Add Indiamart Intermesh Ltd For Target Rs. 2,875 By Choice Broking Ltd
INMART gaining momentum as it addresses its core issues
INMART is focused to drive growth led by ARPUs & new customer acquisitions. To address its churn issues, the company has enhanced its product by improving lead quality, buyer intent, & localized search across Gold, Platinum, & Silver tiers. These improvements have reduced complaints & improved lead queries, though ongoing troubleshooting continues. Additionally, INMART has launched buyer-side advertising aimed at reducing churn & boosting customer acquisition. Early results indicate a 16–17% increase in unique business inquiries, up from the previous 10–12% trend. Management expects meaningful gains in net additions & retention within next 2 quarters, with an additional quarter needed to fully assess churn impact. Given these developments, we believe INMART is well positioned to channelize new strategies to drive better growth. As we roll forward FY28 estimates we maintain our ADD rating with an upward revised target price to INR 2,875, reflecting a higher PE multiple of 25x (earlier 24x) based on average FY27E & FY28E EPS of INR 115.0.
Q1FY26 performance beats street expectations on all fronts
* Revenue for Q1FY26 came at INR 3.7Bn, up 4.8% QoQ and 12.3% YoY (vs Consensus est. at INR 3.6Bn).
* EBITDA for Q1FY26 came at INR 1.3Bn, up 2.4% QoQ and 11.7% YoY (vs Consensus est. at INR 1.3Bn). EBITDA margin was down 60bps QoQ and 20bps YoY to 35.8% (vs Consensus est. at 35.8%).
* PAT for Q1FY26 stood at INR 1.5Bn, down 15.0% QoQ due to one-time exceptional gain in Q4FY25 (vs Consensus est. at INR 1.1Bn).
Gold & Platinum plan churn remains well managed at ±1%: Annualized revenue per paying supplier (ARPU) rose 3.2% QoQ to INR 64,000 led by price hikes. Earlier, INMART concentrated on upselling and retaining customers in its Gold and Platinum plans. However, going forward, we expect pivot towards new customer acquisition as an additional driver of qualitative growth. Gold & Platinum tiers continue to provide pricing power & a stable revenue base, which management is leveraging effectively. A sustained focus on these premium tiers is likely to support consistent growth in the coming quarters
Measures underway to reduce elevated churn in Silver plans: Silver monthly & annual plans see higher churn at ~7% & ~4% respectively. This is led by challenges like inadequate follow-up support, pricing issues, & the need for hyper-local inquiries. The company is addressing these through product improvements in customer lead quality, buyer intent, & localized search. While no price hikes occurred in this tier, we believe lowering churn is crucial to drive customer growth & support ARPU stability.
EBITDAM stabilization ahead as INMART invests for new customers: EBITDAM stood elevated at 36% in Q1FY26, but management expects longterm margins to stabilize at 30–33%. This moderation is driven by increased investments in sales & marketing, especially online advertising, with a quarterly budget of INR 60–100Mn for the coming quarters. The company plans to ramp up these efforts once churn or retention improves. INMART continues to prioritize revenue growth & customer experience over short-term margin gains, signaling a strategic shift toward long-term value creation.
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SEBI Registration no.: INZ 000160131
