IndiaMart Q3 Results Review - Weak Supplier Addition To Weigh On Near-Term Growth: Motilal Oswal

Motilal Oswal Report

IndiaMart Intermesh Ltd. delivered a weak Q3 FY24 performance, with five quarter low collection growth of 17% (last four-quarter average of 24%) as its paying supplier addition moderated to only 1800 QoQ (versus ~2,000 in Q2 and quarterly average of 8500 in FY23).

IndiaMart reported in-line Q3 revenue of Rs 3.05 billion, up 21% YoY, aided by continued strength in deferred revenue (up 24% YoY to Rs 12.3 billion). On the other hand, Ebitda margin expanded by a strong 90 basis points QoQ to 27.9% and average revenue per user jumped 11% YoY (versus 10% in Q2) to Rs 55100.

Weak paying supplier addition is a near-term concern for IndiaMart business growth as it would hurt collections (and subsequently revenue) over the next few quarters.

But we take comfort in the fact that the impact is mainly seen among some Silver customers, which form only 25% of the company’s revenue base.

Moreover, the management remains confident that the supplier addition trajectory (impacted by price hikes few quarters ago) should return to over 5000 per quarter in the next few quarters, helping IndiaMart return to its long-term collection growth target of 20-25% YoY.

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