ICICI Securities has lowered the target price for IndiaMart InterMesh to ₹1,900 from ₹2,300. The revision reflects challenges in growing the subscriber base and concerns over the current interest rate environment. While revenue rose on better pricing, the company is facing a drop in user activity and customer numbers.
ICICI Securities has revised its outlook on IndiaMart InterMesh, lowering its target price to ₹1,900 from the previous ₹2,300. The brokerage’s update comes after the company reported mixed performance metrics in the second quarter of the 2027 fiscal year. While the brokerage maintains a positive view, the reduced target reflects caution regarding the company’s ability to grow its customer base in a tough economic environment.
Financial performance in the recent quarter showed a revenue growth of 9.6% year-on-year. However, a deeper look reveals that this growth was driven by higher charges to existing customers—often called better realisation—rather than a rise in the total number of paying subscribers. The number of paying users has continued to trend downward, with management indicating that they are reducing spending on acquiring new customers due to high churn, particularly among smaller suppliers.
A significant factor impacting user engagement is the 12.9% decline in Unique Business Enquiries (UBE). This drop is largely linked to the company’s decision to tighten user authentication. This move was intended to prevent artificial intelligence bots from scraping proprietary data from the platform. While this protects the company’s long-term business advantage, it has created immediate friction, leading to a temporary dip in activity metrics.
On the positive side, the accounting software division, BUSY, continues to show strong results, with revenue jumping 27% during the quarter. Management expects billing growth for this segment to stabilise between 20% and 30% as the impact of the current quarter settles. The company is also experimenting with credit facilitation and buyer monetisation, though these efforts are still in the pilot phase and contribute only a small portion to the overall financial results.
Investors should note that the company faces broader pressure from high interest rates, which often impact the small and medium enterprise (SME) segment—the core customer base for IndiaMart. When interest rates are high, SMEs may become more cautious about their spending, which directly affects subscriber renewals. The brokerage’s decision to lower the valuation multiple reflects these ongoing hurdles. Moving forward, the most important trends for investors to track will be whether the company can reverse the contraction in its paying subscriber base, whether user engagement metrics recover as the new authentication protocols stabilise, and the continued growth trajectory of the BUSY accounting software unit.