INDIAMART || Consistently Performing Stocks #16
What has led to the consistency?
The aim of this series is to identify consistently performing businesses and understand a little bit more about how they are able to achieve this consistency.
Before we get into today’s stock, let me set some context regarding my research objectives. I do a weekly exercise to study and learn the business of one stock as part of my research activities as a SEBI registered RA. The primary objective is to understand the business a little bit more, figure out the key growth drivers and identify broader industry trends & patterns. Most of the research below is knowledge derived from the past Annual Reports and recent Quarterly Investor presentations. I am not an expert in this domain or industry. And more importantly, this is not a recommendation to buy the stock nor a thesis for a multibagger opportunity.
Let’s start ⬇️
Today, we will look at the key fundamentals & business of Indiamart Intermesh Ltd.
What Has Led to This Consistency
Company Overview
Founded in 1996, Indiamart Intermesh Ltd. is India's largest online B2B marketplace. India had only 15,000 internet users at that time.
The company has over 8.4 million registered suppliers and 100+ million monthly visits, and holds approximately 60-65% market share.
Connects buyers and suppliers across diverse industries through an asset-light digital platform.
Operates on a subscription-based model where suppliers pay for enhanced visibility and lead generation. Buyers access the platform for free.
The company essentially functions as a matchmaker, connecting businesses with relevant suppliers across India and increasingly global markets.
Revenue Model
Steady subscription revenue with 80% annual renewal rate, stable during market downturns. Out of the 8.34 million registered suppliers, 2.17 lakh suppliers are paying customers. There is still room for growth.
Advance payments from customers provides upfront cash flow benefits
Expanding services include Payments, Advertising, Software tools to reduce Subscription service dependency
Busy Infotech Acquisition (in 2022): Acquired 100% of accounting software company for ₹500 crores - offers GST billing, inventory management, TDS/TCS compliance
Vyapar Investment: 27% stake through ₹61.55 crore investment - comprehensive GST billing and inventory management for SMEs with 1+ lakh paying customers
Providing multiple services increases customer stickiness and retention rates
Market Leadership
Indiamart holds 60% of India's online B2B classified market through comprehensive TrustSEAL verification system requiring GST validation, video KYC, document authentication, and quality certifications, creating trusted supplier badges.
More buyers attract more suppliers, creating cycles where suppliers also become buyers. AI-powered matching improves with scale, generating community effects (suppliers becoming buyers) beyond traditional network effects as participation grows.
IndiaMART has "100% organic traffic which indicates strong brand equity" meaning virtually zero paid acquisition costs. Market leadership provides lower customer acquisition costs and entry barriers.
Asset-Light Model
Operates with minimal physical assets, investing primarily in technology infra. Fixed Assets as a % of Total Assets is less. Enables High ROA.
Traffic expanded from 748 million (2020) to 1102 million (2024). Infrastructure costs didn't scale proportionally as platform handles increased load through cloud-based optimization. Rapid scaling with marginal costs creates strong operating leverage.
Tech Innovation
Indiamart invests continuously in AI and ML technologies to enhance lead matching, fraud detection, and personalization.
AI-based matchmaking technology delivers 4 crore business enquiries monthly through sophisticated algorithms that match buyer needs with suitable suppliers beyond location restrictions
Platform facilitates ~7 crore+ matchmakings annually using personalized recommendations based on user behavior, breaking down geographical barriers
Voice-to-text algorithms automatically identify spam calls vs genuine business inquiries by analyzing conversation patterns and keywords
Its R&D team has also secured multiple patents, creating proprietary systems.
It offers voice search and local languages to enhance reach. Voice search available in 9 languages: English, Hindi, Marathi, Tamil, Kannada, Telugu, Gujarati, Bangla, and Malayalam. These additional tools make customers more likely to stay with the platform.
Customer Diversity
Indiamart serves millions of buyers and suppliers across 56 industry verticals, extending beyond major cities into Tier 2 and 3 markets.
This diversity provides cross-industry insights and protects against sector-specific downturns.
Consistency Formula
Revenue Model + Diversification → Predictable Growth With Multiple Vectors
Market Leadership + Network Effects → Sustainable Competitive Advantage
Asset-Light Model + Tech Innovation → Scalable Growth With Operating Leverage
That’s it for today. Every week, I will pick one consistently performing stock and share a little bit more about their business for learning purposes. Do subcribe if you wish to receive it in your Inbox every Saturday.
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Disclaimer: Anand Ganapathy K is a SEBI-registered Research Analyst with SEBI registration number INH000016630. This post is purely for learning purposes to understand more about the business. It does not recommend buying or selling stocks mentioned in this newsletter. Securities market investments carry market risks. Kindly review all related documents before investing.
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