IPO Note | Online
Jun 24, 2019
IndiaMart InterMESH Ltd
NEUTRAL
sue Open: June 24, 2019
Is
Issue Close: June 26, 2019
IndiaMart InterMesh (IndiaMart) is an online marketplace and a B2B classifieds
platform connecting buyers to suppliers. The company enables the discovery of
products across ~50 industry categories. IndiaMart provides lead-generation
Issue Details
services to sellers listed on its platform and earns revenue through subscription
Face Value: `10
fee paid by the sellers. As of FY19, the company had 0.55cr sellers listed on its
platform with products across 97,000 categories. The number of suppliers using
Present Eq. Paid up Capital: `28.59cr
paid services has increased from 72,000 in FY2016 to 130,000 in FY2019.
Offer for Sale: **0.48cr Shares
Fresh issue: `cr
Positives: (1) IndiaMart’s revenue registered 29% CAGR over FY2014-19 to
`507cr; (2) It is a robust two-way discovery marketplace connecting buyers and
Post Eq. Paid up Capital: `28.59cr
suppliers; (3) Number of paid subscription suppliers grew at healthy CAGR of
21% over FY2016-19 to 1,30,000; (4) The company is well diversified across
Issue size (amount): *`472cr -**476 cr
Industries (~50) and Geographies & categories (97,000).
Price Band: `970-973
Investment concerns: (1) Despite being the first mover, IndiaMart has not been
Lot Size: 15 shares and in multiple
able to monetize the full benefit, given that it has turned profitable only in
thereafter
FY2018; (2) IndiaMart has to completely depend on adding new subscriptions, as
Post-issue implied mkt. cap: *`2,790cr
it does not get any fee from deal value; (3) The entry of large player (Google)
- **`2,799cr
having huge database poses a threat for company’s growth; (4) Over the last 4-5
Promoters holding Pre-Issue: 58%
years, a couple of new ventures have come up in the online marketplace space
like Ninjacart (connects farmers to retailers), Power2SME (an online wholesale
Promoters holding Post-Issue: 53%
raw material buying platform for SMEs) and recently entered Udan. We believe
*Calculated on lower price band
IndiaMart will face competition in the respective fields where these have presence.
** Calculated on upper price band
Outlook & Valuation: At the upper end of the price band, IndiaMart demands PE
Book Building
multiple of 33x of FY19 EPS (post adjustment on account of FVTPL expense).
QIBs
75% of issue
Considering the investment concerns, we believe investors should wait for price
discovery before taking any investment decision. Hence, we have NEUTRAL view
Non-Institutional
15% of issue
on the issue.
Retail
10% of issue
Key Financial
Y/E March (` cr)
FY16
FY17
FY18
FY19
Post Issue Shareholding Patter
Net Sales
254
318
411
507
Promoters
53%
% chg
44
25
29
24
Net Profit
(119)
(64)
55
20
Others
47%
EBITDA (%)
(45)
(17)
11
16
EPS (Rs)
(41)
(22)
19
30
P/E (x)
-
-
51
33
RoE (%)
-
-
-
13
ROA (%)
-
-
10
2
EV/EBITDA
-
-
60
26
EV/Sale
10
9
7
4
Company Source: RHP, Angel Research; Note: Valuation ratios based at upper end of the pric
Jaikishan J Parmar
band. FY19 PE is after adjusted for Adj of Fin asset Loss FVTPL
+022 39357600, Extn: 6810
Please refer to important disclosures at the end of this report
1
IndiaMART InterMESH Limited | IPO Note
Company background
The company was incorporated as “IndiaMART InterMESH Limited” on September
13, 1999. The company was promoted by Dinesh Chandra Agarwal and Brijesh
Agrawal. Prior to incorporating the company, Dinesh Chandra Agarwal, the
Managing Director and one of the Promoters, was engaged in the business of
proprietorship firm. Pursuant to an agreement dated January 01, 2000, the
company acquired the assets and liabilities (including the website
IndiaMart is an online B2B classifieds platform which enables the discovery of
products across ~50 industry categories. IndiaMart provides lead-generation
services to sellers listed on its platform and earns revenue through subscription fee
paid by the sellers on a pay-per-lead basis. As of FY2018, the company had
0.47cr sellers listed on its platform with products across 97,000 categories. The
number of suppliers using paid services has increased from 72,000 in FY2016 to
108,000 in FY2018. Of these paid suppliers, 50% subscribe to monthly packages
and 15% subscribe to annual packages, the balance subscribe for other packages.
