IndiaMart IPO Closes on 26th June,Should you Invest?

The largest online market place, IndiaMart IPO opens on Monday  with a price band of Rs 970-973 to raise Rs 474 crore. Here, are the details.     

Business Overview

The company primarily bridges the gap between the seller and the buyer. Through this online platform, the buyer can discover and contact suppliers. 

As per the data, the company has an aggregate of 723.5 million visits in FY 2019, of which 550.3 million is comprised of mobile traffic. Besides that, the buyers can visit the supplier’s web page and ask quotes directly. 

As of now, the company has 82.70 million registered buyers and 5.55 million supplier storefronts in India. The existing investors of this company are Intel Capital, Amadeus, DPF Limited and the promoter of the company is Dinesh Chandra Aggarwal.

IndiaMart IPO Details

The IPO has opened on June 24 and it will close on June 26, 2019.

The company plans to raise 475 crore IPO for which it has received bids of 13,57,365 shares which is around  50% of the total issue size of 26,92,824 units.

On Friday, the company has raised Rs 213 crore by allocating 21,95,038 shares to 15 anchor investors, including ICICI bank, HDFC Mutual Fund and SBI Mutual Fund, at the upper limit of the price band Rs 970-973.

Should you invest?

The company has recently witnessed a turnaround of Rs 12.6 crore against the losses of Rs 72.40 crore in FY 2018, Rs 12.1 crore in FY 2017 and Rs 58.8 crore in FY 2016.

The EBITDA margin for FY 2019 was just 2.9 percent. The sales have been doubled to Rs 497.30 crore in FY 2019 from Rs 237.70 crore in FY 2016. The EPS of the financial year 2019 stood at Rs 6.97.

As per the reports, the investors have subscribed IndiaMart IPO by 1.82 times by Day 2.

IndiaMart has demonstrated its superior position in the field of B2B marketplace and with the government’s digital initiatives it is believed that the investors should be enthusiastic about this IPO.

But as per the experts, the company is highly dependent on the SME subscription which exposes it to high risk in case the economy slows down, another risk is the possibility of entry of established e-commerce players which may interrupt the digital players like IndiaMart.

Moreover, the issue seems aggressively priced, given the intense competition from the emerging players. Hence, investors with a higher risk appetite should invest in this share.