IndiaMART sets ambitious target to double revenue by 2027
Strategic plans for revenue growth: ARPU, paid customers, and new categories
20 March 2023
IndiaMart has invested Rs 900 crore in acquiring stakes in 14 companies, strengthening its position in categories such as HRtech, AI-powered freight movement, shipping solutions, and accounting software.
IndiaMART's recent acquisitions are expected to drive the company's growth over the next few years.
The company has set an ambitious target to double its revenue from a current run rate.
This can be accomplished by improving ARPU (Annualised Revenue Per User), expanding into new categories, and adding paid subscribers.
IndiaMart has spent over Rs 900 crore on acquiring stakes in almost 14 companies over the past few years, which has enabled the B2B ecommerce company to strengthen its position across various categories such as HRtech with Zimyo, AI-powered freight movement with Fleetx, shipping solutions company Shipway, and its costliest acquisition to date, accounting software company Busy Infotech, which was purchased in January 2022 for Rs 500 crore.
It's recent acquisitions are expected to drive the company's growth over the next few years, with ICICI Securities estimating that the proportion of revenue from new businesses could increase from 0% in FY22 to around 10% in FY25E, according to their latest research report.
IndiaMART, which was founded in 1999 and is based in Noida, has set an ambitious target to double its revenue from a current run rate of Rs 1,000 crore to Rs 2,000 crore by 2027. The company believes this can be accomplished by improving ARPU (Annualised Revenue Per User), expanding into new categories, and adding paid subscribers.
“Our search is better than Google, our B2B catalogue is better than Amazon,” Dinesh Agarwal, Founder and CEO, IndiaMART tells YourStory. “We do analytics and machine learning to improve search and match-making. Have price- and location-specific analytics. We focus on the sell side behaviour to improve consumer side matchmaking,” he adds.
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The company currently holds over 60% of the B2B listings market share and has a vast network of 7.4 million suppliers and over 90 million listings. The company aims to strengthen its position by growing its customer base by 15%-20% annually and increasing its ARPU by 5-7%. According to Agarwal, this would result in a CAGR of 25% per annum, allowing them to double revenue every 4-5 years. IndiaMART's Q3 FY23 operating revenue stood at Rs 251 crore on a consolidated basis, up from Rs 188 crore in Q3 FY22.
It has been expanding its ecosystem beyond discovery through acquisitions, with a focus on financial accounting, logistics technology, and order management. Accounting is a key area of focus for the company, with at least four of its acquisitions being in this space. The company aims to tap into the billion-dollar market for tax and accounting assistance for small businesses.
The company is also adding transactions to its platform, with plans to integrate logistics and tracking. The company is considering a combination of subscription- and transaction-based revenue models in the future. Additionally, IndiaMART aims to strengthen its existing product categories and currently operates in 56 industries, with the highest share of paying subscribers coming from industrial plants, machinery and equipment, and construction and raw materials.
The customer engagement strategy has resulted in the addition of 6,600 paid customers in Q3 FY23, with 54% of them being repeat buyers. The company aims to maintain this churn while adding upwards of 8,000 customers quarterly. IndiaMART's paid customer base has grown from 156,000 to 194,000 in Q3 FY23, while its ARPU has increased from Rs 48,000 to Rs 49,400.
ICICI Securities' research shows that the total addressable market of B2B ecommerce in India is expected to grow at a CAGR of 55.8% over FY23E-FY25E. As per analysts, there is room for multiple players to co-exist in the market, with IndiaMART leading the way, followed by Udaan, TradeIndia, and Reliance-owned JustDial who are all working towards scaling up.