Shares of Indiamart Intermesh climbed 5 per cent in Friday's trade after the B2B e-commerce company logged a 60.68 per cent surge in its consolidated profit at Rs 112.80 crore for the December quarter compared with Rs 70.20 crore in the same quarter last year. Indiamart Intermesh said consolidated revenue for the quarter jumped 33.65 per cent to Rs 251.4 crore compared with Rs 188.10 crore in the same quarter last year. Ebitda margin was flat sequentially and down 13.9 percentage points YoY to 28 per cent.
Following the development, the stock rose 4.87 per cent to hit a high of Rs 4,695. It was later trading at Rs 4,555.25, up 1.75 per cent. ICICI Securities said the stock has already corrected 29 per cent over the last year and that at current valuations of 26 times 1-year forward EV/Ebitda, it is a compelling buy, given its likely growth prospects.
Brokerage JM Financial, which has a target of target of Rs 4,940 on the stock, said Indiamart Intermesh reported strong cash collections growth of 27.5 per cent YoY in the December quarter to Rs 283 crore, which was a 2 per cent beat on its estimates. There was, however, disappointment on paid-supplier additions -- up 6,300 sequentially against the management guidance of 8,000-9,000 and JM Financial's own expectation of 7,600.
Despite strong revenue growth of 33.7 per cent YoY, the much-awaited operating leverage remained elusive as Indiamart Intermesh continued to make growth investments, JM Financial said.
"While on the one hand the results are a testament to the company’s ability to up-sell to its existing supplier base, on the other hand they also indicate how steep a task it is to expand the paid-supplier base despite making supportive investments. Recent traffic growth and business enquiries delivered trends have also not been very encouraging. Nevertheless, in the near to medium term, we expect IndiaMART to continue to report strong revenue growth on the back of very strong cash collections in the last 6 quarters," JM Financial said.
While expecting the Indiamart Intermesh management to maintain its paid-supplier additions guidance, JM Financial has lowered its Ebitda margin estimates by 10-110bps over FY23-25E.
"While ramp-up in employee costs (80 per cent of total operating costs) will continue to affect near-term earnings, we expect the company to report strong Ebitda CAGR of 28 per cent over FY23-25E, assuming these investments slow down," it said.
ICICI Securities said Indiamart Intermesh is likely to deliver a strong revenue growth trajectory over FY23-FY25E, as it is a potential key beneficiary of the strong growth in B2B e-commerce expected over the next few years.
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