IndiaMART InterMESH shares tumbled almost six percent on July 31 after the firm reported an addition of just 1,500 subscribers during the quarter ended June, falling sharply under the Street's estimates.
IndiaMART Intermesh on July 30 reported a net profit of Rs 114 crore in the first quarter of FY25, recording a growth of Rs 37.18 percent growth over Rs 83.1 crore posted in the year-ago period, the company said in an exchange filing.
Revenue from operations also jumped 17.44 percent to Rs 331.3 crore in the quarter under review compared to Rs 282.1 crore in the corresponding period of the previous financial year.
However, the company's EBITDA margin surged to 36.1 percent, higher than the Street's expectation of around 30 percent.
At 10 am, the shares were quoting at Rs 2,969.7 apiece on the NSE, lower by 5.8 percent compared to the previous session's closing price.
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Nuvama Institutional Equities said, "Paid supplier addition continues to be subdued as churn in the Silver category remains elevated. With no visible signs of recovery in subscriber addition, management has started cutting back on marketing expenditure, which would only end up impacting growth."
The brokerage maintained its 'Hold' rating with a target price of Rs 3,070 per share.
Japanese brokerage Nomura said, "We retain our neutral rating on the stock with a TP of Rs 2,520. A key upside risk is better than expected subscriber additions, and a key downside risk is continued high churn over the medium term."
In the medium term, once the churn lowers and the need to increase gross adds increases, the company expects to invest into its workforce which may create headwinds on margins. Over the longer term, Indiamart is targeting 33 percent EBITDA margin.
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