Indiamart IPO

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Background of the Company

(i) They are India’s largest online B2B marketplace for business products and services with approximately 60% market share of the online B2B classifieds space in India in fiscal 2017, according to KPMG.

(ii) They primarily operate through their product and supplier discovery marketplace, www.indiamart.com or “IndiaMART”. The online marketplace provides a platform for mostly business buyers, to discover products and services and contact the suppliers of such business products and services.

(iii) IndiaMART had an aggregate of 325.8 million and 552.6 million visits in fiscal 2017 and 2018, respectively, of which 204.8 million and 396.9 million comprised mobile traffic, or 63% and 72% of total traffic, respectively.

Business Model of India Mart

(i) IndiaMART provides a robust two-way discovery marketplace connecting buyers and suppliers. Buyers locate suppliers on the marketplace, including both Indian small and medium enterprises, or “SMEs”, and large corporates, by viewing a webpage containing the supplier’s product and service listings, or a “supplier storefront”, or by posting requests for quotes called “RFQs” or “BuyLeads”.

(ii) The marketplace offerings from which buyers can search for and view product and service listings cover a wider range of industries spread across India, rather than relying on a single target industry or type of geography. As of March 31, 2018, we had organized our listings across 52 industries.

How they do earn Money?

i) As we discussed earlier that they provide the market for SMEs manufacturers to find buyers on their e-platform. They offer monthly pricing schemes for the subscription packages in addition to annual and multi-year subscription models. They offer basic and premium subscription models, which include a set number of RFQ credits (depending on the level of the paid subscription package) that may be used by the suppliers. Suppliers may view sample RFQs before selecting a paid subscription package.

ii) They also charge for the leads generation on their platform.

iii) Advertising revenue

As of March 31, 2018, they had 59.81 million registered buyers and had 4.72 million supplier storefronts in India. The Indian supplier storefronts had listed 50.13 million products, of which 75% of goods comprised products and 25% were services.

Graphical Presentation of Business

Key Growth Metrics 

The most important metric among all is ” Number of Paying Subscription Suppliers” because most of the company’s income is coming from this segment only and it has shown a robust CAGR growth of ~20% in last 3 years.

Objects of the Indiamart IPO:

Offer For Sale of up to 4,887,862 equity shares of the face value of 10 each (“equity shares”) of Indiamart intermesh limited for cash at a price of 973-975 per equity share. 10,000 Shares are reserved for Employees. There is a discount of Rs.97 for Employees.

Indiamart IPO Details:

Open Date: Jun 24 2019
Close Date: Jun 26 2019
Total Shares: 4,887,862
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Building
Issue Size: 475 Cr.
Lot Size: 15 Shares
Issue Price: ₹ 970-973 Per Equity Share
Listing At: NSE,BSE
Listing Date: Jul 04 2019

Promoters And Management:

(i) Dinesh Chandra Agarwal, aged 50 years, is the Managing Director of our Company. He holds a bachelor’s degree in technology (computer science and engineering) from Harcourt Butler Technological Institute, Kanpur University. He has experience in the field of internet, networking and systems development and consulting. He was previously the proprietor of InterMESH Systems, which was subsequently acquired by our Company, and has worked with Hindustan management and Technical Services Private Limited, HCL America, Inc., HCL Limited, HCL Hewlett-Packard Limited, Centre for Development of Telematics (C-Dot) and CMC Limited. He is a charter member of The Indus Entrepreneurs (TiE), a global network of entrepreneurs and professionals. He is also a member of the governing council of the Indian and Mobile Association of India. He has been a Director on our Board since the incorporation of our Company. He received the ‘Zee Business Dare to Dream Awards, 2018’ in the category of ‘inspirational leader (ii) Brijesh Kumar Agrawal, aged 42 years, is a whole-time Director of our Company. He holds a master’s degree in management science from the University of Lucknow and a post-graduate diploma in business management from Northern Institute for Integrated Learning in Management, New Delhi. He has experience in the field of internet, business management and supply chain.

Financials of Indiamart IPO:

A) Standalone Financials( Fig.in Crs)  
Year Revenue EBITDA PAT Equity Net Worth EPS Cash Flow RONW
2017 323 -9 -13 0.9169 -390 -14.18 17 -3.3%
2018 410 -182 -72 0.9997 -321 -72.02 45 -22.4%
2019 533 42 12.5 2.8592 159 4.37 35 7.9%

B) Consolidated Financials( Fig. in Crs)

