Infibeam looks to build on last year’s stellar show

Shares of Infibeam Incorporation, India’s only listed and “profitable” e-commerce company, have come a long way within one year of its listing, both in terms of financials and stock performance.

The company had witnessed a lot of pessimism and negativity during its initial public offer in March 2016 due to sky-high valuation amid bleeding retail (main) business.

The IPO was overall subscribed by just 1.1 times with not a single share purchased by mutual funds. Also, the stock made a tepid debut with single digit premium to its issue price of ₹432. Almost all brokerages had an ‘avoid’ rating on the IPO.

Today, the current market price is at ₹1,305.75, up 94 per cent in the last one year. The stock price more than tripled and touched an all-time high of ₹1,448.8 on February 22, 2017.

In FY17, consolidated revenues jumped 31 per cent to ₹440 crore while the company’s net profit of ₹44 crore almost quadrupled compared to FY16, led by the high-margin services segment (the B2B business under the brand name ‘BuildaBazaar’).

The business, which formed 36 per cent of revenues in FY17 compared to 15 per cent two-three years ago, offers cloud-based, modular and customisable digital solutions and other value-added services to enable merchants to set up online storefronts.

Though debt jumped to ₹136 crore in FY17, it is cash-rich on a net basis. It also has positive operating cash flows.

“The density of population is moving online in India. So, merchants would want to build online shops. We have taken a conscious approach that while retail business is important, we should also build software which is B2B business,” said Vishal Mehta, Managing Director of the company.

There continues to be positive triggers even if the Snapdeal buyout does not take place.

The company’s losses in the retail business (multi-category e-tailer under the brand Infibeam.com) are expected to decline further due to implementation of Goods and Services Tax (GST) and resultant efficiencies.

The company’s recent acquisition of profitable payments company CCAvenue, with FY16 revenue and profit of ₹100 crore and ₹25 crore respectively, will start contributing from the June 2017 quarter.

This will strengthen the company’s services business even more by catering to more than one lakh merchants and providing about 85 per cent of India’s e-commerce websites with payments and platform web services.

The company has been appointed as a successful bidder along with other consortium members for design, development, implementation, operation and maintenance of the government’s e-market place portal.

The subdivision of its equity shares from ₹10 face value to ₹1 will improve liquidity in the stock.

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