{"id":135286,"date":"2022-11-01T03:53:29","date_gmt":"2022-11-01T07:53:29","guid":{"rendered":"https:\/\/44.250.171.167\/?p=135286"},"modified":"2022-11-01T03:53:31","modified_gmt":"2022-11-01T07:53:31","slug":"everything-you-need-to-know-about-indias-largest-b2b-marketplace-indiamart-intermesh-ltd","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/everything-you-need-to-know-about-indias-largest-b2b-marketplace-indiamart-intermesh-ltd\/","title":{"rendered":"Everything you need to know about India’s largest B2B marketplace – IndiaMART InterMESH Ltd"},"content":{"rendered":"\n

About Company:<\/strong> <\/h2>\n\n\n\n

Started in the late 1990s, IndiaMART is India’s largest online B2B marketplace. It connects buyers and sellers of products and services.  It provides ease and convenience to the buyers by offering a wide assortment of products and a responsive seller base while offering lead generation, lead management and payment solutions to its sellers. <\/p>\n\n\n\n

Let\u2019s delve deeper into its revenue model:<\/p>\n\n\n\n

Revenue Model:<\/strong><\/p>\n\n\n\n

The company\u2019s revenue primarily comes from providing subscription based offerings to the suppliers. While most of the suppliers register themselves free on the platform, the company generates revenue through monetization of a small number of our total suppliers by sale of subscription packages. The packages are classified under Silver, Gold and Platinum categories and are offered on monthly, semi-annual, annual and multi-year basis. The packages include providing a web storefront, cloud telephony services, priority listing, RFQ selection credits (BuyLeads), customer relationship management through a lead manager, facility for online payment and better profile information of the prospective buyers. <\/p>\n\n\n\n

Pan India presence:<\/strong><\/p>\n\n\n\n

The company has been diversifying its presence and now the Metro cities account for 32% of buyers while tier-2 cities account for 25% & rest of India accounts for 43% of the total buyers. <\/p>\n\n\n\n

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The diversified presence helps to minimize the impact of region-specific risks on its business.<\/p>\n\n\n\n

Interestingly, the paying subscription suppliers stand the highest in metro cities and account for 55% of the total paying subscriber base while Tier 2 cities account for 27% and the rest of India accounts for 17% of the total paying subscription suppliers.<\/p>\n\n\n\n

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Largest in the industry:<\/strong><\/p>\n\n\n\n

The company commands nearly 60% market share of the online B2B classifieds space which makes it the largest player in the industry. It has a portfolio of 7.3 million supplier storefronts, 160 million registered buyers.<\/p>\n\n\n\n

Well Diversified Marketplace:<\/strong><\/p>\n\n\n\n

The business has ~87 million products from 56 different industries listed across its website which makes it one of the most diversified marketplace in the country. No single industry accounts for more than 10% of the marketplace. Industrial plants, machinery & equipment is the largest category in the marketplace and covers 8% of it, followed by Construction & raw material (7%), packaging Material, Supplies & Machines (6%), consumer electronics & household appliances (6%) and many more.<\/p>\n\n\n\n

Customer Profile:<\/strong><\/p>\n\n\n\n

The business for the company largely comes from small and medium enterprises (SMEs). The platform makes it easier for buyers & suppliers through its offerings which include the marketplace, convenient price discovery, intelligent connect & easy and secure payments.<\/p>\n\n\n\n

The collection from customers has been growing at a CAGR of 20% over the period of last 7 years and stood at INR 264 crores for the second quarter of FY23.<\/p>\n\n\n\n

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Strong and growing Employee base:<\/strong> <\/p>\n\n\n\n

It has nationwide coverage with more than 85 office branches and a sales & service staff of ~4,088 employees. 21% employees have stayed with the company for more than 5 years depicting the trust they have on the company which in return also increases the efficiency of the company.<\/p>\n\n\n\n

Income Source:<\/strong><\/p>\n\n\n\n

The company follows a freemium model and sources 98% of its revenues from the subscription. The top 1% paying customer contributes to 18% of the revenue with an average revenue per user of INR 8.7 Lacs while top 10% contributes 47% of the company\u2019s revenue with an average revenue per user od INR 2.2 Lacs. 58% of revenues comes from sellers in metro cities, followed by tier 2 cities (28 %) & rest of India (15%).<\/p>\n\n\n\n

