IndiaMART InterMESH Ltd shares fell sharply by 8.72% to ₹2,094.70 in early trading on Tuesday, January 22, following mixed Q3 FY25 financial results and broker downgrades. Despite reporting significant revenue and profit growth, concerns about declining subscriber additions and subdued collection growth have weighed on investor sentiment.
Key Financial Highlights (Q3 FY25):
- Revenue from Operations: ₹354.3 crore, up 16.1% YoY from ₹305.3 crore.
- Total Income: ₹399.2 crore, up 15% YoY from ₹347 crore.
- Net Profit (PAT): ₹121 crore, an increase of 47.7% YoY from ₹81.9 crore.
- Profit Before Tax (PBT): ₹159 crore, up 45% YoY from ₹109.6 crore.
- Expenses: Declined marginally to ₹226.1 crore from ₹230.2 crore YoY.
Brokerage Ratings and Concerns:
- Nuvama: Maintained a ‘Reduce’ rating and cut the target price to ₹1,970 from ₹2,500, citing subscriber decline and subdued collection growth. This represents a downside of 14% from the current market price.
- Nomura: Downgraded the stock to ‘Reduce’ and reduced the target price from ₹3,150 to ₹1,900, implying a downside of 17.2%. Concerns include:
- Decline in paying subscribers for the first time since the pandemic.
- Weak gross additions and persistently high customer churn over the past five quarters.
- Medium-term growth expected to remain under pressure unless structural issues are addressed.
Operational Challenges:
The company’s paying subscriber base has been impacted by higher churn rates and lower gross additions. Management has guided for less than 10% growth in collections in upcoming quarters, raising concerns about future profitability.
Outlook:
While cost management has supported profit margins, the structural challenges around subscriber growth and collections pose significant risks. Both Nomura and Nuvama highlight the urgent need for IndiaMART to improve churn rates and subscriber retention to achieve sustainable long-term growth.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions.