Year Revenue EBITDA PAT Equity Net Worth EPS Cash Flow RONW
2017 331 -59.5 -64 0.9169 -390 -69.80 17.6 -16.4%
2018 429 -57.2 54 0.9997 -321 54.02 46.7 -16.8%
2019 548 49.8 20 2.8592 159 6.99 40.1 12.6%
IZ View 1. The company has shown a robust CAGR growth of 28.67 % in the last 3 years in term of revenue. 2. The main expense of the company is " Employees benefit"  which was 63%, 45% and 41% in FY17, FY18, and FY19 respectively. 3. The company Mcap on Issue Price of 973 stands at ~2800 Cr and EV of 2840 Cr. 4. Just Dial has a somewhat similar business model as that of India Mart. Let us analyze both the companies and see what valuation just dial is getting in the market. India mart( FY19 Financials) a) Mcap= 2800 Cr b) Revenue= 548 Cr c) Revenue Growth in last 3 years = 28.67% d) PAT = 20 Cr e) PAT Growth in last 3 years = shown profit in FY19 only. f) Employees Benefit Expense = 41% of Revenue g) P/E= 140 and Mcap/Revenue= 5.10 Just Dial ( FY19 Financials) a) Mcap= 4946 Cr b) Revenue= 984 Cr c) Revenue Growth in last 3 years = 10% d) PAT = 206 Cr e) PAT Growth in last 3 years = 30% f) Employees Benefit Expense = 50% of Revenue g) P/E= 25 and Mcap/Revenue= 5.02 In terms of Mcap/Revenue, it is asking similar valuation as that of Just Dial. However, Just Dial has shown excellent Profit Margin of 20% whereas India Mart has shown only 3.64%. Please note the company has done an investment of close to 604 Cr in Mutual funds. That means over the years they have generated a lot of cash.

Comparison With Peers:

As per DRHP, there is no peer in the market. This would be the first E-commerce company to be listed in the bourses.

Recommendation on Indiamart IPO:

Review and Recommendation of Indiamart IPO from IZ Team are 5/10. [The company has shown excellent growth in the last 3 years in term of the supplier listing their products on the platform to sell. The opportunity size available in front of the company is huge. However, on the negative side, competition in the sector is high and the entry barrier is less. The current GMP of India Mart is 140. So expect some listing gain. ]

Registrar of Indiamart IPO:

  1. Link Intime India Private Limited

Bid Details of Indiamart IPO as on
26-Jun-2019 21:00:00 IST

No.of shares offered No. of shares bid No. of total times
1,463,359 45,116,550 30.83
731,679 45,455,865 62.13
487,786 6,863,670 14.07
10,000 60,615 6.06
- - -
2,692,824 97,496,700 36.21
No.of shares offered No. of shares bid No. of total times
1,463,359 23,286,600 15.91
731,679 33,911,865 46.35
487,786 5,333,115 10.93
10,000 35,685 3.57
- - -
2,692,824 62,567,265 23.23
No.of shares offered No. of shares bid No. of total times
1,463,359 21,829,950 14.92
731,679 11,544,000 15.78
487,786 1,530,555 3.14
10,000 24,930 2.49
- - -
2,692,824 34,929,435 12.97

Total Number of Applications in Retail Category: 421005

Application-wise Subscription in Retail Category: 12.95x

Discussion on Indiamart IPO:

    💡 *IPO Expected soon*

    *Affle (India) Ltd – Tentative 500Crs*

    *Sterling and Wilson Solar Ltd (SWSL) – 4500Crs*

    Pls update your *UPI ID’s* to apply for further IPO’s

    💡 *CPSE ETF*

    *Sources*
    CPSE AUM : ~ INR 10500 cr
    FFO :
    *Anchor : 18th July*
    *Non Anchor : 19th July*

    Anchor : 30% size, Rest to Non Anchor

    *Base Size : INR 8500 Cr to upsize of INR 12000 cr*
    To be removed from INDEX : RECL (~ INR 650 cr) expected to be sold in market

    IOCL : Govt owns almost INR 250 cr, Weight ~ 18.2% in Index
    On Size of 12K cr : IOCL expected buying of INR 1950-2000 cr from market.

    *Discount : 4% (net of IOC adjustment around 3.2%)*

    *💥CPSE FFO 5💥*

    *👉Only one day*
    19th July 2019 for retail investors.

    *👉 Allotment date 26th July 2019*

    👉 Tentative listing 29th July 2019

    👉Issue size 8000 cr to 11500 cr

    👉Portfolio holding:
    ONGC
    Coal India
    NTPC
    Indian oil
    PFC
    Bharat electronics
    Oil India
    NBCC
    NLC India

    ✅Last two offering return V/S Nifty

    👍CPSE FFO 3 27.85% V/S 11%
    👍CPSE FFO 4 11.97% V/S 2%

    🗣Get your fund ready in advance to get allotment.

    Happy Investing !!!

    💡 *CPSE Sr.5*

    Tentatively 18th & 19th July

    18th – Anchor
    19th – Anchor

    Issue size : 8000cr to 12000cr.

    Discount : Confirmation awaited

    Allotment done… Check it out and congrats to the one who have been alloted the same😊😊

    💡 *IndiaMart InterMash Limited IPO Basis of allotment update*:

    *Retail Investor will get 15 Equity share* as per below allotment ratio:

    *35:421 – Bid Lot 1* (15 Shares)

    *1:12 – Bid Lot 2 to 13* (from 30 shares to 195 shares)

    *Final HNI Subscription: 62.077345*

    Tentative Listing Date: *04-July-2019*

    I have applied for one lot but dint get any information for allotment or refund in bank account…does anybody have update on this..

