IndiaMART InterMESH, the leading online B2B marketplace, saw its shares plunge by 10% to a 25-month low of ₹2,065.40 on January 22. This decline came as brokerage firms downgraded their ratings due to weak Q3FY25 results, which revealed a drop in paid subscribers and slow collection growth.
Brokerage firm Nomura downgraded the stock from “Neutral” to “Reduce,” slashing the target price to ₹1,900 from ₹3,150. The firm cited a sharp decline in paying subscribers, ongoing customer churn, and underwhelming collection growth as reasons for the downgrade. Similarly, Nuvama lowered its target price to ₹1,970 from ₹2,500, raising concerns about the first decline in subscriber numbers since the post-COVID recovery.
What Are the Key Q3 Highlights for IndiaMART InterMESH?
IndiaMART reported its December quarter (Q3FY25) results, revealing mixed performance:
- Revenue Growth: Increased by 1.9% quarter-on-quarter (QoQ) to ₹354 crore.
- ARPU Growth: Annualized Average Revenue Per User (ARPU) rose by 3.5% QoQ to ₹62,900.
- Paid Subscribers Decline: The number of paid suppliers fell by 4,000 QoQ, reaching 214,000 due to high churn in Silver monthly packages.
- Registered Buyers: Increased by 4 million QoQ to 206 million.
- EBITDA Margin: Improved slightly to 39.0%, supported by a 4.1% reduction in other expenses.
- Live Product Listings: Rose to 115 million from 113 million in Q2FY25.
Why Are Analysts Concerned About Subscriber Churn and Growth?
Subscriber churn, particularly in the Silver monthly packages, has raised red flags for analysts. Despite the company’s efforts to improve retention, collections grew only 2% year-on-year. Brokerages have pointed out that growth may remain subdued in the medium term until churn stabilizes and net subscriber additions recover.
What Did Brokerages Say About IndiaMART’s Future Performance?
- Nomura: Reduced its FY25-27 PAT estimates by 4-13%, citing ongoing churn issues and weak subscriber growth.
- Nuvama: Warned of medium-term growth challenges and maintained a “Reduce” rating.
- Centrum Broking: Revised its target price to ₹2,368 from ₹3,098, noting the company’s strong market presence but emphasizing the need for stabilization in churn.
Is a Recovery Expected?
IndiaMART’s management remains optimistic about stabilizing churn within the next 2-3 quarters. With a 65% market share in the online B2B classified space, the company continues to hold a dominant position. However, analysts agree that improving retention and driving higher-paid customer additions will be critical for sustained growth.
FAQs
Why did IndiaMART shares fall after Q3FY25 results?
The decline in paid subscribers and weak collection growth led brokerages to downgrade their ratings, causing the shares to slide.
What are the key challenges for IndiaMART?
High churn rates, particularly in Silver monthly packages, and subdued collection growth remain significant challenges.
What are the revised target prices for IndiaMART shares?
Nomura set a target price of ₹1,900, Nuvama set it at ₹1,970, and Centrum Broking revised it to ₹2,368.
Is there potential for recovery in IndiaMART shares?
Yes, management expects churn stabilization and improved retention within 2-3 quarters, which could support recovery.
What is IndiaMART’s EBITDA margin for Q3FY25?
The EBITDA margin improved slightly to 39.0% due to reduced other expenses.
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