Indiamart Intermesh, India’s leading online B2B marketplace, connects buyers and suppliers through a unique freemium model. Explore its impressive financial performance, market growth potential, and strategic initiatives paving the way for future success.
Overview of Indiamart Intermesh
Indiamart Intermesh stands as India’s foremost online business-to-business (B2B) marketplace, facilitating connections between buyers—including small and medium enterprises (SMEs) and large corporations—and suppliers across diverse product categories and geographic regions. The platform distinguishes itself by enabling two-way interactions, allowing suppliers to list their offerings while buyers can submit requests for quotations (RFQs).
Business Model and Market Position
Indiamart operates on a “freemium” model that is advantageous for both buyers and suppliers. Buyers can access the platform without charge, while suppliers can register for free. However, the company generates revenue primarily through paid subscription packages, which account for less than 3% of the total suppliers on the platform.
As of September 2024, Indiamart boasts 8.1 million supplier storefronts and 202 million registered buyers. Among these, 218,000 are paying subscribers, a figure that is well-diversified across various industries. Notably, 50% of these subscribers are classified as ‘Gold’ and ‘Platinum,’ while the remaining 50% fall under ‘Silver.’ Approximately 54% of registered buyers are repeat customers, and an interesting statistic reveals that 37% of suppliers also engage as buyers.
Product and Supplier Diversity
Indiamart features an impressive catalog of 108 million products spanning 56 industries and over 100,000 subcategories. Its buyer and supplier demographics are also varied, with buyers distributed among metro areas (35%), Tier-2 cities (26%), and the rest of India (39%). Conversely, the paying suppliers are distributed as follows: 30% from metros, 25% from Tier-2 cities, and 45% from other regions.
Traffic on the platform has significantly increased, with visits rising from 262 million in FY2016 to 1.084 billion in FY2024, and reaching 287 million in Q2 FY2025. Over the last five years, Indiamart has successfully converted users into paying customers at an annual compounded rate of approximately 30%.
Financial Performance
For the quarter ending September 30, 2024, Indiamart reported a 17.98% increase in sales, reaching ₹347.67 crore. Operating margins improved from 27.13% to 38.70%, resulting in a remarkable 68% rise in operating profit, totaling ₹134.53 crore. The net profit surged by 94.7%, amounting to ₹135.13 crore.
In the half-year period ending September 30, 2024, sales rose by 17.7%, reaching ₹679 crore, with operating margins increasing from 27.27% to 37.42%. This led to a 61.5% rise in operating profit, which stood at ₹254.08 crore, while net profit increased by 63.2% to ₹249.05 crore. Notably, the company remains debt-free, with liquid investments totaling ₹2,531.6 crore and cash reserves of ₹28.4 crore as of September 30, 2024.
Future Outlook
Indiamart operates in a largely untapped market, presenting significant growth opportunities, especially as digital awareness among SMEs continues to rise. The company anticipates revenue growth driven by the conversion of free users to paid subscribers, expansion into large enterprises, and improvements in average revenue per user (ARPU) through various strategies, including up-tiering, price adjustments, and location-based pricing. Additionally, growth is expected from cross-selling software-as-a-service (SaaS) offerings.
While revenue collection faced challenges in Q2 FY2025 due to sales execution issues, management expects this to be a temporary setback. Projections indicate a collection growth of 10-15% year-over-year. Future revenue growth will likely be supported by ARPU increases among the top 1-10% of customers, a healthy influx of new paying customers, reduced churn rates among platinum and gold subscribers, and robust growth in deferred revenue, which amounted to ₹1,483 crore—a 19% year-over-year increase—as of September 30, 2024.
Earnings Projections
The company is projected to achieve a consolidated earnings per share (EPS) of ₹77.2 for FY2025 and ₹86.1 for FY2026. As of November 18, 2024, the stock was trading at ₹2,244 on the Bombay Stock Exchange.
Conclusion
Indiamart Intermesh continues to solidify its position as a leader in the B2B marketplace, backed by a robust business model and impressive financial performance. With significant growth potential on the horizon, the company’s strategic initiatives and market presence suggest a promising future for stakeholders and investors alike.
