1 day ago
Shares of IndiaMART InterMESH Ltd. are trading with gains of as much as 5% on Tuesday, January 7. Brokerage firm JM Financial has issued a double upgrade on IndiaMART InterMESH in its latest note, following a 28% correction in the stock over the past three months.
JM Financial now has a 'Buy' rating on the company, compared to its earlier 'Sell' rating. The brokerage has also increased the price target for IndiaMART InterMESH to ₹2,450, up from ₹2,350 previously.
The revised price target implies a potential upside of 13% from Monday's closing level.
According to the brokerage, the stock has seen significant de-rating due to a sharp deceleration in collections growth during the second quarter of FY25 and muted additions in paying suppliers over the past six quarters.
"While we do not expect material improvement in these key metrics in Q3, we expect that, from a medium-term perspective, collections in the standalone business will grow in the low teens, compared to 5% year-on-year growth in Q2. This growth will be supported by mid-single-digit increases in both paying suppliers and realisations," JM Financial said.
The brokerage also noted that the consolidated EBITDA margin could remain elevated (34-36%) in the absence of meaningful growth investments.
If IndiaMART adds 2,500-3,000 paying suppliers per quarter in FY26, it will result in mid-single-digit growth in paying suppliers. Moreover, realisations could improve at a similar rate, assuming stability in Silver supplier churn and regular price hikes in the Platinum category.
From a medium-term perspective, JM Financial remains confident that IndiaMART's consolidated collections growth could recover to the low teens by FY26.
Following the recent correction, the stock is trading at 28x NTM P/E (excluding cash and other income), which represents a 50% discount to its five-year average of 56x.
For a stock with an FCFF yield (including other income) of over 6% on FY26 estimates, this should provide downside support, the brokerage added.
While topline estimates remain unchanged, margin upgrades have led to a 2-5% increase in FY25-27 EPS estimates.
Out of the 21 analysts that have coverage on IndiaMART InterMESH, nine of them have a 'Buy' rating on the stock, while four have a 'Hold' rating, and eight have a 'Sell' recommendation on the stock.
Shares of IndiaMART InterMESH Ltd. are currently trading 4.45% higher at ₹2,273.40. As of today's current levels, the stock is still 30% below its recent peak of ₹3,198.40.
