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Subscribe to IndiaMART InterMESH: Hem Securities

June 25
15:33 2019

Company’s products and services are spread across India rather than relying on a single geography. Although 36% and 49% of buyers and suppliers are respectively derived from the top eight metro cities in India, namely Delhi NCR, Mumbai, Bengaluru, Hyderabad, Kolkata, Ahmedabad, Pune and Chennai, company’s marketplace offerings also generate traffic from second and third tier cities representing more than 1,000 cities in total. Potential buyers from varying geographies may therefore reliably use company’s platform to fulfill much of their required products and services for their businesses. The wide assortment of product and services spread across geographies makes company to further grow its marketplace by attracting buyers across geographies.

Valuation and Outlook

The co is bringing the issue at p/e multiple of approx. 140 on FY19 eps basis while it is coming at EV/Sales multiple of 5x on FY19 basis at higher end of price band of Rs 970-973/share .Company’s strong network and brand recognition, drives leadership in the B2B marketplace in India. With company’s robust model of providing two-way discovery marketplace connecting buyers and sellers, company has turned around on EBIDTA level in FY19 as it was into operating losses in FY17 & FY18. According to a report, online addressability has led to businesses becoming increasingly
discoverable online, which is leading to the B2B e-commerce market gaining traction. Further, given the ticket sizes associated with B2B/wholesale transactions, the opportunity for B2B e-commerce is even higher as compared to B2C e-commerce market.
Therefore, looking after strong sectoral outlook , going forward we believe that company will show strong financial performance .However at present level , pricing of issue looks little stretched .

Hence we recommend “ Long Term Subscribe” on issue .

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