    💡 *IndiaMART IPO*

    *Day 3 at 6:00PM*

    The following data is assuming the shares will be issued at @973/- (upper price band)

    QIB*: 30.83X (*Excluding Anchor)

    NII: 62.13X (Interest cost = ~81/-)

    *RII: 13.33X*🏇

    Empl: 06.05X

    Total: 36.07X

    Applications: 3,94,000 Approx

    No. of *Application-wise: 12.10X*

    *GMP 165 – 170*📯
    *Kostak 225/-*

    QIB subscribed 1.05 times….NII Subscribed 4%….Retail investors – 2.5 times…
    whats ur opinion MW

      QIB subscribed 1.05 times….NII Subscribed 4%….Retail investors – 2.5 times…
      whats ur opinion MW

    Whilst IndiaMART pricing has improved 7% CAGR over the last 3 years and is greater than 2x of Just Dial’s pricing thereby indicating stickiness from suppliers, based on our channel checks with over 75 suppliers across the country (slide 5), the stress in the MSME sector (slide 6 and 7) could be the single biggest risk for IndiaMART’s revenue and pricing growth (deferred revenue is 85% of cash and bank balance).

    The recent appreciation in the stock price of Just Dial (up 56% in last 3 months) followed by the launch of IPO of IndiaMART reminds us of the 56% appreciation in the stock price of Navneet Education from December 2016 till May 2017, when IPO of SChand was launched and fully subscribed. In sectors where investible options are limited, investors tend to lean towards the best available option till the investible universe within the sector expands and the Indian Internet sector is one such sector. Thus, the appreciation in stock price of Just Dial and expected valuations of IndiaMART can pose valuation related risks for a segment, where growth headwinds in the near term are a possibility.

    The bottom line of the company has suffered due to fair value through P&L (FTPVL) of financial adjustments for preferential shares conversion and ESOP for FY 2017, FY 2018 and FY 2019. Management claims that it has done away with all such adjustments, and it is confident of maintaining around 16% OPM (before such adjustments) it achieved in FY 2019 with continued growth in the top line.

    Adjusting for the gain/losses due to FTPVL, the OPM stands at 16% and PAT would have been around Rs 47.7 crore, translating into an EPS of Rs 16.6 in FY 2019. On this EPS, P/E works out to 59 times. The nearest comparable listed player Just Dial trades around 24 times FY 2019 earnings.

    IndiaMart InterMesh, an online marketplace for business products and services, said on June 21 it has raised more than Rs 213 crore from 15 anchor investors by allotting 21,95,038 equity shares at a price of Rs 973, the upper band of its IPO that opens on June 24. ICICI Mutual Fund, HDFC Mutual Fund, SBI Mutual Fund, Birla Mutual Fund, Hornbill Capital Advisers LLP are among the 15 anchor investors.

    IndiaMart on Wednesday said it will launch its initial public offering from June 24 and has fixed a price band of Rs 970–973 per share.

    The initial public offering (IPO) is of up to 48,87,862 equity shares, according to a statement by the company.

    Promoters Dinesh Chandra Agarwal and Brijesh Kumar Agrawal will sell 14,30,109 shares through the issue, while investors Intel Capital (Mauritius), Amadeus IV DPF and Accion Frontier Inclusion Mauritius will offload 33,20,753 shares and 1,37,000 equity shares by other selling shareholders, it added.

    At the upper end of the price band, the offer is expected to raise about Rs 475 crore.

    The issue will open on June 24 and would close on June 26.

    *IndiaMART InterMESH Ltd IPO.*

    Dates : *24 to 26 June*

    Price Band : *970-973*

    Net Issue : *48,77,862 Shares*

    Lot size : *15 shares*

    Important Note: *This IPO is Closing before 30th June, so old System of ASBA Application Form will be Valid*
    UPI is *Not* Mandatory

    It is very difficult to value “Subscription based model” online companies. You just simply can’t measure them on Price to Earning method as most of these companies are in loss.

    As of now looks clear avoid by means of fundamental and balance sheet but we have to look on the subscription figure on last day then only decide if a subscription is a huge go for some gain on the listing.

    1999: Incorporation of IndiaMART.

    2007: Received investment from Bennett, Coleman and Company Limited and Times Internet Limited

    2008: Received investment from Intel

    2016: Raised series C funding from investment from Amadeus, Westbridge, AFIM and Intel

    2017: Received further investment from Amadeus, Westbridge and AFIM, and also launched payment protection programmed PayX for the purpose of safe and secure payment gateway.

    OFS by existing shareholders

    a)  2,590,000 equity shares by intel capital (Mauritius).

    b) 255,753 equity shares by Amadeus iv dpf limited.

    c)  475,000 equity shares by accion frontier inclusion mauritius.

    d)  852,453 equity shares by Dinesh Chandra Agarwal.

    e) 577,656 equity shares by Brijesh Agrawal.

    f) 137,000 equity shares by the other selling shareholders.

    So it is a pure OFS. The company will not get anything in the IPO or rather their business model does not require any capex. The company is giving exit an opportunity to shareholders who have invested in the company at the early stages.