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Limited Visibility; Recovery Hinges on Churn Stabilisation & Improvement in Net Addition

Near-term outlook remains measured, with continued weakness in subscriber addition and elevated churn (particularly in Silver tier) limiting visibility, even as collections and ARPU trends stay resilient. Growth is expected to remain largely ARPU-led, with recovery in net addition contingent on churn stabilisation and improved sales execution after pricing reset. While margin remains stable, operating leverage is likely to be gradual, given ongoing investments. We remain cautious in the near term, given limited visibility on subscriber addition and elevated churn. We see performance as range-bound; our stance would turn constructive with a sustained improvement in churn and net addition, supported by monetisation levers and AI-led enhancement. We expect Revenue/EBITDA/PAT to clock CAGR of 11.2%/11.1%/14.8% over FY26-FY29E. We have revised our FY27E/FY28E EPS by (10.4)%/(12.1%). We downgrade our rating to ‘ADD’ with a revised TP of INR 2,340 (vs INR 2,800 earlier) at a PE of 22x (down from 25x due to muted volume growth). We have also undertaken DCF valuation as a sanity check and it broadly supports the implied valuation.

Revenue & EBITDA Beat Estimate; PAT Falls Short on Lower Other Income

* Revenue for Q4FY26 came in at INR 4.0 Bn, up 0.7% QoQ and 13.9% YoY (vs CIE est. at INR 3.9 Bn). For FY26, revenues came in at INR 15.6 Bn, up 13.0% YoY.

* EBITDA for Q4FY26 came in at INR 1.3 Bn, down 1.2% QoQ, whereas it was up 1.7% YoY (vs CIE est. at INR 1.2 Bn). EBITDAM was down 62 bps QoQ and down 392 bps YoY to 32.8% (vs CIE est. at 31.9%). For FY26, EBITDAM stood at 33.8%, down 390 bps YoY.

* PAT for Q4FY26 stood at INR 0.5 Bn, down 73.3% QoQ and down 72.2% YoY (vs CIE est. at INR 1.2 Bn). PAT declined due to notional revaluation loss in investments.

ARPU-led Growth Offsets Weak Addition; Supply-side Saturation Emerging

INMART reported a steady Q4FY26 with revenue growth (~14% YoY) supported by healthy collections and deferred revenue. Subscriber trends continue to be weak, with a net decline of ~1,200 paying suppliers. This was driven by pricingled moderation in gross addition and sustained churn in lower tiers, leading management to withhold near-term guidance and indicating limited visibility until churn stabilises. Growth remains increasingly ARPU-led, with strong retention and upsell in premium cohorts (~75% of revenue) offsetting weak additions, whereas high platform penetration limits incremental supply-led growth. Strategic focus is shifting towards AI-led platform enhancements and monetisation levers, though these remain early-stage; near-term recovery is contingent on stabilisation in churn and improvement in supplier addition. Overall, we see Q4 reinforcing the ongoing transition toward an ARPU-led growth model, with subscriber recovery remaining the key trigger for re-acceleration.

Margin Stable; Limited Operating Leverage

EBITDAM remained stable at ~33%, supported by ARPU-led monetisation and premium mix, offsetting weak subscriber trends with limited near-term operating leverage, given the variable cost structure. Treasury MTM losses weighed on PAT but are non-core. Overall, we expect margin to remain range-bound in the near term, with meaningful upside contingent on subscriber growth recovery and operating leverage from scale.

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