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IndiaMart InterMesh reported robust consolidated Q1FY25 revenue from operations at INR3,313mn, up 17.4% YoY. The growth in revenue was primarily driven by 4% increase in paying subscription suppliers and 13% improvement in ARPU due to higher monetization. The number of subscription-paying suppliers increased to ~216,000, up 0.9% sequentially/ 3.8% YoY. Consolidated collections grew 14% YoY to INR3,660mn in Q1FY25. Deferred revenue rose 23% YoY to INR14.7bn, which should support revenue growth in FY25E. Consolidated cash generated from operations stood at INR1,360mn for Q1FY25 (represents 37% of collections).

*  Standalone EBITDA Margins stood at healthy 37% for the quarter. This margin expansion was due to organic operating leverage, certain cost optimization initiatives and savings due to lower customer acquisitions. As the customer growth picks up, the margin expansion will normalize to 33-34% for FY25E with the help of operating leverage and lower sales and marketing cost. Standalone collections have been growing below 20% trajectory over the last few quarters because of weak net customer addition. Company added ~2,000 customers in Q1 and continues to see more than anticipated churn in silver category, while gold and platinum customers continue to have a very low churn and grow healthily in terms of numbers and ARPU. Company may start guiding on net customer additions once the churn improvement is seen. IndiaMart registered traffic of 267mn and unique business enquiries of 25mn in Q1FY25. Supplier Storefronts grew to 8.0mn, an increase of 5% YoY. Company continues to make investment and undertake measures to enhance customer experience and improve retention, as well as drive a deeper penetration in the paying customers.

*  BUSY has done a net billing of INR234mn in Q1 representing a 4% YoY. The revenue from operations have grown by 15% YoY to INR155mn. The deferred revenue and advances have grown by 41% YoY to INR515mn. The EBITDA for the quarter stood at INR10mn representing a margin of ~6.5%. There were a total of about 9,700 new licenses that were sold to customers during the quarter, taking the total licenses sold count to 3,73,000 at the end of Q1. Management is focused on growing its new customer base and increase the overall growth rate in coming quarters.

*  During the quarter, company has got into an agreement to acquire 10% stake in ‘M/s Baldor Technologies Private Limited’ ("IDfy"), which is an Integrated Identity Platform offering products and solutions for KYC, Background Verifications, Risk Mitigation, Digital Onboarding and Digital Privacy

Valuation: IndiaMart continues to make investments in strengthening their organization to leverage the growth opportunities. Growth will be driven by new sales, service and marketing head, focus on tier1 and tier 2 suppliers and ARPU growth in gold and platinum segment. We maintain our BUY rating and arrive at a revised TP of INR3,480 implying a P/E of 37x on FY26E EPS of INR94.

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