B2B e-commerce marketplace, IndiaMART, is expecting double-digit growth in collections/subscriptions. The firm expects the growth to be in the range of 20-30 per cent for FY22 due to improving macro economic conditions showing repeat upgrades from subscribers at the premium end.
IndiaMART has a buyer-base of 138 million. It operates on a subscription model whereby users pay to list on the marketplaces rather than a commission-based model where revenues for the platform come in on sales made through it.
In the July-September quarter, collections stood at ₹223 crore, up 37 per cent year-on-year and 31 per cent sequentially. Unique buyer enquiries remain at 26 million. The annualised revenue per paying subscriber stood at around ₹48,400, recording a CAGR growth of 6 per cent. These numbers continue to be higher as subscriber additions have been stagnant at 4,500, with exits mostly at the lowest monthly subscription level. Subscriber additions (paying ones) per quarter were in the 6000-odd range during pre-pandemic times.
According to Dinesh Agarwal, Founder and CEO of IndiaMART InterMESH, the target is to ensure customer additions in the 5,000-6,000 range by December-end and hit these numbers consistently during coming quarters. Although there has been some customer loss annually, the loss is from the lowest end, mostly limited to silver category. “As of now the trends are positive and premium subscribers are upgrading or renewing their subscriptions. The problem is at the lower end with MSME clients repeatedly changing businesses or not being able to continue because of working capital issues. So they are dropping off in one quarter and coming back in another,” he told BusinessLine , adding that average revenue per paying subscriber is expected to be in the ₹45,000 range as stabilisation happens.
For the September quarter, IndiaMART reported an 18 per cent y-o-y increase in consolidated net profit at ₹82 crore.
According to Agarwal, there has been a consistent recovery which was mostly broad-based, although the churn (subscriber additions, drops and renewals) is a few notches higher than the pre-Covid levels.
EBITDA margin which stood at 28 per cent pre-Covid are expected to stabilise in the 38 per cent range going forward. High margins – hovering at 48 per cent during Covid times – are unsustainable in the long-term.
According to brokerage firm Motilal Oswal, strong collections are a testimony to a recovery in the demand momentum. “We expect the momentum in collections to improve further in the near term. IndiaMART has shown higher resilience on the margin front. While we concur that margin at current levels are not sustainable, it would see positive benefits from cost optimisation and operating leverage in the long term,” it said in a report.
The company, Agarwal said, has also re-worked its sales model. Customer acquisition strategy is more through ‘hybrid modes’. Nearly, 50 per cent of subscriptions are coming in from older channels (physical interactions by field sales force) and another 20-25 per cent from new channels – telecalling, online ones – while distributor-led sales account for the remaining.
The B2B player is also looking at the MSME financing space, most likely when viability issues are sorted out.