Shares of India’s largest B2B digital marketplace dropped 19 percent to Rs.2,447.50 per share on Monday morning trade following a downgrade from Jefferies, despite a strong quarterly performance.
Share Price Movement
In Monday’s trading session, Indiamart Intermesh Ltd share price reached an intraday low of Rs.2,447.50 per share, falling 19 percent from the previous close of Rs.3,013.15 per share. The share price has adjusted since then and is currently trading at Rs.2,488.60 apiece.
What Happened
Shares of Indiamart Intermesh plunged on October 21, despite a robust second-quarter earnings report that prompted a cautious outlook from analysts.
The online B2B marketplace reported a 18 percent increase in revenue to Rs.348 crore in Q2 FY25 compared to Rs.295 crore in Q2 FY24. Furthermore, on a quarter-over-quarter basis, the company saw an increase of 5.2 percent from Rs.331 crore in Q1 FY25.
In the same period, the company has reported a significant increase in net profit of 96 percent to Rs.135 crore in Q2 FY25, up from Rs.69 crore Q2 FY24 and 18 percent from profit of Rs.114 crore in Q1 FY25.
The company’s EBITDA margin increased to 38.7 percent, up from 27.2 percent in the same quarter last year, indicating improved operational efficiencies. Additionally, deferred revenue grew to Rs 1,483 crore, representing a 19 percent year-on-year increase.
Jefferies Downgrade
Following the development, Jefferies downgraded the company from ‘buy’ to ‘underperform,’ lowering its target price to Rs 2,540 per share. The international brokerage noted that although the company reported in-line Q2 results, weak subscriber growth contributed to a decline in collections growth, which dropped to just 5 percent year-on-year, a significant concern for the quarter.
Jefferies anticipates collections growth to remain between 10-15 percent unless subscriber additions improve. The firm has also revised its estimates downward by 4-12 percent, citing a persistent rise in subscriber churn despite various management interventions, which has been an unexpected negative outcome.
Shareholding Pattern
As of the September 2024 shareholding pattern, Promoters hold 49.21 percent stake in IndiaMart Intermesh. Foreign Institutional Investors (FII) hold 23.86 percent, Domestic Institutional Investors (DII) hold 12.10 percent, and Retail investors hold 14.78 percent.
About the company
IndiaMART is India’s largest online B2B marketplace, connecting buyers and suppliers across a wide array of industries. It offers a platform for small and medium enterprises (SMEs), large enterprises, and individual buyers.
Written by – Siddesh S Raskar
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