13. Right now, the company’s aim is to protect its current revenues and customers, and focus on the growth and ARPUs later since the customers are also suffering from a financial crunch, he said. The lockdowns have already affected the company’s ARPUs for Q4FY20 and for April, and will continue to affect them “substantially” in the short run, and in the long run, depending on how the lockdown plays out, he said.
Having said that, Agarwal also said that the company’s geographic and category diversification could help them leverage staggered opening of the lockdown and that the company’s subscription-based model, negative working capital and robust cash reserves made them confident.
Because of the lockdown, the platform is not adding any new customers, or very few who are coming for particular categories of products, Agarwal said. Last quarter, weak economy had led to lower customer additions than the long-term average of 5,000+ customers per quarter and low market demand. He also said that economic slowdown has reduced market demand and led to cash flow and credit crunches. ARPU growth also dropped from historical trends of 5%-10% to 7% in Q3FY20.
“So given that we have nearly 150 thousand paying subscription suppliers customers and we are not adding any new customers or adding very little number of customers, who maybe specifically coming from the special focus categories that are working in the COVID times, I would say that let us assume that we would be down by 20% from our current customer base if the current and fourth lockdown is the last one. If the uncertainty continues further, and the economy goes through further challenges, I can only come back and tell you in a month’s time or so, about what kind of feelers do we have. As of now I can only tell you that maybe about 10% are already on hold and in the next 45 days, based upon our experience of the last 45 days, another 10% may go.” — Dinesh Agarwal
“[F]or every month of lockdown, we may end up losing 10% of the existing customer base because during lockdown, lot of customers may not be able to afford or may have to change their business model. SO I would say, that assuming that in the next 3 months all of this is over, I may lose 20% of my customer base and as things return to normalcy over 6 months we will start to add maybe 1,000 customers per quarter and then 2,000 and then 5,000 customers in sometime. But we don’t really know how it will pan out in the times to come.” — Dinesh Agarwal
10% to 20% customers ‘severely impacted’, more likely to churn: Since new sales are not possible due to the lockdown, and IndiaMART’s salespeople can’t meet customers as most businesses and premises are completely closed, Agarwal expects 10% to 20% of the subscriber base to be “severely impacted” and are more likely to churn.
All subscriptions work on a rolling basis, and aren’t affected by the financial year. Agarwal explained their three tiers:
But he acknowledged that it’s hard for people at the top of the pyramid to sustain subscriptions as well because of the costs involved (₹ 1,75,000/year or almost ₹15,000/month) and stress caused by the lockdown. As a result, since March 20, they have received multiple requests to cancel subscriptions, or to give them extensions, or to temporarily suspend their account for a month or a quarter, or to downgrade their account to a lower tier, or . Of the approximately 147,000 customers they have, about 50% have paid for more than a year, Agarwal said.
More than one-third of the customer base is more than 3 years old. Few customers are also more than 15 years old. Customers remain on the platform to make use of the lower subscription rate. For instance, if someone joined in 2014-2015, they paid ₹2,000/month and continue to pay that rate. If they were to churn out and join back in later, they will have to pay ₹3,000/month, D. Agarwal explained. Older customers are also more inclined to upgrade their tiers after experiencing the platform and growthing through it, he said.
Company offers discounts, relaxed payment terms to SME customers: According to Agarwal, the financial crunch started in October-November 2019, and “got further acute when the sudden and long lockdown happened”. To retain customers, it has offered them discounts, shorter duration renewals, relaxed payment terms.
“[F]unding would become tougher for the short-term to medium term as the funds will chase the best returns in these times and for any new kind of a trial and testing, the funding would be less available,” Agarwal said in response to a question about whether or not competitive intensity would subside as Udaan is facing funding challenges. He, however, pointed out that Udaan already has “a large amount of funds available with them” and because of their financial prudence, had been able to save them for long. “[F]or now, there may be certain opportunities for us to consolidate and as much as we can consolidate, that should be our goal,” Agarwal said.
No competition for the products and services IndiaMART deals into: However, their ability monetise on that immediately will depend on the financial situation of the customer. Agarwal differentiated between IndiaMart, Udaan and Amazon: “We are mostly manufacturers, wholesale traders, custom product made, truck load products. Just to give you one comparison, if Udaan has about $60 average order value, at IndiaMART it would be around $600 and at Amazon it may be at around $16.”