Vyapar and other investments:<\/strong><\/p>\n\n\n\n

Since listing, IndiaMart has deployed ~INR 9 Bn in over 10-12 investments in software start-ups for minority stakes\/big buyouts. Of this, ~INR 6.5 Bn has been deployed in four companies in accounting. It acquired Busy Infotech (on-premise accounting and GST software) for INR 5 Bn in an all-cash deal, hiked its stake in the startup Vyapar (27.5% stale) (offering do-it-yourself, mobile-based accounting and GST software to small businesses), injecting INR 634 Mn, and recently invested in Realbooks (26% stake) and Livekeeping. Now with these four investments in accounting, the company has a portfolio of products that appeals to the entire spectrum of businesses (micro to large). It plans to use cross-selling opportunities to drive growth. Summing it up, we can state that the company pushes a lot of focus on the accounting softwares and wants to tap into the B2B market completely.<\/p>\n\n\n\n

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The company also sold accounting software Busy licenses worth INR 301K depicting a CAGR of 10% over the period of last 4 years. The sales for the same have been INR 11.7 crores for the year while the net profit was INR 2.9 crores for the fiscal year 22<\/p>\n\n\n\n

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The company also has other strategic investments in other businesses as well that includes logistics, people management and operations management.<\/p>\n\n\n\n

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Let’s take a look at the revenues earned by its investments over the period:<\/p>\n\n\n\n

Particulars (INR Mn)<\/strong><\/td>Revenue FY20<\/strong><\/td>Revenue FY21<\/strong><\/td>Revenue FY22<\/strong><\/td>PAT FY20<\/strong><\/td>PAT FY21<\/strong><\/td>PAT FY22<\/strong><\/td><\/tr>
Buzy Infotech<\/strong><\/td>348<\/td>424<\/td>500<\/td>87<\/td>110<\/td>120<\/td><\/tr>
Vyapaar<\/strong><\/td>56<\/td>117<\/td>NA<\/td>NA<\/td>NA<\/td>NA<\/td><\/tr>
Realbooks<\/strong><\/td>21.9<\/td>26.3<\/td>33.8<\/td>NA<\/td>NA<\/td>NA<\/td><\/tr>
Live keeping<\/strong><\/td>10<\/td>20.5<\/td>33.7<\/td>0.02<\/td>2.4<\/td>5.2<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We believe that despite the government\u2019s push, MSME owners have been reluctant or slow to digitize systems. While GST, demonetisation and Covid-19 compelled many to switch, the larger proportion still keep accounts offline, which is the way platforms such as Busy and Tally are structured. As more corners of the MSME sector are digitized, a huge market is opening up for software companies. Since IndiaMart is already bringing buyers and sellers online, it makes sense for the marketplace to add digital accounting and billing solutions. <\/p>\n\n\n\n

How are they different from its competitors:<\/strong><\/p>\n\n\n\n

A lot of startups have started focusing on SMEs like Power2SME, Moglix, IndustryBuying, Udaan, Bizongo, OfBusines but out of all these, Udaan has drawn heavy focus from the VCs. It commands a huge valuation of almost 5 billion plus (as of 11 Feb 2022). However, the operational business of Udaan is still small compared to IndiaMART.<\/p>\n\n\n\n

Udaan operates only in a few verticals like apparel, electronics, pharmacy, staples, fresh food and FMCG products while IndiaMART\u2019s main focus is on long-tail manufacturing products (Also no single category contributes more than 10% of revenues of IndiaMART). Udaan is also into the lending business and yes, it is lending from its own books. So the company needs to turn around its table because once the VC money is all blown up, Udaan will face a severe existential crisis. <\/p>\n\n\n\n

Such huge focus \/ funding by VCs and entry by new startups in this area asserts the longevity of the industry. The company faces a stiff competition from its traditional competitors – Trade India and Exporters India.<\/p>\n\n\n\n

Competitors<\/strong><\/td>Industries Served<\/strong><\/td>Registered suppliers (Mn)<\/strong><\/td>Registered Buyers (Mn)<\/strong><\/td>Number of categories<\/strong><\/td>Market Share<\/strong><\/td><\/tr>
IndiaMART<\/strong><\/td>56<\/td>7.2<\/td>149<\/td>95,000+<\/td>~60%<\/td><\/tr>
Trade India<\/strong><\/td>40+<\/td>4.2<\/td>5.8<\/td>87,886+<\/td>~14%<\/td><\/tr>
Exporters India<\/strong><\/td>40<\/td>1.2<\/td>1.6<\/td>75,000<\/td>NA<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Share price insight:<\/strong><\/h2>\n\n\n\n