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Result Synopsis

Indiamart (INMART) reported broadly inline financial performance for the quarter. While, sequential revenue growth was slightly ahead of estimates; EBITDA margin came in slightly below expectation. It reported sequential revenue growth of 6.9% QoQ, led by 4.6% QoQ increase in the number of paid customers and around 2.4% QoQ increase in average realization. The growth in the number of paid customers was at around ~9k. There was sequential decline in EBITDA margin(down 333 bps QoQ) led by higher manpower cost. The Internet traffic to the portal and the number of registered buyers reported marginal 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 8k?9k 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 nearly stabilized after being under pressure recently and we expect it to improve in medium term. We estimate revenue CAGR of 22.7% over FY23?25E with average EBIT margin of 29.2% over the period. We maintain our BUY rating on the stock with revised target price of Rs 6,491/share based on DCF methodology. The stock trades at PER of 45.1x/35.3x on FY24E/FY25E EPS.

Result Highlights

* Reported revenue of Rs 2,688mn (up 6.9% QoQ, up 33.5% YoY). The sequential growth was led by 4.6% QoQ increase in the number of paid customers and around 2.4% QoQ increase in average realization.
* Total collection grew by 47.7% QoQ (up 31.5% YoY) to Rs 4.1bn, with strong traction seen across customer categories.
* EBITDA margin declined by 333 bps QoQ to 24.6%, led by around 280 bps impact from higher employee expense as it continues to add on to its manpower.
* Number of registered buyers was 170 mn for the quarter vs 165 mn in Q3FY23.
* Total traffic to the portal increased to 252 mn vs 250 mn in Q3FY23.
* The number of paid customers grew by 9k QoQ to 203k. While ARPU grew by 2.4% QoQ to Rs 50,600 for the quarter.

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