Buy IndiaMART Ltd For Target Rs. 3,845 - Yes Securities Ltd
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Result Synopsis
Indiamart (INMART) reported broadly inline financial performance for the quarter. The sequential revenue and EBITDA margin were along expectation. It reported sequential revenue growth of 4.9% QoQ, led by 2.5% QoQ increase in the number of paid customers and around 1.8% QoQ increase in average realization. The growth in the number of paid customers was at around ~5k. There was sequential improvement in EBITDA margin(up 281 bps QoQ) led by positive operating leverage. The Internet traffic to the portal and the number of registered buyers reported modest growth during the quarter. It has dominant market share in B2B 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 7k?8k 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 improved after being under pressure recently and we expect it to reach around 30% by Q4FY23. We estimate revenue CAGR of 22.4% over FY23?25E with average EBIT margin of 30.0% over the period. We maintain our BUY rating on the stock with revised target price of Rs 3,845/share based on DCF methodology. The stock trades at PER of 52.4x/40.2x on FY24E/FY25E EPS.
Result Highlights
* Reported revenue of Rs 2,821mn (up 4.9% QoQ, up 25.6% YoY). The sequential growth was led by 2.5% QoQ increase in the number of paid customers and around 1.8% QoQ increase in average realization.
* Total collection dipped by 23.2% QoQ to Rs 3.2bn (up 26.4% YoY), due to seasonality as Q4 is generally strong quarter for collection.
* EBITDA margin improved by 281 bps QoQ to 27.4%, led by positive operating leverage.
* Number of registered buyers was 175 mn for the quarter vs 170 mn in Q4FY23.
* Total traffic to the portal increased to 254 mn vs 252 mn in Q4FY23.
* The number of paid customers grew by 5k QoQ to 208k. While ARPU grew by 1.8% QoQ to Rs 51,500 for the quarter.
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