Shares of IndiaMart Intermesh plunged by 19% to ₹2,447 during morning trading on October 21, despite reporting strong second-quarter earnings.
While the online B2B marketplace posted a significant year-on-year net profit increase of 94.7% to ₹135.1 crore for Q2 2024, concerns about slowing collections growth and weak subscriber additions led analysts to issue cautious recommendations.
Jefferies downgraded the stock from “buy” to “underperform,” pointing to a potential decline in future growth unless the company addresses its subscriber churn.
IndiaMart share price takes a hit despite strong Q2 results
The IndiaMart share price tumbled sharply, even after the company reported impressive earnings for the quarter ending September 30, 2024.
While net profit soared to ₹135.1 crore, up 94.7% year-on-year, subscriber growth lagged, with just 2,390 new paid subscribers added.
This slowdown led to a mere 5% rise in collections, a steep drop from 14% in the same quarter last year.
As a result, Jefferies slashed its price target for IndiaMart shares to ₹2,540, citing weak subscriber additions and stagnant collections growth as critical concerns.
Jefferies downgrades IndiaMart to ‘underperform’
Jefferies’ downgrade of IndiaMart from “buy” to “underperform” has raised red flags for investors.
The brokerage noted that without a significant improvement in subscriber additions, collections growth is likely to remain in the 10-15% range, which could weigh heavily on the stock’s performance.
Additionally, the firm reduced IndiaMart’s earnings estimates by 4-12%, signaling that subscriber churn remains a persistent issue despite management efforts to curb it.
IndiaMart share price faces further pressure
IndiaMart’s share price has been under pressure, currently trading at ₹2,585, down 14.2% from the previous close on the NSE.
Source: TradingView
The stock is significantly lower than its 52-week high of ₹3,198. While the company’s EBITDA margin improved to 38.7%, up from 27.2% in the same period last year, operational efficiencies have not been enough to offset concerns over growth sustainability.
Deferred revenue increased by 19% year-on-year to ₹1,483 crore, but weak subscriber growth continues to cloud the company’s near-term outlook.
Analysts split on IndiaMart stock
Opinions on IndiaMart’s future remain divided among analysts. Nomura maintained a “neutral” rating, with a price target of ₹3,150, pointing to the weak collections and sluggish subscriber additions as major headwinds.
The brokerage highlighted that low collection per customer, combined with consistently low net subscriber additions—averaging 2,000 per quarter over the last five periods—pose significant risks to the company’s growth trajectory.
Out of 21 analysts covering IndiaMart, eight have a “buy” rating, four recommend “hold,” and nine suggest “sell,” reflecting the mixed sentiment surrounding the stock’s prospects. Despite strong earnings, the company’s ability to accelerate subscriber growth will be key in determining whether its share price can recover.
IndiaMart News: what’s next for investors?
For investors tracking the IndiaMart share price and news, the focus will be on how the company addresses its growth challenges.
With analysts forecasting moderate growth in the near term, the stock’s performance will likely depend on improving subscriber additions and sustaining its collections growth.
As IndiaMart navigates these challenges, investors should weigh their options carefully, considering both short-term market movements and long-term growth potential.
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