IndiaMart shares get Rs 3,800 target price, stock jumps 6%
ADVERTISEMENT 'We upgrade IndiaMart from 'REDUCE' to 'BUY'—following earlier downgrades in Oct-23 to 'HOLD' and Oct-24 to 'REDUCE'—as we believe the business is entering a new demand upcycle,' Nuvama said.
IndiaMart shares were trading at a one-year forward P/E of 28x, compared to the historical average of 45x. The stock is still down around 3% over the past year.
Arguing that a new demand cycle will begin—starting with improvement in traffic and unique business enquiries, followed by a rise in net subscriber additions and, ultimately, an acceleration in collection growth—the brokerage said valuation should rerate as the management focuses on enhancing customer engagement metrics.'We are increasing earnings estimates by ~9–10% for FY26E/27E, driven by higher revenue growth, though we are lowering profitability expectations.We are raising the target valuation multiple from 22x to 35x—the same as the pre-downgrade level—due to improving growth prospects, thereby increasing the target price from Rs 2,100 to Rs 3,800,' Nuvama noted.
ADVERTISEMENT Stating that the company's management has made several changes to address structural issues—such as improving the platform, insourcing part of the sales force, and now investing in branding and marketing—Nuvama said IndiaMart is on the right path. The company has reduced the number of supplier enquiries from ~7 to fewer than 4, thereby reducing competition among suppliers.'Moreover, investing in attracting buyers will ensure there is plenty of enquiry volume for everyone to flourish. We believe headwinds have bottomed out and these investments are ready to deliver results.
ADVERTISEMENT We reckon an improvement in subscriber additions shall occur by Q2/Q3, which will lead to a revival in collection growth,' it added.
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