IndiaMart Closes 34% Higher On Stock Market Debut
IndiaMart’s IPO was subscribed more than 36 times.
IndiaMart InterMesh Ltd., an online marketplace for business products and services, made its stock market debut at a premium to its issue price.
The scrip opened 21 percent higher on the BSE at Rs 1,180 apiece compared to its issue price of Rs 973 and eventually closed 34 percent higher at Rs 1,302 apiece.
The operator of Indiamart.com raised about Rs 476 crore by selling close to 49 lakh equity shares. Intel Capital, Accion Frontier and Amadeus IV had sold their shares in the initial public offering, which was a pure offer-for-sale.
The offer was subscribed more than 36 times, with most of the demand coming from the high net worth individuals. Institutions and retail investors, respectively, placed nearly 31 times and 14 times more demand than the shares on offer.
IndiaMart, according to KPMG, is the nation’s largest wholesale online marketplace with about 60 percent market share. Haitong Securities said given the nascent stage of the online business-to-business e-commerce in India, this segment provides a huge room for growth in the years to come. IndiaMart being the market leader will benefit from this expansion, it had said in a sales note to clients.
The subscriber base is expected to improve as internet penetration broadens among the small and medium enterprises, said Brijesh Agrawal, co-founder and director of the company.
The digital classified market—estimated at Rs 4,020 crore in financial year ended March 2017—is expected to grow at an annualised rate of 14 percent over FY17-22 to reach Rs 7,710 crore, according to the company’s red herring prospectus.
IndiaMart connects manufacturers, suppliers and exporters to buyers through its platform. It, however, doesn’t engage in any other allied activities like logistics and credit facility, among others.
Agrawal downplayed the concerns of competition from e-commerce giants Alibaba and Amazon disrupting IndiaMart’s business. “Largely their focus is on business-to-consumer space. We are undisputed market leaders in business-to-business space,” he told BloombergQuint in an interview.
The [website] traffic was four times higher for us compared to our competitor in the second place in 2016. It grew to about 10 times in 2018. As we go into 2019, it has become close to 16 times. Once the network effects start playing in, it becomes very difficult for any other competitor to come in and disrupt.Brijesh Agrawal, Co-founder and Director, IndiaMart InterMesh
The company, which mostly has small businesses listed on its platform—generates 99 percent of revenue from the subscriptions purchased by sellers. The subscription packages are available monthly, annually and for multi-year, which offers benefits such as featuring on storefronts on priority basis, access to lead management system, integrated access to third-party online payment gateways and access to request for quotations. The rest of its business comes from advertising, facilitation of payment and sale of request for quotations credits. It also allows sellers to list without subscribing and is free for buyers.