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After stellar listing of IndiaMART, what should be investors' strategy?

Analysts who are bullish on the stock already achieved their targets but still advising a hold for long term

July 04, 2019 / 12:38 PM IST
 
 
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IndiaMART InterMESH started off the day on a stellar note, rising as much as 37.5 percent to hit an intraday high of Rs 1,338 on the National Stock Exchange on July 4.

The stock opened at Rs 1,180 on the exchange (which was also its day low), up 21 percent over its issue price of Rs 973. It was trading at Rs 1,267.60, up 30 percent at 1144 hours IST.

Analysts are mixed in their opinion as some are optimistic on the stock due to its non-traditional business and expected growth after completion of capex while others are worried because of its premium valuation and volatility in quarterly financials in the past.

Analysts who are bullish on the stock have already achieved their targets but still advising holding the stock for the long term.

"One should remain invested for long term and if one wants to buy, then one can buy at issue price or 10 percent above issue price," Rajnath Yadav, Research Analyst at Choice Broking said.

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Considering the growth outlook coupled with the dominant market position and expected benefit from the operating leverage, he feels that the future benefits outweigh the target share price derived from various traditional valuation multiples.

But Tausif Khurshid Shaikh, Research Analyst at Way2Wealth Securities advised investors' not to hurry their buying decision as the stock may see profit booking from short-term investors.

 

Here is what analysts say about strategy after strong listing:

Prashanth Tapse, AVP Research at Mehta Equities

Investors with a higher risk appetite may consider holding and wait for 3-6 months for more optimistic return on investment. If in any case, the listing is around or below Rs 1,080, one can consider this as buying level.

Rajnath Yadav, Research Analyst at Choice Broking

One should remain invested for a long term and if one wants to buy, then one can buy at issue price or 10 percent above issue price.

I expect 30 percent return from issue price over a period of one year on strong operating leverage.

 

Tausif Khurshid Shaikh, Research Analyst at Way2Wealth Securities

We advise investors' not to hurry their buying decision as the stock may see profit booking from short-term investors. The company has recently turned profitable, and it is better to watch its performance for a few quarters to get a clear picture of its growth trajectory and financials.

Astha Jain, Senior Research Analyst at Hem Securities

One should hold the stock in our view and if anyone wants to buy on listing day then it is a good buy at around issue price or 3-4 percent above issue price.

For one year, we are expecting the stock to give 30-35 percent return as the company has enough cash and a strong balance sheet.

Kuber Chauhan, Research Analyst at BP Wealth.

We have given an avoid rating and one shouldn’t go for it. Looking at the business model, IndiaMart depends on the third party service providers for the major portion of its operations, which can have an adverse effect due to systemic and operational disruptions.

Therefore, we believe the future growth potentials are much more important than profitability. On valuations aspect, we feel IndiaMart is quite expensive.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sunil Shankar Matkar
first published: Jul 4, 2019 12:38 pm

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