Indiamart Intermesh - Indian Alibaba?

Vedanta turned ex-dividend (31.5/share) and the stock lost 44.8/share due to dividend adjustment and mkt weakness.
On top of that, the 31.5/share is taxable at the peak tax rate at the hands of the investor.

Yeah, I too like a company that does buyback than a company that gives dividend.

I have a slightly different perspective on this. While I also have a preference for a company that does buyback to reduce outstanding shares (and thereby increase EPS), it should be dependent on the price of the buyback. (@diffsoft - really appreciate the tax analysis as this is something new I learnt today)

This is a capital allocation decision - is it better to give a dividend and let the shareholder decide the best use of the money or do a buyback? If the company is buying back below or near intrinsic value, a shareholder who wants to hold will benefit (buyback will come back with more cash flow in the future!). However, if the buyback price is above intrinsic value then the company has just spent money on something that will return less in the future.

Currently my intrinsic value has very conservative assumptions on subscription per subscriber growth (3-5%) as guided by the management - primarily because there is no visibility currently of how much (if any revenue) will be added by all the acquisitions they have made. Perhaps the management knows that there is likely to be a change in this number?

My intrinsic value currently is significantly less than the buyback price - so it makes sense for me to tender my allocation of shares (but is also feels a bit like promoters are cashing out at the cost of remaining shareholders - themselves included of course).

Disc. Invested so likely to be biased

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While Buy back are good but intention of buy back should be right. In this case buy back is designed to benefit promoters as buy back is so small. More over they buy 10% of many companies and not bug stake in any one. In recent confcall when asked about integration they are far behind in starting that. Looks like laziness on part of promoters.

Disclosure: I was invested but exited today

I personally look at dividends and buybacks are just ways of capital allocation and the way it handles it is the way that defines their nature.

I personally look for the open market buyback is better for a company just for capital allocation as they just used cash to invest in their own shares and that might not reward some people that participate in the short term but help in the long term.

When I look at this buyback this is like ok they are not buying too big but at least should reward individual holders more like most tata companies do most times promoters don’t participate that at least make money to flow to people that don’t run the company and are just investors money be given in a better tax-effective way but here money is just paid to the promoter and that looks bad to me but the size makes it not that bad at least they used high share price effectively.

Just for increased pay to employees we see this quarter and it is rapid have some friends and also have interviewed for there SDE role and if we look many new developments, especially in software are now opened and also many have given a good pay rise and have said much more new initiative are now been taken in the software side, especially in data department in data analyst, data engineer and data scientist role the number has increased significantly and also the move of there existing staff is also going there as a negative point I think there attrition is very high have around 10 friends last year in indiamart and most have left the company just said for better offer overall.

Disclaimer :- Invested

Government is very confident about ONDC(open network digital commerce).They set ambitious FY25 target of 50% digital e commerce business from 7%.Small and medium enterprises are going to benefit from this opportunity. Big players like amazon flipkart may lose their leadership &pricing power .Indiamart ,justdial may benefit from this SME growth…please share your views &Correct me if i am wrong

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Appreciate the insights in your post. For buyback, there is capital gain tax if buyback is via open market and no tax if via tender route. Can you pls share the differences between these two buyback ?
I do not understand essence of open market buyback because it seems to be always at market prices and also attract capital gains tax, so it is just like selling in live market…
However, no capital gain tax via tender buyback looks like greater control to promoters and less to retail investors.

Indian IT majors keep doing buy back…in context of your above details on buyback, how do you see them as they are from top governance firms?

More to ponder on dividend vs buyback for me, thanks for initiating this thought in context of tax and reasons of why promoters may do it in event of introduction of dividend tax at hands of receivers, including them,


Capital gains tax is still just 10% (LTCG) and 15% (stcg) while peak income tax rate (applicable to dividends) could be pretty high (typically above 30%).

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Thank you!!

True, In case of a market based Buyback, there is both Buyback Tax and Capital Gains!!!

So why do companies do open market buyback?

If a Company thinks that its True value >> ( Share price + Buyback Tax ~ 1.2x (not always) ) and it has nowhere else to put the cash and get that returns, then it makes sense to buy the shares from the open market.

For the shareholder, an open market buyback price is a firmer indicator than tender route, of what the Company thinks the value to be. It also provides liquidity. But why should a shareholder sell such shares at ‘x’ and pay tax on it, if he agrees with the company that the value is atleast 1.2x? So such shareholders will not tender, and either the buyback will not be fully completed in the time period or the price will soon rise above ‘x’. However the shareholder may also have to worry that once the buyback period is over and the price falls back to below ‘x’ then there will be no assured buyer (i.e. the Company) for atleast a year. These considerations will weigh for the shareholder.

I think for IT majors, it’s a question of returning cash in the most efficient way and that is Buyback as of today. If they have to, they should price it atleast about the market price. They are all indeed of top notch governance. That should not stop them from treating Taxes as an expense that should be legitimately reduced.


Buyback Letter of Offer released. Refer pages 40 – 42 in the below document.

• Shareholders holding not more than 46 shares will be classified as “small shareholders” and 15% of the buyback is reserved for them.

• Buyback entitlement for small shareholders is 1 share for every 63 shares held.

But if you actually hold 63 shares, you are not a small shareholder.

• So small shareholders will be sent Tender Forms will zero entitlement.

