The issue received bids for 9,74,93,895 shares against the total size of 26,92,824.
The qualified institutional buyers’ quota was subscribed 30.83 times, non-institutional investors 62.12 times and retail investors 13.37 times.
At the upper end of the price band, the issue demands a valuation multiple of 139.68 times at FY19 EPS of Rs 6.97. The P/B ratio would work out to be 17.51 times at FY19 book value of Rs 55.57. Many analysts had given ‘avoid’ rating on the issue.
IndiaMART is India’s largest online B2B marketplace for business products and services. Choice Broking, which has a ‘subscribe’ rating on the issue, said if one excludes the negative impact of non-cash items, the demanded P/E is at around 32.8 times to its adjusted EPS of Rs 29.6.
“Based on FY20E and FY21E EPS, the stock is valued at a P/E multiple of 35.1 times and 25.9 times, respectively, which again is at a premium to the peer average of 21.5 times and 15.3 times. But considering the growth outlook coupled with dominant market position and expected benefit from the operating leverage, we feel that the future benefits outweigh the target share price derived from various traditional valuation multiples,” it said.
Such types of technological and scalable business models should not be valued merely on profitability, but also on future market potential and capabilities of the management to work towards achieving the potential, the brokerage said, assigning a ‘subscribe’ rating to the issue.
