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Robust growth in the number of paid customers and Collections

Our view and valuation

Overall, it reported mixed performance as reported revenue was inline; but, the EBITDA margin was below expectation on higher investment in manpower and sales and distribution during the quarter. The addition in paid customers was among the highest in recent quarters and that was also reflected in the growth in collections. Most of traffic on the portal is organic driven led by strong value proposition with little spending on advertising.  It continues to be a leader in B2B online classified segment with around 70% market share and remains a strong play on rising adoption of internet among SMEs. We estimate revenue CAGR of 21.3% with average EBIT margin of 37.1% over the period

We maintain BUY on the stock with revised target price of Rs 6,950 /share, based on DCF based valuation. Trades at PER of 37.8x on FY24E EPS

Result Highlights

Reported revenue of Rs 2.0 bn( up 7.1% QoQ, up 12.1% YoY), primarily led by increase in the number of paid customers.

The number of paying customers grew by 13,065 QoQ to 169k during the quarter( an increase of 8.5% QoQ).

Collection reported robust growth of 43.9% QoQ( up 16.9% YoY) to Rs 3.2bn, on improved demand environment in Q4FY22

Total traffic to the portal was 260mn compared to 259mn in Q3FY22; While total products live on the platform was 83mn compared to 80mn as of Q3FY22.

EBITDA margin was down 1349 bps QoQ to 28.4%, led by higher employee cost( up 35% QoQ), on strong employee addition; and higher other expenses( up 27.6% QoQ). The number of employees increased by 15.2% QoQ. The increase in cost is part of investment plan to capitalize on opportunities in the space.

Cash and investment of Rs 24.2bn compared to Rs 25.2bn in Q3FY22.

Recommended final dividend of Rs 2/ share and also announced buyback of 160,000 equity shares for an aggregating upto Rs 1 bn.

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