Funding will be harder for smaller start-ups: He predicted that two years down the line, with increased adoption of internet, “the competition and funding can come back with a far more rigor and far more vengeance, just like when IndiaMART became successful, a large amount of funding went into multiple B2B and SME platforms”.
Internet adoption: “An overall adoption curve of the Internet will improve,” Agarwal predicted. Coupled with a potential increase in “manufacturing intensity” in India in the post-COVID-19 scenario, this could increase IndiaMART’s market size. He expects online and tele-sales to grow and reliance on physical meetings to decrease, thereby making their operations more efficient.
200 bigger brands such as Philips, Tata Steel, etc. which are already using the service would be a good source of revenue, especially given their liquidity. This is why investment into Bizom is helpful since they know how to handle big clients, D. Agarwal said. Currently, IndiaMART’s sales and collections are driven by those who have cash, he said.
Bigger brands add trust to the marketplace, attract more traffic: D. Agarwal pointed out that smaller players are usually regional players while bigger brands, such as Tata Steel or Tata Motors, have a dealer distribution network to work at a national level. “[P]resence of a brand gives a lot more trust to the buyer that the entire list of manufacturers or suppliers is present here and it is not a flea market but a more trusted marketplace,” he said. Bigger brands can fulfil remote buyer enquiries while SMEs fulfil long tail of pricing and products. Thus far, the two kinds of enterprises have not quit on account of the other.
Exports: “In fact there could be a possibility even on the export side if ‘Make in India’ becomes better or truer,” Agarwal said.
50% reduction in traffic but spikes in categories of essential items: Agarwal said that traffic had reduced “on an average of 50%” but varied “significantly across categories and across geographies”. This is true for traffic, enquiry, calls and versus RFQ (request for quotes). “We are witnessing significant traffic growth in categories such as sanitization, safety, hospital, pharmaceutical and food supplies etc. and in indirect categories like chemical, packaging, raw materials related to the above-mentioned items,” he said but did not give numbers for these spikes. The company is identifying such essential categories and is working to increase the number of suppliers for them across India. Though traffic improved in April, but Agarwal wasn’t sure if he could be “hopeful of sustaining everything like this”.
Bengaluru-based Mobisy, a SaaS-based distribution technology solutions provider is raising INR 11.4 Cr from B2B ecommerce platform IndiaMART and Triton Alternative Investment Trust.
According to the ministry of corporate affairs (MCA) filings accessed by Inc42, Mobisy’s board, on May 15, approved the issue of equity and preference shares to IndiaMART and Triton.
In this deal, Mobisy is issuing 100 equity shares to IndiaMART at INR 100 per share, totalling to INR 77K. Additionally, Mobisy is offering 1,28,593 preference shares to IndiaMART for INR 10 Cr at a price per share of INR 778.
Meanwhile, Triton is investing INR 1.4 Cr through Triton Alternative Investment Trust and will get 18,018 preference shares. Prior to this, Mobisy closed its second round of venture capital funding of $3.5 Mn led by SIDBI Venture Capital Limited (SVCL) in May 2018.
Founded in 2007 by Lalit Bhise, Mobisy is the maker of Bizom, a SaaS-based suite of automation solutions tailor made for consumer companies. The platform delivers real-time insights for driving greater distribution efficiency that helps organisations to grow.
Bizom, which was developed by Mobisy in 2012, offers solutions broadly including sales force automation (SFA), a partner relationship management application distributor management system (DMS), retail execution, merchandising and van sales automation.
Mobisy claims to have integrated its solutions with technologies such as artificial intelligence (AI) and machine learning (ML) to provide brands with the structure, visibility and insights they require to enable decision-making, as part of all the solution offerings.
According to the company’s website, more than 65K retail outlets are registered on Bizom. The company also claims to be catering to more than 500 enterprises including Casio, Pepsi, Shell, Emami, Unibic, Godrej, Borosil, India Gate, Park Avenue, Raymond, among others.
According to Datalabs by Inc42, India has around 8,633 SaaS startups. A report published by Google India and Accel Partners stated that the Indian SaaS industry will be valued at a staggering $50 billion by 2025.
In recent times, SaaS startups have witnessed massive growth in terms of new customers as well as revenues. Some of the notable SaaS startups in India include Zoho, Wigzo Technologies, Wingify, Chargebee, Anaek, among others.
