IndiaMART InterMESH Stock Zooms 10% After Reporting 78% Rise In Q1 PAT, Buyback Proposal

IndiaMART InterMESH, a midcap stock, skyrocketed by more than 9% on Friday despite reporting mixed performance in the first quarter of FY24. Investors give thumbs up to the Noida-headquartered e-commerce firm on registering double-digit growth in both PAT and revenue during Q1FY24. Also, the company has declared a buyback plan aggregating to Rs 500 crore. Brokerage ICICI Securities has recommended buying.

At the time of writing, IndiaMART InterMESH's share price traded at a new 52-week high of Rs 3,180 apiece, up by Rs 280.70 or 9.68% on BSE.

At the current market price, the company's valuation is around Rs 19,445 crore.

During the June 2023 quarter, IndiaMART posted a consolidated net profit of Rs 83 crore rising by a whopping 78% YoY, while revenue from operations stood at Rs 282 crore up by 26% YoY. EBITDA came in at Rs 77 crore in the quarter, soaring by 20% YoY, and EBITDA margins were at 27% versus 29% in Q1FY23.

In the quarter, the company registered traffic of 254 million and Unique business enquiries of 22 million. Supplier Storefronts grew to 7.6 million, an increase of 6% YoY and paying subscription suppliers grew to 207,683 a net addition of 4,993 subscribers during the quarter.

Furthermore, the company received board of directors approval for a buyback of Rs 500 crore. A total of 12,50,000 equity shares are proposed to buyback at a price of Rs 4,000 per equity share. The buyback proposal represents 2.04%, of the total number of equity shares in the total existing paid-up equity capital of the company as of June 30, 2023.

Post the quarterly earnings and buyback plan, ICICI Securities in its research note said, "IndiaMART's strong revenue growth trajectory was maintained in Q1FY24 with ~26% YoY revenue growth. However, new subscriber addition was significantly lower than expectations (4,993 vs. I-Sec. est. of 8,000). Our channel checks indicate that>10% price increases were taken in base packages (price sensitive) mid-Q1FY24. We believe lower subscriber additions were due to customer pushback to pricing action. EBITDA margin was higher than estimated (27.4% vs I-Sec est.- 26.3%), as employee expense remained flattish QoQ. BUSY revenue grew 15.4% QoQ in Q1FY24, which we believe indicates improving traction for its accounting software service offerings. In addition, the company has announced a buyback of 2.04% equity at Rs 4,000 per share."

On the stock price, the brokerage's note said, "We believe IndiaMART is likely to deliver strong revenue (32%) and EBITDA (41%) CAGR growth trajectory over FY23-FY25E as a key beneficiary of the robust growth in B2B e-commerce expected over the next few years. We maintain BUY, given its likely growth prospects and improving margin trajectory. We maintain our target price at Rs 3,500 (~34x FY25E EV/EBITDA)."

Taking into consideration the brokerage's target price, IndiaMART stock has a potential to nearly 11% upside on the exchange.

IndiaMART stock surged nearly 46.72% for year-to-date on BSE.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.