INDIAMART - IndiaMART InterMESH Limited Share Price

Management provided a positive outlook for IndiaMART, emphasizing its growth capabilities in the digital marketplace. They reported a Q4 consolidated revenue of Rs. 404 crores and an annual revenue of Rs. 1,569 crores, marking a year-on-year growth of 14% and 13%, respectively. Collections from customers reached Rs. 595 crores for Q4 and Rs. 1,857 crores for FY26, with growth rates of 10% and 14%. Notably, deferred revenue stood at Rs. 1,965 crores, a 17% increase year-on-year.

Leadership highlighted plans to enhance the quality of business inquiries by improving product specifications and starting buyer-side verifications for increased trust in the platform. AI capabilities are being embedded to refine the discovery processes, promising more precise interactions between buyers and sellers.

A significant point mentioned was the transition toward higher average revenue per user (ARPU). Despite challenges noted in customer growth, particularly in the Silver subscription tier, management conveyed a commitment to innovation in value-added services. They anticipate doubling the number of paid suppliers over time, aspiring to reach a target of 500,000 customers as part of their strategic goals.

Management remains resolute in maintaining pricing, despite a temporary decrease in gross additions attributed to external factors like geopolitical unrest and price modifications. CEO Dinesh Agarwal underscored that both supplier growth and ARPU will fuel future revenue increases, expecting continued double-digit growth in the upcoming periods.

Finally, the Board proposed a total dividend of Rs. 60 per share, reflecting a consistent strategy of returning capital to shareholders.

Question 1: Vivekanand Subbaraman: "Dinesh, if you can just update us on the process changes that you were initiating in improving the quality of gross adds? By when can we expect the business to go back to a net add trajectory of maybe 5-6% at least on an annual basis?"

Answer: We're implementing better verification processes for suppliers through GST and turnover qualifications. Currently, due to a price increase and external factors like the recent war, our gross adds declined. Until churn improves, we can't provide guidance on net adds. We're focused on enhancing supplier quality, so our gross adds should recover eventually, but a timeline remains uncertain.

Question 2: Vivekanand Subbaraman: "How much of the current quarter's muted gross addition would you attribute to the war, and how much to the price increase?"

Answer: Out of 1,200 lost customers, I estimate about 1,000-1,500 could be attributed to the war, and a similar number to the price hike. Without the conflict, we might have seen a net increase of around 2,000 customers for the quarter. The downturn is a combination of external factors influencing our sales processes.

Question 3: Anmol Garg: "Have you thought about any value-added services that we want to provide through our platform to increase ARPU?"

Answer: Our Platinum customers already utilize many value-added services without us reporting them distinctly. This includes targeting for search and location. We plan to enhance services like Lead Management and explore logistics solutions but currently, our ARPU growth comes mostly from existing customer tiers and occasional new initiatives.

Question 4: Anmol Garg: "How many GST registered MSMEs would be currently on our platform?"

Answer: There are 1.6 crore GST registered businesses in India. We have about 50 lakh businesses with GST registered on IndiaMART, with 2 lakh 20 thousand active online suppliers. The penetration of GST registered MSMEs on our platform sits at around 30-40% but there's still room for growth, especially with ongoing improvements to trust and digitization.

Question 5: Nikhil Choudhary: "The last two quarters saw unique business enquiries stuck at 27-28 million. Why isn't this number increasing despite performance marketing investments?"

Answer: Unique enquiries fell partly due to our new verification measures for buyers. While we're enhancing trust in the platform, it may slow down enquiry conversions in the short term. High traffic, however, is still being driven organically and through various channels we are exploring but I cannot provide specific numbers just yet.

Question 6: Abhisek Banerjee: "There's a divergence between registered and active buyers. Has this raised any concerns?"

Answer: The increase in registered buyers can partly be attributed to agentic traffic, which skews our metrics. While we do worry about this divergence, we are enhancing verification measures to ensure a more engaged buyer base, which could help convert inquiries into actual business over time.

Question 7: Jitin Diwan: "Why did employee expenses decline this quarter despite typically increasing in Q4?"

Answer: Last quarter we incurred labor code impacts that inflated our expenses. This quarter reflects those adjustments. Currently, our employee count sits at 6,200. Although we have no significant rationalization plan, we routinely hire as needed for servicing, so staffing levels will adapt along with business needs.

Question 8: Dinesh Chandra Agarwal: "Are there any metrics to track whether RFPs are fulfilled by sellers?"

Answer: While we mainly operate as an intermediary platform, we do send surveys regarding RFP fulfillment. About 40-45% of respondents confirm their RFPs were satisfied, though these figures stem from a limited feedback pool and should be viewed as anecdotal data rather than precise metrics.

These summaries encapsulate the primary concerns and feedback presented during the Q&A session from the earnings call, keeping within the character limit while providing substantial insights.