Sample  write-ups  
 IndiaMART InterMESH   
Vol. No. : 18    Issue No. : 9                             Wednesday, August 07, 2019

India’s largest online B2B marketplace

The company is scaling up well capitalizing on increasing internet penetration and its well recognised brand among SMEs across industries

Related Tables
4IndiaMART InterMESH: Consolidated financials
4IndiaMART InterMESH: Consolidated results

Idea IndiaMART InterMESH
BSE Code 542726
BSE Group B
ISIN Demat INE933S01016
Bloomberg INMART@IN
Reuters INMR.BO
Par Value Rs 10
52-week High/Low Rs 1367 / Rs 1173
Current Price Rs 1199 on BSE and Rs 1200 on NSE
(as on 7 August 2019)

IndiaMART InterMESH is an India-based online marketplace, which connects buyers with suppliers for business–to- business (B2B) transactions.

The company's online channel focuses on providing a platform to small and medium enterprises (SMEs), large enterprises, as well as individuals.

India’s largest online B2B marketplace

IndiaMART with approximately 60% market share is India’s largest online B2B marketplace which operates through its product and supplier discovery marketplace, or "IndiaMART".It provides a robust two-way discovery marketplace connecting buyers and suppliers.

Visitors can become registered buyers on IndiaMART by providing contact details and setting up their own accounts. Buyers locate suppliers on marketplace, including both Indian SMEs and large corporates, by viewing a webpage containing the supplier’s product and service listings, or a "supplier storefront", or by posting requests for quotes called "RFQs" or "BuyLeads".

On IndiaMART, supplier can create storefront at no charge to display information about their company, products and services. Suppliers on IndiaMART include Indian SMEs and large businesses who are manufacturers, wholesalers, exporters and retailers.

The company has strong brand recognition and market position. Its market leading position creates strong network effects as a large number of buyers on their online marketplace results in more enquiries for suppliers, which in turn attracts more suppliers to register, create supplier storefronts and list products and services, consequently attracting more buyers

The company provides free and paid services for suppliers. Free services for suppliers include Supplier storefronts which allow suppliers to create an online space displaying their products and services, Content Management Solution and Lead Management Solutions to "do-it-yourself" tools for managing their presence on IndiaMART, premium number service which helps to forward calls directly to suppliers while also providing software-based missed call alerts to suppliers when a buyer calls them so as to ensure that inquiries from interested buyers are not missed, Assured Payments through IndiaMART payment protection program

In paid services the company has subscription packages that include varying numbers of free bundled RFQ credits. It earns revenues from the sale of subscription packages, request for quote or "RFQ" credits, advertising from IndiaMART desktop, mobile optimised platforms and payment facilitation services. In this the company provides Silver package (or Mini dynamic Catalog), Gold package (in this the company has 2 packages Trust seal and Maximiser) and Platinum package. Listing of products for platinum package is higher than the gold, silver and non paying client. Each of the Silver, Gold and Platinum subscriptions are available for purchase on a monthly basis, annually or for multiple years at discretion based on supplier behavior. The company offers discount to longer-tem subscription packages relative to short-term subscriptions.

Wide product categories

It hosts 60 million products in 54 industries in 138000 categories.

Its product categories include industrial plant and machine; electronics and electrical; Industrial Supplies; building and construction; apparel and garments; food and beverages; medical and healthcare; packaging machines and goods; chemicals, dyes and solvents; Mechanical Parts and Spares; Lab Instruments and Supplies; Furniture and Supplies; Agriculture and Farming; Automobile, Parts and Spares; Housewares and Supplies; Metals, Alloys and Minerals; Hand and Machine Tools; Handicrafts and Decoratives; Kitchen Utensils and Appliances; Textiles, Yarn and Fabrics; Books and Stationery; Cosmetics and Personal Care; Home Textile and Furnishing; Engineering Services; Gems, Jewelry and Astrology, and Computer and Information Technology Solutions.

B2C E-commerce market has led to a large number of sellers bringing their businesses online

B2C E-commerce market has led to a large number of sellers bringing their businesses online, which is leading to the B2B e-commerce market gaining traction. The company’s online marketplace capitalizes on this opportunity by helping buyers gain access to a national pool of suppliers, comprehensive product and supplier information in a standardized format and greater transparency in prices. Their online marketplace also provides suppliers with cost-effective ways to reach new buyers across geographies.

According to KPMG, the wholesale market in India is estimated to reach US$ 700 billion in 2020, rising from an estimated US$ 300 billion in 2015. In order to tap into this potential, B2B e-commerce players have started building platforms for SMEs and traders. The number of SMEs buying and selling online has increased over the years with 27% of the internet-enabled-SMEs being engaged in e-commerce in 2017. The company’s online marketplace is particularly relevant in India, which, unlike many other countries, has no major multi-brand or multi-category offline retailer of scale for business products and services.

Increasing data penetration is a big positive

Competitive data rates offered by 4G service providers, introduction of affordable smart feature-phones, Digital India initiative by the Government of India are increasing the internet subscribers manifold.

On advertisement spend front too, Digital continues to power ad spend growth.

Internet penetration among Indian SMEs remains low, at only 32% in India in 2017 and 17% of Indian SMEs used internet for business purposes as compared to 34% in China. Internet penetration and mobile usage is expected to grow rapidly, driven by greater smartphone penetration and relatively affordable mobile data costs, favourable government policies, make in India initiatives and Digital India promotions.