As of March 31, 2019, they had 8.27cr registered buyers, and 0.56cr supplier
storefronts in India. These Indian supplier storefronts had listed 6.07cr products, of
which 76% of goods comprised products and 24% were services.
Exhibit 1: Well diversified across industries
Industry Category
% of total Suppliers
Building Construction material, Equipment & Real estate
9%
Apparel, Clothing & garment
8%
Vegetables, Fruits, Grains, Dairy Products & Other FMCG
7%
Appliances Consumer Electronics & Household Appliances
4%
Medical, Pharma, Surgical & Healthcare
4%
Accessories Automobiles, Spare Parts and Accessories
3%
Institutes Educational & Professional Training Institutes
3%
Electrical Equipment and Supplies
3%
Information Technology and Telecommunication Services
3%
Trade Event Organizers, Management & Planners
3%
Travel, Tourism, Recreational & Other Hospitality Services
3%
Architectural & Designing Services
2%
Solutions Computers, Software, IT Support & Solutions
2%
Jun 24, 2019
2
IndiaMART InterMESH Limited | IPO Note
Issue Details
IndiaMart is coming up with IPO size of `476cr and it only constitutes offer for sale
(OFS). OFS largely would offer partial exit to early investor such as Intel Capital
(Mauritius), Amadeus IV DPF Limited, Accion Frontier Inclusion Mauritius.
IPO to reserve 10,000 share for employee and will be eligible for Discount of
Rs.97/-Per share.
Exhibit 2: Pre & post promoter and investor holding
Particular
Pre Holding %
Post Holding%
Promoter
Dinesh Chandra Agarwal
32.97
30.00
Brijesh Agrawal
22.34
20.33
Investor
-
-
Intel Capital (Mauritius), Limited -
13.39
4.39
Amadeus IV DPF Limited
3.95
3.06
Accion Frontier Inclusion Mauritius
3.95
2.30
Praveen Kumar Goel
0.37
0.28
Surat Singh Bhati
0.35
0.18
Exhibit 3: Pre and post-IPO shareholding pattern
No of shares (Pre-issue)
%
No of shares (Post-issue)
%
Promoter
1,65,67,200
58
1,51,37,091
53
Public
1,21,97,980
42
1,36,28,089
47
2,87,65,180
100
2,87,65,180
100
Source: RHP, Angel Research; Note: Calculated on upper price band
Objects of the offer
To achieve the benefits of listing the equity shares on the Exchanges and to
carry out offer for sale of equity shares.
Key Management Personnel
Dinesh Chandra Agarwal is the Promoter and Managing Director of the company.
He has experience in the fields of internet, networking & systems development and
consulting. Mr.Dinesh 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.
Brijesh Agrawal is the Promoter and Whole-time Director of the company. He has
experience in the fields of internet, business management and supply chain. He
has been a Director on the Board since incorporation of the company.
Prateek Chandra is the Chief Financial Officer of the company, appointed with
effect from February 16, 2015.
Dinesh Gulati is the Chief Operating Officer of the company and has been
associated with the company since March 12, 2012.