• Since entitlement for all small shareholders is zero each, whatever they tender is in excess of their entitlement. In such a case, the document says company will buyback one share from each of them. (See 21.7 (b) on page 42)

But there are 2,45,614 small shareholders and reservation for them in the buyback is 24,000 shares. So it is not clear how the company will decide the acceptance. A small shareholder will be lucky if even one share is bought back from him. If everyone tenders, only 1 out of 10 will see 1 share bought back while others get zero.

Please correct me if this understanding is wrong.


Yes, it is not clear how the company will handle the buyback if all of them tender their shares (they will all be Additional Shares, as their entitlement is zero).

The small shareholders’ holding seems to have a long tail because there are 245,614 shareholders holding 1,502,736 shares, leading to an average of ~ 6 shares per person (against 46 shares max).

Indiamart has not specified the process by which they will accept the ‘one’ share in the Reserved for Small Shareholders category if more than 24,000 small shareholders tender such Additional Shares. They should

I think your understanding is correct, and Indiamart needs to specify how they will accept the ONE share if more than 24,000 Small Shareholders tender. It cannot be on any basis that is not pre-specified. Maybe a clarification can be sought from them or the Buyback managers

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Wanted to know would there be any impact of Open Network for Digital Commerce (ONDC) on Indiamart. ONDC seems to be taking shape.

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I understand if more than 24,000 shareholders tender, they will decide through draw of lots.

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Can anyone explain about this higher proportion acceptance of the promoter in this buyback and what kind of behavior it’s indicate ?


In this buyback the split was in a way that people with large holding will have good benifit and that is also pretty clear from this.
You can see the document above in chandragupta sir post.
It is also clear not many dii ,fii have participated in the buyback that can be a positive.

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I attended the online Indiamart AGM today. Though I know that many AGMs are a waste of time, some of them tell you just a little bit more about the company or the management. This was one such.

After a short opening remark, the AGM was adjourned for 20 minutes to elect a Chairman for the meeting – I realised Indiamart Board doesn’t have a Chairman! (Not sure how I missed this earlier, very stupid of me). Thereafter, the temporary Chairman read out his opening statement and then the management took up the Q & A session. At the session, the management answered 2-3 questions and then said the remaining questions will be answered to the questioners individually by email within the next one week. The AGM was over.

No shareholder was given a chance to speak live, something which is the very purpose of an AGM. Even all the written questions submitted were not answered, though time was available. The event was wound up in hardly 10-15 minutes (excluding the adjournment). This is certainly unethical and probably illegal. I have attended dozens of AGMs but it never happens like this. Even Mr. Yusuf Rangwala is given a chance to speak! :grinning:

IMHO, this just shows the utter contempt the management has for retail shareholders and for AGM as an event. You need to put up at least a pretence of seriousness. After all, it is a statutory mandate and supposed to serve the purpose of shareholder – management interaction. At other times, Indiamart management perhaps does more analyst & institutional investor interactions than any other company.

Even the questions that were answered today, the sound quality was quite poor and very difficult to follow. I remember during the last quarterly concall also, the quality of audio was so poor that one of the analysts suggested the management to terminate the call and reschedule it later. So much for being a technology company!!

Meanwhile, I am posting here two questions I had submitted for the AGM. If the management answers them, I will post their responses.

  1. We have made several minority stake investments in start-ups over the years. Can you shed some light on how they are progressing, and which are the most promising ones where you feel there are chances of a profitable exit and by when it can be achieved?

Update on 25-Sep-2022:
Response: As you know we have raised about Rs 1,070 crore from QIP with a clear agenda of "investments in SaaS-based companies with the purpose of business and commerce enablement on the platform. So, we went ahead and made investments into businesses with synergies that could benefit from our network of over 154 million buyers and 7.2 million+ storefronts. These companies provide solutions in areas of accounting, logistics, legal tech, HR payroll management etc which are the core needs of small businesses. And we hope to capitalize on this rising need in the long term.

For example, in accounting, micro and small businesses can benefit from Vyapaar’s offerings, medium-sized ones can avail of Busy’s software, while large businesses that need a multi-location facility can use Realbooks. Then, HR and payroll management are taken care of by Zimyo , invoicing by M1Xchange and likewise for others too.

While most of these are minority investments, all of them are strategic investments done - “to gain and to offer”. We have a clear vision with these investments, of providing a holistic ecosystem for all business needs. This involves a collaborative and integrated ecosystem or bundling of services for finance and accounting, payroll, attendance and HR management modules, and logistic companies, among others.

We are understanding the customer persona of these companies and the pain points to guide them better with our experience and understanding of sales strategies. Currently, these companies are in the growth stage and we expect the return on these strategic investments to fructify in the long term.

  1. Though the audited financials were published by the end of April 2022, the AGM is being held only now in the end of September. What is the reason for this delay, and will it be possible to hold the AGM earlier next year?

Update on 25-Sep-2022:
Response: Please note that pursuant to the applicable provisions of Companies Act, 2013, the AGM of the Company has been held within the statutory timelines. However, we took note of your request to hold an AGM earlier next year.

(Disc.: At the time of writing this, I am still a shareholder. As I have said before, it is always a dilemma what to do with such stocks – a good business with a bad management!)

(Note: This post has been updated on 25-Sep-2022 with the company’s responses.)


IndiaMart_InterMesh_Limited_-_Q3FY23_Results_Analysis33741fe5-6d00-44ec-8737-a25f2449f67b.pdf (359.8 KB)

Finally some good company specific announcement by Indiamart, which discuss’s their core business :sweat_smile:

Disc : Invested


Please help me understand. Does this statement from Auditors mean the subsidiaries Audit reports are not provided properly?

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