IndiaMart - Q1 FY22 first cut (Current Rating: BUY) - YES Securities

Inline performance as per expectation

- Revenue grew by 1.1% QoQ to Rs1,816 mn. The week growth in the quarter is due to impact of 2nd Covid19 wave that led to around 4% QoQ decline in the number of paid customers. It lost 6k customers due to covid impact vs 14k loss in Q1FY21 (1st covid wave)

- ARPU grew by 5.7% QoQ even in this tough macro scenario.

- Continued cost optimisation helped it to post 126 bps QoQ increase in EBITDA margin to 48.8%

- PAT increased by 57.8% QoQ led by higher other income and lower tax outgo in the quarter.

- It remains zero debt company with around Rs 23 bn of cash. Negative working capital cycle helps to improve free cash flow generation.

- Operationally, the number of registered buyers grew by 4.8% QoQ to 131 mn. Total traffic grew by 4.3% QoQ to 268 mn.

- Total number of listed suppliers grew by 0.1mn QoQ to 6.6mn

- Unique business enquires increased by 8% QoQ. Number of products listed on the platform increased to 74mn vs 72 mn in Q4FY21.

View: Overall, Financial performance was inline in the aftermath of 2nd covid wave. We remain positive on the outlook of the company with strong traction in enquires/ buyers will drive addition of paid customers. We currently have BUY Rating with target price of Rs 8,631. It is best placed to benefit from rising digitalization of SMEs. It benefits from huge network effect that will continue to drive increase in the number of paid suppliers. The value proposition for SMEs is attractive that it requires little need of advertising and thus benefits from optimum cost structure. Positive operating leverage would continue to drive improvement in margin. Low price sensitivity offers it pricing power and enable the and migration of customers from basic to premium packages would drive growth in ARPU. Low capex requirements would boost FCF generation going ahead. We currently have BUY Rating with target price of Rs 8,631.

Source : Equity Bulls

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