Jun 24, 2019
3
IndiaMART InterMESH Limited | IPO Note
Consolidated income statement
Y/E March (` cr)
FY16
FY17
FY18
FY19
Revenue
254
318
411
507
% chg
25
29
24
Total Expenditure
370
372
364
425
Raw Material
21
23
24
Personnel
181
210
195
230
Others Expenses
189
142
146
172
EBITDA
(115)
(54)
47
82
% chg
(53)
(186)
77
(% of Net Sales)
(45)
(17)
11
16.2
Depreciation& Amortization
4
5
3
4
EBIT
(119)
(59)
44
78
% chg
(50)
(174)
79
(% of Net Sales)
(47)
(19)
11
15
Interest & other Charges
1
-
Other Income
5
2
3
4
Extraordinary Items
Adj of Fin asset Gain FVTPL
12
16
37
Adj of Fin asset Loss FVTPL
(19)
(123)
(65)
Share in profit of Associates
Recurring PBT
(115)
(64)
(60)
54
% chg
(44)
(6)
(190)
Tax
4
0
(115)
34
PAT (reported)
(119)
(64)
55
20
% chg
(46)
(185)
(63)
(% of Net Sales)
(32)
(17)
15
5
Basic & Fully Diluted EPS (Rs)
(41)
(22)
19
7
Jun 24, 2019
4
IndiaMART InterMESH Limited | IPO Note
Exhibit 4: Consolidated balance sheet
Y/E March (` cr)
FY16
FY17
FY18
FY19
SOURCES OF FUNDS
Equity Share Capital
75
9
10
29
Reserves& Surplus
(153)
(399)
(331)
131
Shareholders’ Funds
(77)
(390)
(321)
160
Minority Interest
0
0
0
-
Total Loans
-
247
373
0
Other Liab & Prov
80
123
172
239
Current Liability
188
241
319
421
Deferred Revenue
226
325
424
586
Total Liabilities
191
221
543
821
APPLICATION OF FUNDS
Net Block
9
7
7
8
Capital Work-in-Progress
1
1
1
1
Current Assets
164
207
384
721
Investments
125
136
311
607
Inventories
-
-
-
-
Sundry Debtors
0
1
1
1
Cash
19
41
47
78
Loans & Advances
18
5
10
17
Other Assets
2
24
15
18
Other Non Current Asset
17
5
150
90
Total Assets
191
221
543
821
Consolidated cash flow
Y/E March (`cr)
FY17
FY18
FY19
Profit before tax
(64)
(60)
54
Depreciation
4
2
4
Change in Working Capital
53
130
168
Interest / Dividend (Net)
(2)
(3)
(3)
Direct taxes paid
(1)
(1)
(5)
Others
(10.2)
(110.8)
(37.2)
Cash Flow from Operations
(1)
179
255
(Inc.)/ Dec. in Fixed Assets
(3)
(2)
(5)
(Inc.)/ Dec. in Investments
(5)
(163)
(271)
Cash Flow from Investing
(8)
(165)
(276)
Issue of Equity
7
15
14
Inc./(Dec.) in loans
-
-
-
Others
-
-
0.3
Cash Flow from Financing
7
15
14
Inc./(Dec.) in Cash
(1)
29
(7)
Opening Cash balances
19
18
47
Closing Cash balances
18
47
40
Jun 24, 2019
5
IndiaMART InterMESH Limited | IPO Note
Exhibit 5: Key Ratio
Y/E March
FY16
FY17
FY18
FY19
Valuation Ratio (x)
P/E (on FDEPS)
-
-
51
140
P/E (Adj FY19)
-
-
51
33
P/BV
-
-
-
18
Dividend yield (%)
-
-
-
-
EV/Sales
10.4
9.0
6.9
4.2
EV/EBITDA
-
-
60
26
EV / Total Assets
14
13
5
3
Per Share Data (`)
EPS (Basic)
(41)
(22)
19
7
EPS (Adj FY19)
(41)
(22)
19
30
Cash EPS
(40)
(21)
20
8
DPS
-
-
-
-
Book Value
(27)
(136)
(112)
56
Returns (%)
ROA
-
-
10.1
2.4
ROE
12.5
Turnover ratios (x)
Asset Turnover (Gross Block)
28
42
56
60
Inventory / Sales (days)
-
-
-
-
Receivables (days)
0
1
1
0
Payables (days)
325
374
377
422
Working capital cycle (ex-cash) (days)
(325)
(373)
(377)
(421)
Valuation ratios based at upper end of the price band. *adjusted for Fin asset Loss FVTPL
Jun 24, 2019
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IndiaMART InterMESH Limited | IPO Note
Research Team Tel: 022 - 39357800
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