Indiamart is India’s largest online B2B marketplace,

Dear investor,

Please find below mentioned fundamental stock for delivery purpose.

 

Company	CMP	Target	BSE Code	NSE Code
Indiamart Intermesh Ltd.	2460	2590	542726	INDIAMART

Fundamental

 

• Market Cap:  7,069 Cr.
• Current Price:  2,460
• 52 weeks High / Low  2862.50 / 952.00
• Book Value:  95.05
• Stock P/E: 37.38
• Dividend Yield: 0.41 %
• ROCE: %
• ROE: %
• Sales Growth (3Yrs): 25.90 %
• Listed on BSE and NSE
• Company Website
• Face Value:  10.00

• PEG Ratio:
• Promoter holding: 52.42 %
• Pledged percentage: 0.00 %
• Debt:  76.50 Cr.
• Price to Earning: 37.38
• EPS:  65.41
• Net profit:  189.10 Cr.
• Profit growth: 73.97 %
• Profit growth 7Years: %
• Net profit preceding 12months: 147.40 Cr.
• Profit growth 3Years: 29.42 %
• Dividend yield: 0.41 %
• Debt to equity: 0.28
• Sales last year:  507.42 Cr.
• Sales growth: 19.08 %
• Unpledged promoter holding: 52.42 %
• Investments:  901.50 Cr.

Indiamart is India’s largest online B2B marketplace, connecting buyers with suppliers. With 60% market share of the online B2B Classified space in India, the channel focuses on providing a platform to Small & Medium Enterprises (SMEs), Large Enterprises as well as individuals to pursue win-win objectives. Yesterday’s trading volume was 4x higher than its 30 days average volume. The current market cap is Rs7000 crore and the stock is held by all leading AMCs (UTI, Religare Invesco, HDFC, Kotak, and others). Westbridge Crossover Fund, Llc holds >5% followed by Amadeus Iv Dpf Limited holding>3% and many other leading FIIs and long funds.
 

Investment rationale
 

Pioneer in B2B marketplace, diversified across 1L+ product categories: The Company has a 60% market share in online B2B space offering with 68 million products across 1L+ categories. It has 6.1 million supplier and 107 million registered buyers managing >44 million business inquiries every month. The company uses behavioral data-driven by algorithmic matchmaking. The activities start with RFQ submission from buyers-enrichment & broadcasting by Indiamart-relevant RFQ selection by supplier-finally buyers supplier interaction through CRM tool. It offers end-to-end discovery from raw material till final products through 100% organic traffic.

 

Nationwide coverage, huge scope for future growth: Both buyers and suppliers are from across metro and semi-urban areas. 35% of buyers from Metro while 61% of suppliers from metro cities. It derives >25% business from tier-II cities while rests are from other semi-urban areas (>4000 cities). It has >3600 sales representatives with 84 branches. Top 10% of subscribers (Gold and Platinum) contribute>43% revenue. Nearly 55% of buyers and 36% of suppliers are repeat customers. In the last five years, it has registered 27% CAGR in no. of suppliers while live products listing clocked 28 CAGR for the same period. The buyer’s trend getting registered with the platform has clocked 39% CAGR in the last five years. Internet penetration among India’s MSMEs remains low, with 17% of MSMEs using the internet for business purposes in 2017. The impact of digital services on MSMEs is currently estimated at US$18 billion; and 40% is contributed by IndiaMART alone. With, COVID led lockdown, Indiamart becomes prefer the choice to reach out to millions. Considering that access to finance is another major problem that businesses in India face, Company launched the payment facilitation service to help alleviate payment default risk and other payment-related concerns for suppliers and buyers. Its payment protection program and online payment gateway system allow multiple payment options like credit cards and wallets among others, directly on supplier storefronts.

 

Significant recovery post lockdown: COVID led lockdown has a significant impact on MSME. In Unlock phase-1, buyers traffic is now back to a normal level while monthly collection from buyers is now 2/3rd of pre-lockdown levels. The company is managed to drive cost-saving measures and was able to save 15% without any layoffs. Going ahead, accelerated internet adoption, openness to online, and Make in India to drive the business.   

 

Strong financial backed by an asset-light model:  The company follows an asset-light business model with negative working capital due to a long term subscription base. It has a strong balance sheet with zero debt and cash and investment of Rs1000 crore which is valued at Rs345 per share. It has been reporting strong quarterly numbers with an EBITDA margin of +50% and the return ratio is not in higher double-digit. The company is trading at 33x of its TTM June 2020 earnings.
 

Duration of recommendation: Short to Medium term.
 

Best Regards,
Team SBICAP Securities