Despite macroeconomic uncertainties and the rapid evolution of artificial intelligence (AI), Dinesh Agarwal, Chief Executive Officer, IndiaMART, remains optimistic and expects IndiaMART InterMESH to continue growing profitably in the foreseeable future.
In an interaction with Mint on Wednesday, 28 October, the CEO of one of India's leading business-to-business (B2B) online marketplaces discussed the factors weighing on revenue growth, its strategy to navigate competition from AI-powered information platforms, and the opportunities it sees in technology-led improvements.
While subscriber volumes in IndiaMART's standalone business have remained stagnant, the company has managed to increase the value generated per subscriber.
Agarwal believes these factors, along with investments in technology, customer acquisition and category-level pricing, can help the company sustain profitable growth.
Explaining the factors behind the company's revenue growth, Agarwal said performance depends on two key variables: the number of paying subscribers and the value generated per subscriber.
Although subscriber volumes have not increased, IndiaMART has recorded an approximately 8% increase in value per subscriber in its standalone business.
The company's consolidated performance is also benefiting from Busy, which has reported revenue growth of around 26–27%, according to Agarwal.
Looking ahead to the second half of the financial year, Agarwal identified several developments that could influence the business environment. These include geopolitical tensions, elevated inflation, high oil prices and an upward interest-rate cycle.
Agarwal highlighted the technological transformation taking place as generative AI, large language models and AI agents become increasingly capable.
According to Agarwal, these technologies present both opportunities and challenges for businesses such as IndiaMART.
"On the positive side, AI can help companies perform tasks more efficiently, reduce the time required to complete them and potentially lower operating costs. Technological advances could therefore help IndiaMART improve productivity and streamline its operations. However, the emergence of AI-powered platforms is also changing how users discover and access information," said Agarwal.
IndiaMART is expanding its focus on performance marketing to generate traffic and enquiries.
Agarwal said approximately 10% of the company's traffic or enquiries comes from performance marketing, which targets the top quartile of categories where demand and supply can be managed by the company.
This provides an additional channel for customer acquisition and could help IndiaMART diversify its dependence on external sources of traffic.
Busy, IndiaMART's business software subsidiary, is another potential growth driver.
The company has launched a mobile application and introduced a new user interface, with Agarwal saying both initiatives are performing better.
IndiaMART also plans to continue expanding its sales efforts and make it easier for customers to onboard.
The combination of product improvements, easier onboarding and sales expansion could support Busy's growth and increase its contribution to the consolidated business, said Agarwal.
He further added that Agarwal said AI is helping the company develop a deeper understanding of individual categories.
This could allow IndiaMART to make more informed pricing decisions and introduce dynamic pricing based on category-specific conditions.
Such an approach could help the company improve monetisation by aligning prices more closely with the characteristics of different categories, said Agarwal.
IndiaMART reported a 10% year-on-year (YoY) rise in its consolidated revenue from operations to ₹429 crore for Q2FY27. This includes IndiaMART standalone revenue of ₹389 crore and Busy Infotech revenue of ₹37 crore.
Net profit for the quarter was ₹91 crore, up 10% YoY.
Collections from customers grew to ₹443 crore for the quarter, up 9% YoY, primarily comprising IndiaMART standalone collections of ₹394 crore and Busy Infotech collections of ₹46 crore.
Most brokerage firms appear largely positive about the stock even though they have trimmed their earnings estimates due to volume growth challenges and uncertainty around marketplace traffic.
Brokerage firm Choice Equity Broking has maintained an "add" rating on the stock with a target price of ₹1,815, citing average revenue per user (ARPU)-led growth and long-term monetisation opportunities that provide downside support. However, Choice added that a meaningful re-rating hinges on sustained recovery in supplier additions and buyer engagement.
The brokerage firm has trimmed its earnings estimates by 1.7–5% and reduced its valuation multiple to 18 times (earlier 20 times), factoring in persistent volume growth challenges and uncertainty around enquiry generation and marketplace traffic.
ICICI Securities has maintained a 'buy' call with a revised target price of ₹1,900 compared to ₹2,300 earlier.
ICICI underscored that in Q2FY27, IndiaMART’s paying subscribers continued to shrink; however, revenue grew 9.6% YoY driven by improved realisations.
The stock ended 3.13% lower at ₹1,575.10 on Wednesday, 28 October. It hit a 52-week low of ₹1,539.20 on 23 October this year and a 52-week high of ₹2,525 on 13 November last year.
Year-to-date, it is down 28%, while over the last one year, its loss is nearly 37%.
Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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