Jefferies has upgraded Indiamart Intermesh to 'hold', arguing that while growth challenges cap upside, recent derating limits further downside risk. The brokerage has set a revised target price of Rs 2,100, valuing the stock at 18x earnings, after Indiamart's December-quarter performance came in mixed.
Indiamart Intermesh on Tuesday reported 55.62% rise in consolidated net profit to Rs 188.31 crore for December quarter FY26. The company had posted a net profit of Rs 121 crore during the October-December period a year ago, according to a regulatory filing from Indiamart Intermesh. Revenue from operations was up 13.35% to Rs 401.6 crore in the December quarter. It was Rs 354.27 crore in the year-ago period.
On a consolidated basis, normalised Ebitda rose 4% YoY, below Jefferies' estimates. However, normalised PAT jumped 63% YoY, exceeding expectations.
Jefferies now expects Indiamart to deliver 12% revenue CAGR and 7% EPS CAGR over FY26–28. After a 15% stock correction over the past two months, the stock trades at 23x one-year forward consolidated PE (19.5x standalone PE), which the brokerage believes limits downside risks. However, muted earnings growth is likely to cap upside, prompting Jefferies to upgrade the stock to 'hold' with a revised target price of Rs 2,100.
A key negative in the quarter was the continued decline in the paid subscriber base, which fell by 1,000 in Q3, missing Jefferies' estimates. Despite management interventions to improve supplier satisfaction, churn remains elevated — 7% for Silver monthly plans and 4% for Silver annual plans — partly due to the recent 12–30% price hike. Factoring in the Q3 miss, Jefferies has cut its FY26–28E subscriber base assumptions by 1–3%.
Standalone collections grew 14% YoY, beating estimates. However, Jefferies believes sustaining 15%+ collections growth would require subscriber growth of over 5%, which appears unlikely in the near term. The brokerage expects collections growth to moderate to around 10%, and has revised revenue estimates accordingly, projecting 11% collections growth and 11%/12% CAGR in standalone and consolidated revenues over FY26–28.
While Ebitda margins contracted year-on-year, they exceeded expectations due to cost reversals. Jefferies has raised its FY26 standalone margin estimate by 60 bps, while tweaking FY27–28 estimates. Over the longer term, margins are expected to normalise at 33–34% as subscriber churn moderates, translating into an 8% EPS CAGR over FY26–28.
Watch LIVE TV, Get Stock Market Updates, Top Business, IPO and Latest News on NDTV Profit.
