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Yes Securities Report
IndiaMart Intermesh Ltd. reported broadly inline financial performance for the quarter. The sequential revenue and Ebitda margin were along expectation. It reported sequential revenue growth of 4.5% QoQ, led by 1.0% QoQ increase in the number of paid customers and around 3.9% QoQ increase in average realisation.
The growth in the number of paid customers was at around ~2000 QoQ. There was sequential decline in Ebitda margin (down 26 basis points QoQ) led by higher manpower cost. The Internet traffic to the portal and the number of registered buyers grew during the quarter as per the trend.
IndiaMart has dominant market share in business-to-business classified business with around 65% market share in paid listings.
The strong performance is led by higher value proposition for sellers leading to higher pricing power, efficient matching algorithm resulting in higher buyer satisfaction. The growth in paid customers is expected to be between 7,000-8,000 per quarter going ahead.
The growth in collections remain robust and provides strong growth outlook. Most of traffic on the portal is organic driven led by strong value proposition with little spending on advertising. Ebitda margin has stabilised after being under pressure recently and we expect it to reach around 30% by Q4 FY23.
We estimate revenue compound annual growth rate of 23.5% over FY23‐25E with average Ebitda margin of 30.4% over the period.
We maintain our 'Buy' rating on the stock with revised target price of Rs 3,755/share based on discounted cash flow methodology.
The stock trades at price-to-earnings of 49.0 times/35.9 times on FY24E/FY25E earning per share.
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