Recently, contract management software as a service (SaaS) startup SirionLabs raised $44 Mn in Series C funding round led by Tiger Global and Avatar Growth Capital while Vernacular.ai has raised $5.1 Mn in Series A funding in May 2020.
The company has kept its multibagger status intact amidst the Covid-19 meltdown
New Delhi: Internet-based businesses are making the most in a world changed for good by the coronavirus pandemic.
India does not have too many listed internet-based businesses. The ones that are there are already getting lapped up by investors.
One such opportunity domestic investors seem to be betting on is the country’s only listed B2B marketplace, IndiaMARTNSE 1.33 % Intermesh, which however faces a near-term challenge in the face of the dark clouds looming over the medium and small enterprises, who form the bulk of its customer base.
The company has no listed peer in India, but has kept its multibagger status intact amidst the Covid-19 meltdown. Listed on July 4 last year at Rs 1,302, at a 33.87 per cent premium to its issue price of Rs 973, the stock scaled its peak of Rs 2,862 on February 20, 2020. It crashed up to 40 per cent from there during the March selloff to trade at Rs 1,758 by the end of that month. From there, the scrip has recovered 27 per cent to trade at Rs 2,360 on May 19. The stock still trades 127 per cent above its issue price.
“During the lockdown, we contacted various manufacturers and suppliers for face masks, hand sanitizers, PPE kits and face shields, which resulted in a decent enquiries and business,” says Dinesh Agarwal, founder and CEO of IndiaMART Intermesh.
He claimed IndiaMART has since become a major destination for the supply of safety, sanitisation, hygiene, chemical and medical products and related raw material.
The company’s March quarter top line increased 3.3 per cent QoQ to Rs 165.80, while bottomline shrank 37 per cent to Rs 40 crore.
Brokerage Edelweiss Securities has a ‘Buy’ rating on the stock, but has revised its target price downward from Rs 2,815 to Rs 2,535. The stock currently trades at 27.5 times FY22E EPS.
“The lockdown would accelerate digital adoption, implying higher growth potential for the company over the medium-to-long term. However, the management painted a gloomy outlook for MSMEs, which would translate to 10-20 per cent business mortality among its paying customers,” said Edelweiss.
The management also highlighted that the lockdown has hurt business activity, almost halving its traffic. The biggest challenge is to retain its 1.47 lakh customer base as businesses may face issues related demand, affordability, debt and survival, at worst.
The company’s focus is now on customer retention via discounts and relaxed payment terms. It has undertaken cost-cutting measures such as salary rationalisation, cutbacks in discretionary spends to absorb the impact on profit.
A major portion of the company’s business comes from small business enterprises that are under constant pressure. Events like demonetisation, GST, NBFC crises, liquidity crunch, trade war and economic slowdown have hit them hard. Now, Covid-19 and lockdown added fuel to the fire, Agarwal said.
Delhi-based brokerage firm Wealth Discovery expects IndiaMART to deliver up to 15 per cent return in next one year and has set a target price of Rs 2,600-2,650.
Domestic brokerage firm Nirmal Bang has kept its outlook ‘neutral’ for the stock.
However, SPARK Research has a ‘sell’ rating on the stock with a price target of Rs 1,880, citing key challenges to retain the top 10 per cent of customers who contribute 40 per cent of revenue as they are facing a contraction in cash generation.
However, the company sees some silver lining ahead. The usage of the internet and ‘Atma Nirbhar Bharat’ scheme may pave the path for various opportunities for the company.
“The government scheme focuses on diversification from single-point sourcing and strengthening domestic manufacturing and supply chain. Also, if India can attract a decent chunk from major global businesses pulling out of China, this can push the second leg of ‘Make in India’ scheme,” Agarwal said.
Last week, IndiaMART acquired a 9 per cent stake in Mobisy Technologies, owner of Bizom, for Rs 10 crore. Mobisy has a marquee customer base, including Coca-Cola, Philips, Reckitt Benckiser, and Bausch + Lomb and offers mobile-enabled digital transformation of sales and supply channels of consumer brands distributing through retail stores.
“The government has reduced the effective tax rate and surcharge on new manufacturing units in September 2019. Now, it is trying to do some handholding of the MSMEs , all of which are a good omen for IndiaMart in the long run. But one has to see how things actually play out in the short term,” said Agarwal.