Avoid IndiaMART InterMESH: Way2Wealth

The objects of the offer are to achieve the benefit of listing the Equity Shares on the Stock Exchanges and sale of up to 4.89mn equity shares by the selling shareholders. The Company will not receive any proceeds from the Issue.

Competition from new and existing companies may reduce demand for IndiaMART services or cause us to lose visitor traffic.  Unable to retain existing paying subscription suppliers or attract new paying subscription suppliers to IndiaMART.  Further operating losses. Any delay to adapt to new technological developments or industry trends.

Valuation and Outlook

IndiaMART has not been a profitable entity on a persistent basis, although its revenue has grown at a CAGR of ~32% from FY14 to FY18. We believe, valuation based on P/E multiple is difficult due to negative PAT level and we value IndiaMART on EV/EBITDA basis. Since there are no listed company with the same business model, we use other listed entities in the internet business like Justdial, and Matrimony. At the price band of `970-973, the asking valuation for IndiaMART is ~33x EV/EBITDA (FY19). We believe the premium valuation of IndiaMART is not justified and inconsistency show at the operating level makes this IPO offer “AVOID”