IndiaMart Q3 Results Review - Weak Net Adds While ARPU Climbs; OPM Expansion Healthy: Dolat Capital

Dolat Capital Report

IndiaMart Intermesh Ltd. reported revenue growth of 3.6% QoQ (our estimate: 2.9%), led by average revenue per user growth of 3% QoQ, while net subscriber addition remained muted at 1800, attributed to continued churn in large base of Silver monthly subscribers.

Operating profit margin expansion was notable at 25.3%, up 89 basis points QoQ (our estimate: 24.8%), due to lower outsourced cost, and despite one-month impact of salary hikes. Standalone Biz. Ebitda was up 114 bps QoQ at 29.9%.

While pain of net adds continued -

1. focus on tier-I/tier-II cities,

2. greater emphasis on annual packages in tier-III/IV cities, and

3. Improving customer experience, are some of steps undertaken to address the issue.

Subscriber addition was weak, but sustained ARPU improvement, strong macro indicators reiterates our positive stance.

Maintain 'Buy' rating with discounted cash flow based target price of Rs 3,500 (implies PER of ~43 times on FY26E earnings per share or PEG of 1.7 times).

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