Online marketing company IndiaMART InterMESH could hit 30 percent margins by end of the current financial year 2023-24, Dinesh Agarwal, Founder and Chief Executive Officer of the compay, said on Friday while speaking to CNBC-TV18. IndiaMART reported an EBITDA of Rs 77 crore for the June quarter, while margins stood at 27.4 percent.
The quarter-on-quarter fluctuation in margin, as per Agarwal, is because of business, nature of business accounting, the collections coming upfront, the revenue flows from back, and an upfront cost.
"In every quarter for there is a higher cost and that is why you see this margin fluctuation. But on an overall level, if you see year-on-year, I think we are better off than pre-Covid levels. And I think we will slowly and slowly try to improve from here," he said.
'On track to achieve 5-6% ARPU gain'
The CEO further said the company is on track to achieve 5 to 6 percent average revenue per user (ARPU) gain. "If you see annualised ARPU in the last two quarters have grown by 7 percent and 8 percent year-on-year. Even sequentially, they have grown by 2 percent," he noted.
In the second half of FY24, paid subscriber addition will move back to 7,000-8,000 levels per quarter. "I think maybe just one quarter or so I think we should look at 6000 and then we will again, try to go back to 7,000-8,000 levels," Agarwal noted.
The Noida-headquartered company recorded a 77 percent year-on-year rise in consolidated net profit at Rs 83 crore for the June quarter. Revenue rose 25 percent to Rs 282 crore for the April to June, from Rs 225 crore in Q1FY23.
FY23 had base effect of FY22 and as the first quarter of FY22 was little wash out due to the second wave of Covid-19, Agarwal said, adding that the company will try and maintain the 24-25 percent revenue growth for the fiscal.
Further, the company's board has approved a proposal for a buyback of 12.5 lakh equity shares for an amount not exceeding Rs 500 crore. The buyback price is fixed at Rs 4,000, which is a 37 percent premium from the current market levels.
The promoters will also participate in the share buyback. The buyback will be executed on a proportionate basis through the tender route.
Following the first quarter results, domestic brokerage firm JM Financial reiterated a 'Buy' recommendation on the counter, with a revised target price of Rs 3,300 from Rs 3,000 earlier.
Meanwhile, ICICI Securities has maintained a 'Buy' on IndiaMart InterMesh with a target of Rs 3,500, given its likely growth prospects and improving margin trajectory.
On Friday, the company's shares were trading 9 percent higher at Rs 3,167 on NSE. In the last year period, the stock is up about 50 percent.
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