At a time when the Indian stock market was lagging behind its global peers this year, shares of Indiamart Intermesh Ltd have gained about 32 percent in 2023 (year-to-date or YTD) so far, rising from around Rs 4,327 level to currently at Rs 5,731 level, as compared to 0.04 percent increase in benchmark Sensex. The stock settled 1.85 percent higher at Rs 5,732 per share in Wednesday's trade.

Share Market Live

NSE

The stock of the e-commerce company has been gaining since December 2022 after it reported a revenue of Rs 251 crore and consolidated net profit rose of Rs 113 crore during the third quarter. For the March quarter of fiscal 2023, Indiamart reported a revenue of Rs 269 crore, which is up 7 percent quarter-on-quarter (QoQ) and 33 percent year-on-year (YoY).

The company, with a market capitalisation of 17,550 crore, has recorded an operating profit at Rs 70 crore, down 6 percent on a QoQ basis because of higher employee costs during the quarter.

Employee cost will likely moderate going ahead, which will help the company in improving its operating margins profile. The outlook on revenue growth momentum still remains strong.

Bonus issue, dividend

Apart from the fourth quarter results, the Noida-headquartered company has also announced a bonus issue of equity shares to investors in the proportion of 1:1.

A company issues bonus shares for their shareholders in order to increase the liquidity of the stock as well as with the aim to decrease its stock price to make it affordable for investors.

The company has also recommended a final dividend of Rs 20 per equity share of face value of Rs 10 each for fiscal FY23. The dividend will be paid within 30 days from the date of declaration and approval of final dividend by the shareholders of the company.

Analysts raise price targets

Given the company's strong growth potential backed by a robust product profile with leading market share and superior execution capabilities, most analysts have raised their price targets for IndiaMART.

Below are the target prices given by brokerages -

IIFL Securities has a target price of Rs 5,400.

Anand Rathi has a target price of Rs 6,200.

Nuvama has a target price of Rs 6,220.

Axis Securities has a target price of Rs 6,170.

HDFC Securities has a target price of Rs 5,960.

Analysts believe the company's management is confident of gaining medium-term demand momentum and expects improvement on the margin front as well. The stock has sustained market share gain with more than 2 lakh suppliers.

The management is also confident of adding over 8,000 paying subscribers in each quarter in financial year 2023-24, according to analysts. During the March quarter, the company has added 200 employees.

From a long-term perspective, analysts at Axis Securities believes Indiamart is well-placed for encouraging growth in light of the multiple long-term contracts it has procured from the world’s leading brands. Richer revenue visibility also gives the brokerage further confidence in its business growth moving forward.

Meanwhile, domestic brokerage HDFC Securities has maintained a 'positive' stance on the stock based on better growth visibility led by strong collections; lower churn across client buckets; margin expansion possibility; and an increase in realisation led by platinum clients.

First Published:May 3, 2023 3:23 PM IST