IndiaMART Q2: Margin to stabilise at around 38-40%; tier-1, 2 cities back in focus, says management

IndiaMART InterMESH expects margin to stabilise at around 38-40 percent from Q3, Dinesh Aggarwal, founder & CEO, told CNBC-TV18. Aggarwal also said that now the focus is moving back to tier-1 and tier-2 cities.

IndiaMART, a company that provides B2B and customer-to-customer (C2C) sales services via its web portal, reported earnings for the September-ended quarter. It posted a flat sequential revenue growth while margins declined due to a rise in employee costs.

“Based upon the collections growth and the deferred revenue growth, deferred revenue has been growing at about 20 percent now, for the current next two quarters or so, revenue from operations would follow that principle and it will mirror the deferred revenue growth of about 20 percent. In terms of margins, we were at 28-30 percent. We jumped to 48-50 percent and we will probably be back to 38-40 percent on a steady basis from Q3, Q4,” Aggarwal said.

On business, he said, “Currently, we are more into tier-2, 3 and tier-4 cities as compared to earlier. Now that we are back to office, focus will be back to tier-1 and tier-2 cities.”

According to him, the average revenue per user (ARPU) should get back to Rs 45,000 as the company adds more customers. “As we start building a bigger customer base, ARPU will come back to the normal Rs 45,000 figure,” said Aggarwal.

“ARPU is a very slow growth area. It has grown over the last five years from Rs 33,000 to Rs 44,000. So about 5-6 percent CAGR, given COVID wave one and two. I think there will be a flattish ARPU for some time and then it will start to grow slowly,” he said.

For the entire management interview, watch the video