IndiaMART stock is down around 38 percent and for last couple of weeks the stock is under pressure. Now what is worrying the investors? One of reasons is the many acquisitions that the company has been making. Last year, in January-February of 2021, the company raised about Rs 1,000 crore at a price of close to about Rs 9,000. Now, more than 50 percent of that has already been spent.
IndiaMART stock is down around 38 percent; it had been under pressure for the past couple of weeks.
What is worrying the investors now? One reason is the many acquisitions that the company has been making. In January-February of 2021, the company raised about Rs 1,000 crore at a price of close to Rs 9,000. Now, more than 50 percent of that has already been spent.
In Q3 the company announced a very large-acquisition of an accounting company called Busy Infotech for Rs 500 crore, they also announced a small investment — Simply Vyapar. On Tuesday, the company has announced another acquisition, this time of in Fleetx Technologies, a company which digitises logistics operations.
Also, their margins have been on a declining trajectory. Now, due to COVID-related savings, the IndiaMART’s margins were close to 50 percent. The company always had been maintaining that these are COVID linked savings; they’re not going to sustain -- 50 percent will be ploughed back into the business and only 50 percent will be retained. But even then, analysts estimate the margin estimates were still higher and in Q3, they were close to 42 percent and according to the company, sustainable margins are even lower — 38 percent -- which means margins are going to decline even further.
Watch the accompanying video of CNBC-TV18’s Reema Tendulkar for more details.
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