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Shares of B2B ecommerce major IndiaMART fell as much as 7.5% during the intraday trading today to hit a 52-week low of ₹1,773 before closing 5.25% lower at ₹1,817.40 on the NSE. 

The company’s market capitalisation stood at ₹10,930.4 Cr (about $1.1 Bn) at the end of the session. 

The decline came a day after IndiaMART reported its Q1 FY27 earnings, with investors reacting to continued weakness in its paid supplier base despite healthy growth in revenue and profitability. 

Jefferies retained its ‘Underperform’ rating on the stock with a target price of ₹1,650, citing the third consecutive quarterly decline in paid suppliers. The brokerage also lowered its FY28 and FY29 earnings estimates by 1.5% to 4%. 

Meanwhile, Nomura maintained its ‘Reduce’ rating with a target price of ₹1,810, saying a recovery in paid supplier additions would be key for any meaningful upside. 

For the quarter ended June, IndiaMART reported a 12% YoY increase in consolidated net profit to ₹172.2 Cr from ₹153.5 Cr a year earlier. On a sequential basis, profit jumped more than 3.4X from ₹50.2 Cr. 

Operating revenue rose 11% YoY and 3% sequentially to ₹414.4 Cr. Including other income of ₹106.7 Cr, total income stood at ₹521.1 Cr.  

The company’s EBITDA increased 10% YoY as well as sequentially to ₹14.6 Cr.

IndiaMART’s core web and related services business, its biggest revenue contributor, grew 9% YoY to ₹375.9 Cr, while revenue from its accounting software business surged 49% to ₹38.5 Cr. 

Customer collections rose 8% YoY to ₹463 Cr, while Busy Infotech reported collections of ₹59 Cr. During the quarter, IndiaMART generated 26 Mn unique business enquiries, while supplier storefronts grew 5% YoY to 8.8 Mn.

However, the number of paying suppliers stood at 2.18 Lakh at the end of June, continuing a trend that has emerged as a key concern for investors.

Speaking to Inc42, IndiaMART CEO Dinesh Agarwal acknowledged that supplier retention had weakened over the past few quarters, particularly among silver-tier customers.

“On the retention side, the last couple of quarters retention has been bad, especially in the silver tier,” Agarwal said.

According to him, these suppliers struggle to compete with gold- and platinum-tier customers and often leave the platform within their first year. “Silver-tier customers are not able to actually compete with gold and platinum today and are finding it difficult to compete, and they leave in the first year,” he said.

For context, IndiaMART offers three paid plans for suppliers – silver, gold and platinum. Higher plans give suppliers more leads, better visibility, and a greater chance of reaching buyers. 

Silver provides basic visibility and 7-10 buyer leads a week. Gold offers better search ranking and around 14-25 leads, while platinum gives sellers top visibility and more than 50 leads a week.

Silver subscribers make up about 50% of IndiaMART’s paying suppliers but contribute only around 25% of subscription revenue. In contrast, gold and platinum customers account for the remaining half of the customer base and generate nearly 75% of the revenue.

As per Agarwal, Silver customers are generally newer to the platform and struggle to compete with Gold and Platinum sellers, which receive better visibility and more buyer leads. As a result, improvements in buyer quality and enquiries have benefited higher-tier customers more than Silver subscribers.

Agarwal added that the company is using AI and other initiatives to improve retention and encourage silver-tier suppliers to upgrade.

“With AI and various initiatives, we continue to see what can help us retain the silver customers better and upgrade them better,” he said.

Until retention improves in the entry-level tier, IndiaMART will continue focusing on better monetisation from gold and platinum customers and improving the overall experience for buyers and sellers.

Along with the results, IndiaMART’s board approved the incorporation of a wholly owned subsidiary, IndiaMART Finance.

Agarwal said the new arm will not lend directly. Instead, it will facilitate short-term transaction financing and working capital for buyers and sellers by partnering with banks, lenders and technology companies.

“We remain a low-touch marketplace, so we are neither into trading nor into lending nor into the purchase or sale of any products. We are a technology company and would like to remain a catalyst to businesses,” he added. 

The post IndiaMART Shares Sink 7.5% To 52-Week Low As Paid Supplier Concerns Mount appeared first on Inc42 Media.