IndiaMart Q2 Results Review - Strong ARPU But Weak Net Adds; Lead Indicators Affirmative: Dolat Capital

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Dolat Capital Report.IndiaMart Intermesh Ltd. reported revenue growth of 4.5% QoQ (our estimate: 3.7%), led by healthy average revenue per user growth of 4% QoQ, while net subscriber addition was weak at 2,000, attributed to May-23 price hike and churn in large base of Silverin last six quarters. Operating profit margin stood at 24.4%, down 34 bps QoQ (our estimate: 26.4%), due to continued investments in Busy and Livekeeping Accounting. Standalone business Ebitda was up 35bps QoQ at 28.7%.Gross adds were affected by price hike, where management expects price absorption to be completed by Q3 (gross adds to improve), and has also commenced a strategic review on churn reduction..What to expect next quarter We expect revenue growth of about 3.6% QoQ in Q3 FY24, led by relatively improved subscriber addition and sustained ARPU mining. We expect OPM to grow by 21 bps, on normalisation of incentives, slower employee addition and benefits from ARPU translating into better profitability..Valuations IndiaMart remains a dominant player in India’s B2B business space, gaining from digital adoption and steady progress by micro, small and medium enterprises. IndiaMart’s platform paid supplier growth is a result of a matured, yet evolving platform that drives efficient matchmaking for buyers. We expect revenue to grow steadily at 21% (unchanged) compound annual growth rate over FY23-FY32E in stage-I and slightly moderate to 16.8% CAGR (earlier 15%) in stage-II over FY32-FY40E. We also expect Ebit margins to consistently improve, and later, normalise. Margins to rise from current 24% level and average 32% for the entire forecast period. We assign 'Buy' rating, and a discounted cash flow based target price of Rs 3,500 (implies ~40 times on price-to-earnings ratio on FY26E estimates)..Click on the attachment to read the full report:.RateGain Q2 Results Review - Significant Beat Led By Adara; Guidance Remain Conservative: Dolat Capital.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

IndiaMart Q2 Results Review - Strong ARPU But Weak Net Adds; Lead Indicators Affirmative: Dolat Capital

Company's platform paid supplier growth is a result of matured, yet evolving platform that drives efficient matchmaking for buyers

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