IndiaMart, a 20-year old online marketplace and one of the country’s biggest, is selling shares as e-commerce gets more competitive
- Promoters are cashing out of
Indiamartwith the ₹4.75 billion initial public offering.
- The IPO closed the first day with 50% subscription.
- IndiaMart faces competition from the likes of Alibaba India.
A total of 4.88 million shares of the company are up for grabs,at a price band of ₹970-₹973 per share. The IPO will be closed for subscription on June 26.
IndiaMart had also registered a compounded annual growth in revenue (CAGR) of 26% in the last three years. However, Indiamart will not receive any of the IPO proceeds. In fact, the listing is only an offer for sale (OFS) through which the promoters and shareholders will dilute 0.49 crore shares of the company.
Competition in the market
IndiaMart, which was founded in 1999, today claims to have a 60% market share of the online B2B Classified space in India, and it focuses on providing a platform to Small & Medium Enterprises (SMEs), large enterprises as well as individuals. IndiaMart has over 82.7 mn registered buyers and 5.55 million supplier storefronts across 54 industries in India as of FY19.
What’s better, there has been a growth of 21% in paid subscribers on the platform in the last three years, according to Geojit, and the number of registered buyers has grown 45% in the same period
However, its competitors are far behind. Some of its competitors are TradeIndia.com, Alibaba India and ExportersIndia.com. TradeIndia.com was started in 1996 has over 4.96 million registered users today, according to the company’s official website. ExportersIndia was founded in 1997 and has over 2.7 million users in India.
Meanwhile, the globally e-commerce giant Alibaba launched the India unit in 2008 and has over 6 million members with 15,000 Indian SMEs on its platform. Alibaba could soon push for growth in the Indian market too given the economy’s potential as the world’s fastest growing economy. E-commerce in India is expected to be $200 billion industry by 2026.
That brings us to the biggest risks that the company could face in the near term. Aside from competition, there is a huge slowdown in overall consumption in India. “Demand slowdown for the types of products and services listed by suppliers on IndiaMart online marketplace,” was the top risk cited by Geojit in a report, followed by losses in previous years as well as high employee costs.