The mobile website and app created by the company is capable of handling the dynamic needs of buyers and suppliers while remaining reliable, secure and scalable.

Increasing internet penetration and continued investments by the company to develop mobile web and app will further enhance user experience and help the company to retain and attract buyers and suppliers.

On geographical front, although 36% and 49% of buyers and suppliers are respectively derived from the top 8 metro cities in India, namely Delhi NCR, Mumbai, Bengaluru, Hyderabad, Kolkata, Ahmedabad, Pune and Chennai, traffic from second and third tier cities represents more than 1,000 cities in total and is increasing.

June 2019 quarter consolidated results

For the quarter ended June 2019, consolidated sales grew 30% to Rs 147.30 crore. OPM improved 1420 basis points to 24.9% which saw OP rise 203% to Rs 36.70 crore.

Other income jumped 240% to Rs 14.30 crore and interest cost rose to rs 40 lakh from NIL. After providing for depreciation (up 529% to Rs 4.40 crore), PBT grew 196% to Rs 46.20 crore.

EO loss was NIL against Rs 65.30 crore. Thus PBT after EO stood at a profit of Rs 46.20 crore against a loss of Rs 49.70 crore.

Provision for tax grew 106% to Rs 13.80 crore after which PAT stood at Rs 32.40 crore against a loss of Rs 56.40 crore.

The company generated consolidated cash flow from operations of Rs 54 crore leading to cash and investments of Rs 746 crore as on June 2019 as compared to Rs 448 crore on June 2018, up 67%.

No of paid subscribers grew 17% yoy in June 2019 quarter. Average customer realization per customer improved 10% yoy.

100% of traffic is organic that is the company does not spend any money for customer (buyer) acquisition.

FY 2019 consolidated performance

In FY 2019, consolidated sales grew 24% to Rs 507.404 crore. OPM improved 490 basis points to 16.2% which took OP up 76% to Rs 82.30 crore.

Other income jumped 116% to Rs 41.00 crore. After providing for depreciation (up 42% to Rs 4.10 crore), PBT grew 90% to Rs 119.20 crore.

EO loss fell 47% to Rs 65.30 crore. Thus PBT after EO stood at a profit of Rs 53.90 crore against a loss of Rs 60.10 crore.

EO loss was due to due to fair value through P&L (FTPVL) of financial adjustments for preferential shares conversion and ESOP.

Tax provision stood at Rs 33.80 crore against a write back of Rs 114.86 crore after which PAT went fell 63% to Rs 20.10 crore.

Revenues to continue to grow faster than expenses

Historically for the past few years, the company’s sales have grown at CAGR of 25% and operating expenses have growth at CAGR of 17-18%. Generally subscriber addition has grown at 15-20% and average customer realization per customer has grown 5-7%. The management is confident that this trend will continue to future also. This would ensure steady expansion of OPM.


In FY 2020 and FY 2021 we expect the company to register consolidated EPS of Rs 38.3 and Rs 50.3 respectively. At current market price of Rs 1199, the scrip trades around 23.8 times its projected FY 2021 earnings.


IndiaMART InterMESH: Consolidated financials
  1803 (12) 1903 (12) 2003 (12P) 2103 (12P)
Sales 410.51 507.40 629.18 780.18
OPM (%) 11.4 16.2 19.6 22.2
OP 46.63 82.30 123.31 173.14
Other inc. 19.02 41.00 56.00 64.40
PBIDT 65.65 123.30 179.31 237.54
Interest 0.00 0.00 1.60 1.73
PBDT 65.65 123.30 177.71 235.81
Dep. 2.89 4.10 18.00 19.80
PBT 62.76 119.20 159.71 216.01
EO 122.86 65.30 0.00 0.00
PBT after EO -60.10 53.90 159.71 216.01
Total Tax -114.86 33.80 49.51 71.28
PAT 54.76 20.10 110.20 144.72
EPS (Rs) * 19.0 23.2 38.3 50.3
* On current equity of Rs 28.8 crore; Face value of Rs 10 each
(P): Projections
Figures In Rs Crore
Source: Capitaline Database


IndiaMART InterMESH: Consolidated results
  1906 (3) 1806 (3) Var. (%) 1903 (12) 1803 (12) Var. (%)
Sales 147.30 113.30 30 507.40 410.51 24
OPM (%) 24.9 10.7   16.2 11.4  
OP 36.70 12.10 203 82.30 46.63 76
Other inc. 14.30 4.20 240 41.00 19.02 116
PBIDT 51.00 16.30 213 123.30 65.65 88
Interest 0.40 0.00 100 0.00 0.00 --
PBDT 50.60 16.30 210 123.30 65.65 88
Dep. 4.40 0.70 529 4.10 2.89 42
PBT 46.20 15.60 196 119.20 62.76 90
EO 0.00 65.30 100 65.30 122.86 -47
PBT after EO 46.20 -49.70 LP 53.90 -60.10 LP
Total Tax 13.80 6.70 106 33.80 -114.86 PL
PAT 32.40 -56.40 LP 20.10 54.76 -63
EPS (Rs) * # #   23.2 19.0  
* On current equity of Rs 28.8 crore; Face value of Rs 10 each
Figures in Rs crore LP: Loss to profit
# EPS can not be annualized due to seasonality in business
Source: Capitaline Database