IndiaMART InterMESH

For the quarter ended March, 2020 IndiaMART reported a topline of Rs. 170 cr up 3.2% Q-o-Q basis and 23.3% on Y-o-Y basis. Revenue increased on the back of increase in number of paying customers and better realisation per customer. EBITDA came in at Rs. 52 cr with EBITDA margins improving at 30.7% in Q4 FY20. EBITDA margin improved by 430 bps on Q-o-Q basis mainly on account of increase in revenue. The company reported PAT at Rs. 44.3 cr in Q4 FY20. At the current price of Rs. 2212 IndiaMart trades at 43x trailing valuation based on the FY20 earnings. With the impact of Covid-19 being material on the business that has turned operationally profitable only a couple of years ago we believe that there is room for re-rating of the stock. Business impact and valuation shrinkage continue to keep the stock price under pressure. We assign a SELL rating to the stock.