Buy IndiaMART InterMESH, target price Rs 2975: Edelweiss

Edelweiss has given a buy rating to IndiaMART InterMESH with a target price of Rs 2975. The share price moved up by 2.88 per cent from its previous close of Rs 2258.05. The stock’s last traded price is Rs 2323.
IndiaMART InterMESH’s (IndiaMART) Q1FY21 numbers clearly demonstrate: 1) Tectonic shift in business activity to online platforms. 2) The company’s capability to manage profitability during challenging times. With all-time high business enquiries run rate, collections are expected to return to pre-covid-19 level by Q3FY21. The company has demonstrated exemplary cost control with a staggering 32% QoQ reduction in expenses, half of which the management expect to sustain.
Financials
For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 153.10 Crore, down -9.99 % from last quarter Sales of Rs 170.10 Crore and up 3.94 % from last year same quarter Sales of Rs 147.30 Crore. The Company reported net profit after tax of Rs 74.50 Crore in latest quarter.
Investment RationaleThe brokerage believes that all-time high business enquiries will be a key driver of revenue growth and subscriber addition for IndiaMART. Although SMEs are under stress due to lockdown, they will have to incrementally depend on a platform like IndiaMART as business moves online. The stock is trading at an attractive 24.2x FY22E EPS. The brokerage maintains ‘BUY’ with revised TP of Rs 2,975 (INR2,535 earlier).
Promoter/FII HoldingsPromoters held 52.3 per cent stake in the company as of June 30, 2020, while FIIs held 15.2 per cent, DIIs 3.8 per cent and public and others 28.7 per cent.