IndiaMART InterMESH reported a 9.6% revenue growth in Q2 FY27, exceeding estimates, though adjusted profit of 908 million rupees missed projections. Brokerage firm Motilal Oswal has maintained its buy rating with a 2,000 rupee target, citing attractive valuations and improving profit margins despite lingering market concerns over subscriber expansion.
IndiaMART InterMESH recently reported its financial results for the second quarter of the 2027 fiscal year. The company showed a revenue increase of 9.6% compared to the same period last year, which was higher than the initial market expectation of 7.4%. This growth indicates steady demand for its business-to-business online marketplace services.
Operational Efficiency and Margins
A positive takeaway from the quarter was the improvement in operational efficiency. The company’s EBITDA margin, which measures core operating profitability, expanded by 180 basis points on a quarter-on-quarter basis to reach 37.1%. This performance was notable as it surpassed the 34.2% forecast set by the brokerage. Additionally, deferred revenue—money received from customers for services that have not yet been delivered—grew by 16%, reaching 20.3 billion rupees. This indicates that the company has a strong pipeline of future service delivery.
Understanding the Profit Miss
While the company showed strong revenue and operational growth, its adjusted profit after tax stood at 908 million rupees, reflecting a 9.4% year-on-year increase. However, this figure was lower than the market estimate of 1.196 billion rupees. The primary reason for this gap was identified as variations in other income categories rather than a failure in core business operations. For the first half of the fiscal year, the company has shown a consistent upward trend, with revenue growing 10.5% and adjusted profit rising by 11.4% compared to the previous year.
Analyst Outlook and Market Context
Motilal Oswal has reiterated a buy rating on the stock with a 12-month target price of 2,000 rupees. Analysts at the firm suggest that current stock valuations remain attractive. They note that the share price currently reflects market worries about subscriber expansion and the company's product-market fit. The brokerage considers these concerns to be overblown, arguing that the company’s business model remains resilient.
Risks and Investor Monitorables
For investors, the key area to watch is the subscriber growth rate. In the B2B marketplace model, adding new paying subscribers and retaining existing ones is essential for long-term revenue visibility. If subscriber additions remain slow, it could put pressure on the company's ability to maintain high growth rates. Investors may also track management’s commentary on pricing strategies and how the company plans to balance subscriber acquisition costs with profit margins. While the current valuation is viewed as attractive by some analysts, the ability of IndiaMART to convert its deferred revenue into long-term profit while managing competitive pressure in the digital marketplace space will remain a critical monitorable in the coming quarters.