Indiamart Intermesh Ltd saw its shares rallying 9 per cent even as a few brokerages cut its earnings estimates by 4-7 per cent post the December quarter results. HDFC Institutional Equities, which cut its FY25 and FY26 EPS for Indiamart Intermesh by 6-9 per cent due to moderation in growth, said revenue growth of 3.6 per cent sequentially was led by continued improvement in realisation. The paid supplier addition remained soft due to higher churn in the silver monthly bucket, it said.
On Friday, the stock rose 9.47 per cent to hit a high of Rs 2,706.45 on BSE.
"Once the impact of the price hike is absorbed, the churn is expected to stabilise. The management has refrained from giving any target but expects a revival in two quarters. The collections growth stood at 17 per cent YoY, slightly lower due to soft additions in the last two quarters. However, the ARPU improvement continues (11.5 per cent YoY) led by migration to a higher price/tenure package and lower churn in the gold and platinum bucket," HDFC Institutional Equities said.
The brokerage maintained its 'BUY' rating on the stock with a target of Rs 2,900.
Kotak Institutional Equities has cut its FY2024-26 EPS by 3 per cent to bake in lower supplier addition. "We assume weaker longer-term margins due to continued investments needed to keep the platform relevant for SMEs, resulting in revised fair value of Rs 2,400 (Rs2,700 earlier), roll-forward to March 2026 notwithstanding," it said while maintaining 'SELL' call on the stock.
Motilal Oswal said weak paying supplier addition is a near-term concern for Indiamart Intermesh business growth as it would hurt collections (and subsequently revenue) over the next few quarters. But the brokerage took comfort in the fact that the impact is mainly seen among some Silver customers, which form only 25 per cent of the company’s revenue base.
The management is confident that the supplier addition trajectory, hurt by price hikes few quarters ago, should return to over 5,000 per quarter.
"We adjust our FY24/FY25/FY26 earnings estimates by +3.3 per cent/-2.5 per cent/+4.7 per cent, as we bake in longer recovery time for margins and higher other income. We value IndiaMart on a DCF basis to arrive at a target of Rs 3,000, assuming 12.5 per cent WACC and a 6.5 per cent terminal growth rate. We retain our BUY rating on the stock," it said.
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