After the B2B e-commerce company reported a 60.68% increase in its consolidated earnings at Rs 112.80 crore for the December quarter compared with Rs 70.20 crore in the same quarter previous year, shares of Indiamart Intermesh rose 5% in Friday's trade. According to Indiamart Intermesh, the combined income for the quarter increased by 33.65% to Rs 251.4 crore from Rs 188.10 crore in the corresponding quarter last year. Sequentially unchanged and down 13.9 percentage points year over year to 28% was the Ebitda margin.

In response to the news, the stock increased 4.87 percent, reaching a high of Rs 4,695.

Later, it was up 1.75 percent and trading at Rs. 4,555.25. Given its expected growth potential, ICICI Securities said the company, which has already declined by 29% over the past year, is a compelling buy at its present value of 26 times one-year future EV/Ebitda.

Brokerage Indiamart Intermesh recorded significant cash collections growth of 27.5% YoY in the December quarter to Rs 283 crore, which was a 2% beat on its projections, according to JM Financial, which has a target of Rs 4,940 on the stock. However, the paid-supplier additions disappointed because they were only up 6,300 sequentially compared to JM Financial's own anticipation of 7,600 and the management's guidance of 8,000–9,000.

Despite strong revenue growth of 33.7 per cent YoY, the much-awaited operating leverage remained elusive as Indiamart Intermesh continued to make growth investments, JM Financial said.

"While on the one hand the results are a testament to the company’s ability to up-sell to its existing supplier base, on the other hand they also indicate how steep a task it is to expand the paid-supplier base despite making supportive investments. Recent traffic growth and business enquiries delivered trends have also not been very encouraging. Nevertheless, in the near to medium term, we expect IndiaMART to continue to report strong revenue growth on the back of very strong cash collections in the last 6 quarters," JM Financial said.

JM Financial has decreased its Ebitda margin forecasts by 10-110 bps over FY23-25E while still anticipating Indiamart Intermesh management to stick to its paid-supplier additions guide.

While ramp-up in labour expenses (80% of total operating costs) will continue to have an impact on near-term profitability, they estimate the company to report a solid Ebitda CAGR of 28% over FY23-25E, the statement read.

Indiamart Intermesh is forecast to deliver a robust revenue growth trajectory over the course of FY23–FY25E, according to ICICI Securities, as it is a possible main beneficiary of the rapid expansion in B2B e-commerce anticipated over the coming several years.