Shares of IndiaMART InterMESH Ltd climbed 4.578% on Thursday’s intraday trades to reach a high of ₹ 5997.00 on the National Stock Exchange (NSE). At 02:35 PM, its shares were trading 4.05% higher at ₹ 5967.60 apiece.
IndiaMART is the first and largest B2B digital marketplace in India which connects buyers with suppliers. It is focused on providing a platform for small and medium enterprises (SMEs), large enterprises as well as individuals. It operates under two segments — Web and related services and accounting software services.
The Nifty 50 has merely gained 0.10% on a year-to-date (YTD) basis, however, the company’s share price has risen by 38.58% YTD from ₹ 4327.35 to the current levels. The company’s share price has been increasing since December 2022, after it reported robust results. It reported a revenue of ₹ 269 crores, up 7% quarter on quarter (QoQ) and up 33 percent year on year (YoY).
The company has announced the issue of bonus shares in the ratio of 1:1, i.e., one bonus equity share will be allotted for every equity share held by shareholders. It has announced Wednesday, June 21, 2023, as the record date for the purpose of determining the eligibility of shareholders for the issue. This means that shareholders will have to buy the shares at least one day before June 21, 2023, to be eligible for the bonus issue.
Moreover, it has announced a dividend of ₹ 20 per share, subject to the approval of the shareholders in the ensuing shareholders meeting. If approved by the shareholders, this dividend will be paid within 30 days from the date of declaration of final dividend.
On a consolidated basis, IndiaMART reported a 2.79% decline in its quarterly net profit year-on-year (YoY) to ₹ 55.80 crores in Q4FY23 (January to March 2023), as compared to ₹ 57.40 crores in Q4FY22 (January to March 2022). However, its total income increased by 29.71% to ₹ 299.5 crores in Q4FY23 as compared to ₹ 230.9 crores in Q4FY22.
For the entire financial year (FY23), its profit after tax decreased by 4.73% to ₹ 283.80 crores, against ₹ 297.90 crores reported in FY22. The company posted a total income of ₹ 1165.90 crores in FY23, against ₹ 865.7 crores reported in FY22, indicating an increase of 34.68%.
IndiaMART is a mid-cap company with a market capitalization of ₹ 17,537 crores. It has a return on equity of 14.43% and an ideal debt-to-equity ratio of 0.04. The company’s shares were trading at a price-to-earnings ratio (P/E) of 61.84, which is significantly higher than the industry P/E of 12.05, indicating that it is overvalued as compared to its peers.
The company’s promoters hold a 49.22% stake in it followed by foreign institutions with 26.60%, retail investors with 18.98%, mutual funds with 4.89% and other domestic institutions with 0.31%.
HDFC Securities has a target price of ₹ 5,960 on the stock, and a positive stance based on better growth visibility led by strong collections; lower churn across client buckets; margin expansion possibility; and an increase in realisation led by platinum clients.
According to Axis Securities, Indiamart is well-placed for encouraging growth in light of the multiple long-term contracts it has procured from the world’s leading brands. Richer revenue visibility also gives the brokerage further confidence in its business growth moving forward.
Written by Simran Bafna
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