HDFC Securities has lowered its target price for IndiaMART Intermesh to ₹2,400, citing high churn among entry-level silver subscribers. Despite the cut, the brokerage maintained a 'Buy' rating, betting on revenue growth from premium gold and platinum users. Investors may watch for improvements in unique business inquiries, which have recently declined.
What Happened
HDFC Securities has revised its target price for IndiaMART Intermesh Ltd. downward by approximately 6%, setting it at ₹2,400 compared to the previous ₹2,550. While the brokerage maintains a 'Buy' rating on the stock, the reduction reflects caution regarding the company's subscriber growth. The brokerage highlighted persistent difficulties in retaining entry-level customers, a trend that is currently weighing on the company's overall subscriber base and near-term revenue visibility.
The Challenge of Customer Churn
IndiaMART relies on a subscription model where businesses pay to be listed on its platform. The company segments its paying subscribers into silver, gold, and platinum tiers. The recent report points to a specific issue: elevated churn in the silver-tier segment, which represents a large portion of the customer base. Churn refers to the rate at which existing customers stop using or paying for the service. When this rate is high, the company must work harder to acquire new customers just to maintain its total subscriber count. High churn in this segment has resulted in lower-than-expected net subscriber additions for the company over the past two quarters.
Impact of Falling Business Inquiries
A key driver of IndiaMART's value proposition is the number of leads, or business inquiries, it generates for its clients. These are referred to as Unique Business Inquiries (UBEs). The report notes a decline in these inquiries, which fell to 27 million in the fourth quarter of FY26 from 31 million in the second quarter.
This drop is significant because fewer inquiries mean fewer business leads are available to distribute among subscribers. According to the brokerage, premium customers—specifically those in the gold and platinum tiers—often capture the most valuable opportunities. Consequently, the silver-tier members, who receive fewer leads, are more likely to discontinue their subscriptions, creating a cycle that is difficult for the company to break.
Revenue Growth via Premium Tiers
Despite the churn issues, HDFC Securities notes that the company is still finding ways to grow revenue. This growth is currently being driven by an expansion in Average Revenue Per User (ARPU). Several strategies are contributing to this: premium customers are increasingly opting for pan-India packages, the company has implemented category-based pricing, and existing silver and gold customers are being encouraged to migrate to higher, more expensive tiers. These moves help offset the slower subscriber growth by extracting more value from the customers who remain on the platform.
What Investors Should Track
For investors, the primary monitorable will be the company's ability to stabilize its subscriber base. The effectiveness of efforts to improve the quality of leads and reduce competition among suppliers will be critical. Additionally, keeping an eye on whether the decline in unique business inquiries is arrested or reversed will be important for assessing the health of the platform. Finally, the sustainability of ARPU growth, as the company pushes customers toward higher-tier packages, will be a key factor in determining if the current revenue trend can continue.