After 730% jump since listing in 2019; can this multibagger continue its dream run?

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IndiaMART InteMesh, an online marketplace for business products and services, is looking to expand the scope of its ecosystem after a stellar debut in 2019.

Shares of the company have soared 732% to Rs 8,095 from the issue price of Rs 973. The rally indicates that investors who bought one lot of IndiaMart Intermesh at Rs 14,595 have made a profit of over Rs 1 lakh.

Market analysts are bullish on the company after the recently concluded QIP. Anand Rathi Shares and Stock Brokers has a ‘Buy’ rating on IndiaMart InterMesh with a price target of Rs 9,200.

“We find value in IndiaMart for its network-driven pricing power, healthy cash-flows (on high operating-profit growth), negative working capital and less capital expenditure in an asset-light model. We believe that the longer-term margin performance should converge with those of platforms such as Naukri.com, where margins (around 55%) have expanded around 1,000 bps in the last 10 years due to high operating leverage,” the brokerage said.

Of late, the fundraising committee of the company’s board approved the allotment of 12,42,212 equity shares to eligible qualified institutional buyers at the issue price of Rs 8,615 per equity share, aggregating to Rs 1,070.16 crore to successful eligible QIBs. The QIP issue opened on February 12 and close on February 22.

The company proposed to utilise the net proceeds for organic and inorganic growth opportunities in spaces strategic to IndiaMart and adjacent ones. The idea is to become a one-stop-shop and keep improving customer experience and engagement and expanding the network for monetisation.

In an interview with The Hindu BusinessLine, Dinesh Agarwal, MD, and CEO, IndiaMART InterMESH, said they are open to picking up a minority stake or strategic investments or outright acquisitions in companies related to payment platform or receivable, order and inventory management and accounting software.

In the interview, Agarwal said he is open to acquiring other B2B e-commerce companies if they “help solve problems in a particular vertical that IndiaMART deals with”.

The B2B e-commerce firm in January posted a 29% rise in its consolidated net profit to Rs 80 crore for the third quarter ended December 31, 2020. It had reported a net profit of Rs 62 crore in the year-ago period.

“IndiaMART’s Q3FY21 results performance was another strong beat on an operational front with the company reporting strong growth in paying supplier base,” JM Financial said, while retaining the ‘Buy’ call on the stock with a price target of Rs 8,550.

“Company continues to benefit from strong network effects, as indicated by metrics such as ‘repeat buyers’/ ‘suppliers are buyers’ that improved from 54%/36% in 3QFY20 to 59%/37% in 3QFY21. Going ahead, management expects pre-Covid growth in paid supplier base (5k+ net additions per quarter) to sustain. We raise our FY21E-23E EPS by 4-8% driven by both increases in revenue and margin assumptions. We also believe that IndiaMART’s fund raise of Rs 1,100 crore for investments towards building a digital B2B ecosystem can have positive implications for its business over the long-term,” the brokerage said.