IndiaMart Q1 Results Review - Weak Net Adds Continues But ARPU, Margins Shines: Dolat Capital

Dolat Capital Report

IndiaMart Intermesh Ltd. reported revenue growth of 5.3% QoQ (our estimate: 4.9%), led by 4.5% uptick in average revenue per user and a muted 0.7% QoQ subscriber growth. Consolidated operating profit margin expanded by 957 basis points to 33.6% (our estimate: 26.5%), from operational efficiency and protracted sales/marketing investments.

Subscriber adds were dull at 1500 and remain a concern, though ARPU growth in Platinum and Gold Category (up 14%/17% YoY) ensures platform relevance. Growing product category monetization ensures enough growth headroom in ARPU and subscribers addition.

Subscriber addition was weak, but robust ARPU and healthy lead indicators reiterate our positive stance. Noting operational efficiency improvement, we raise our FY25E/FY26E earnings estimates by 4.5%/4.2% and maintain ‘Buy’ rating with DCF based target price of Rs 3,600 (implies PER of ~44 times on FY26E EPS implies sub two times on PEG).

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