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INMART’s cash collections in 1QFY24 grew 26.4% YoY to INR 3.21bn in 1QFY24, ahead of JMFe by 3%. The beat was likely driven by price hikes and up-sells. Paid subscription additions were, however, weak at +5k QoQ, below JMFe and management guidance of 8k+ qtrly additions. We believe this indicates a shift in strategy and the company may prioritise realisation over volume in the near term (in line with competitor actions). While this may not impact a 20%+ collection growth trajectory in the near term, the defocus on volume was a bit of a dampener over otherwise good results. In fact, INMART’s EBITDA of INR 773mn was ahead of JM/Street expectations by 4-5%. The beat on JMFe was margin-led, as revenue was in line. With a bulk of growth investments (mainly related to sales team expansion) in the base and realisation likely to improve, we expect operating leverage to support ~400bps margin improvement over FY23-FY26E. Overall, we forecast 22%/27%/24% Revenue/EBITDA/PAT CAGR over FY23-26E. We expect the stock to continue to trade at punchy valuations amidst strong earnings visibility. We also expect the market to cheer the company’s intention to return excess cash through the buyback route. We reiterate BUY with a revised TP of INR 3,300 (vs. INR 3,000 earlier).

* Robust cash collections driven by realisation: IndiaMART’s cash collections grew 26.4% YoY (-23.2% QoQ, due to seasonality) to INR 3.21bn in 1Q. In the standalone business, while sequential paid supplier additions stood at only ~5k (lower than JMFe of 8k), they were offset by very strong realisation (INR 51.5k vs. JMFe of INR 50.5k). Busy revenue grew 26% YoY driven by very strong billings (+94% YoY). Overall, Consol. revenue of INR 2.82bn (+25.6% YoY, 5% QoQ) was in line with JMFe. Basis the results, we cut supplier additions’ expectations but raise realisation forecasts. Overall, we expect IndiaMART to report c.22% revenue CAGR over FY23-26E on the back of strong build-up of deferred revenue of INR 12.0bn (+25% YoY) and robust collections expected in the near term.

* Realisation likely to support margin improvement: EBITDA margin stood at 27.4% (- 120bps YoY, +280bps QoQ) ahead of both JMFe/Cons. of 26.1%/26.9%, respectively. The beat on JMFe was due to lower-than-expected employee cost and other expenses. With a bulk of the growth investments that had adversely impacted the company’s margins in FY23 now in the base and realisation continuing to improve, we forecast strong margin expansion hereon driven by operating leverage. Accordingly, we raise our Consol. EBITDA margin forecasts by 10-60bps over FY24-26.

* Announces share buyback of up to INR 5bn: The company has announced its intention to buyback 1.25mn shares worth up to INR 5bn at a per share price of INR 4,000, a c.38% premium over CMP. The buyback will be through the tender offer route and will extinguish 2.04% of the total outstanding shares. There is no restriction on promoters’ participation and we expect them to participate in the buyback offer. However, given that the buyback offer accounts for 24.33% of the company’s total paid-up equity capital and free reserves, it will require shareholders’ approval. Record date for the buyback offer

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