IndiaMART's shares dropped 7.5% to a 52-week low, driven by a decline in paid suppliers despite a rise in profits and revenues.
New Delhi, India Jul 22, 2026 ALN: Shares of B2B eCommerce major IndiaMART fell as much as 7.5% during intraday trading today, hitting a 52-week low of ₹1,773 before closing 5.25% lower at ₹1,817.40 on the National Stock Exchange (NSE). This sharp decline reflects growing investor concerns surrounding the company’s ability to retain its supplier base, a critical factor for its long-term growth and stability.
The company’s market capitalization stood at ₹10,930.4 Crore (approximately $1.1 billion) at the end of the trading session, highlighting the significant impact that this drop in share price has had on its overall valuation.
This decline came a day after IndiaMART reported its Q1 FY27 earnings, with investors reacting to continued weakness in its paid supplier base, despite the company showcasing healthy growth in revenue and profitability metrics. The juxtaposition of strong financial performance against a backdrop of declining supplier numbers has raised red flags for analysts and investors alike.
Jefferies, a prominent financial services firm, retained its ‘Underperform’ rating on the stock with a target price of ₹1,650. The firm cited the third consecutive quarterly decline in paid suppliers as a significant concern. Additionally, Jefferies lowered its FY28 and FY29 earnings estimates by 1.5% to 4%, indicating a cautious outlook for the company’s future performance.
Meanwhile, Nomura, another well-respected brokerage, maintained its ‘Reduce’ rating with a target price of ₹1,810. Nomura emphasized that a recovery in paid supplier additions would be crucial for any meaningful upside in the stock, highlighting the importance of supplier retention in the overall business model of IndiaMART.
For the quarter ended June, IndiaMART reported a 12% year-over-year increase in consolidated net profit, rising to ₹172.2 Crore from ₹153.5 Crore a year earlier. On a sequential basis, profit surged more than 3.4 times from ₹50.2 Crore, indicating a robust recovery from the previous quarter.
Operating revenue also showed positive growth, rising 11% year-over-year and 3% sequentially to ₹414.4 Crore. When including other income of ₹106.7 Crore, total income stood at ₹521.1 Crore, further illustrating the company's ability to generate revenue despite challenges in supplier retention.
The company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased by 10% year-over-year as well as sequentially to ₹14.6 Crore. These financial metrics reflect a healthy operational performance in the face of declining supplier numbers.
IndiaMART’s core web and related services business, its largest revenue contributor, grew 9% year-over-year to ₹375.9 Crore, while revenue from its accounting software business surged by 49% to ₹38.5 Crore. This diversification in revenue streams is a positive sign, suggesting that the company is not solely reliant on its supplier base for growth.
Customer collections also rose, increasing 8% year-over-year to ₹463 Crore, while Busy Infotech reported collections of ₹59 Crore. During the quarter, IndiaMART generated 26 million unique business inquiries, and supplier storefronts grew 5% year-over-year to 8.8 million. However, the number of paying suppliers stood at 2.18 lakh at the end of June, continuing a trend that has emerged as a key concern for investors.
Speaking to reporters, IndiaMART CEO Dinesh Agarwal acknowledged that supplier retention had weakened over the past few quarters, particularly among silver-tier customers. This admission underscores the challenges the company faces in maintaining its supplier ecosystem, which is vital for its marketplace model.
“On the retention side, the last couple of quarters retention has been bad, especially in the silver tier,” Agarwal stated. This remark points to a critical issue within the company’s operational strategy, as supplier retention is essential for sustaining revenue growth.
Agarwal elaborated that these suppliers struggle to compete with gold- and platinum-tier customers and often leave the platform within their first year. “Silver-tier customers are not able to actually compete with gold and platinum today and are finding it difficult to compete, and they leave in the first year,” he added. This highlights the competitive dynamics within the platform and the challenges faced by newer entrants.
For context, IndiaMART offers three paid plans for suppliers – silver, gold, and platinum. Higher plans provide suppliers with more leads, better visibility, and a greater chance of reaching potential buyers. The silver plan offers basic visibility and 7-10 buyer leads a week, while the gold plan enhances search ranking and provides around 14-25 leads. The platinum plan offers top visibility and more than 50 leads a week, making it the most attractive option for suppliers.
Silver customers make up about 50% of IndiaMART’s paying suppliers but contribute only around 25% of subscription revenue. In contrast, gold and platinum customers account for the remaining half of the customer base and generate nearly 75% of the revenue. This disparity underscores the importance of higher-tier customers in driving the company’s financial performance.
As per Agarwal, silver customers are generally newer to the platform and struggle to compete with gold and platinum sellers, which receive better visibility and more buyer leads. As a result, improvements in buyer quality and inquiries have benefited higher-tier customers more than their silver counterparts. This situation creates a challenging environment for silver-tier suppliers, who may feel disadvantaged and consider leaving the platform.
Agarwal added that the company is employing AI and other initiatives to improve retention and encourage silver-tier suppliers to upgrade. “With AI and various initiatives, we continue to see what can help us retain the silver customers better and upgrade them better,” he said. This strategic focus on technology and innovation could play a crucial role in enhancing supplier retention and overall platform performance.
Until retention improves in the entry-level tier, IndiaMART will continue focusing on better monetization from gold and platinum customers and improving the overall experience for both buyers and sellers. This dual approach reflects the complexities of the B2B eCommerce landscape, where maintaining a healthy supplier ecosystem is essential for sustained growth.
Along with the results, IndiaMART’s board approved the incorporation of a wholly owned subsidiary, IndiaMART Finance. This move indicates the company’s intent to diversify its offerings and provide additional services to its user base.
Agarwal mentioned that the new arm will not lend directly. Instead, it will facilitate short-term transaction financing and working capital for buyers and sellers by partnering with banks, lenders, and technology companies. This strategic initiative could help address some of the financial challenges faced by suppliers, particularly those in the silver tier who may struggle with cash flow.
“We remain a low-touch marketplace, so we are neither into trading nor into lending nor into the purchase or sale of any products. We are a technology company and would like to remain a catalyst to businesses,” he added. This statement reinforces IndiaMART's commitment to its core business model while exploring new avenues for growth.
The implications of these developments are significant for IndiaMART and its stakeholders. The decline in share price and concerns over supplier retention could impact investor confidence and the company’s ability to raise capital for future growth initiatives. Furthermore, the strategic focus on credit facilitation may provide a much-needed lifeline for struggling suppliers, potentially improving retention rates in the long run.
As IndiaMART navigates these challenges, it will be essential for the company to implement effective strategies to enhance supplier retention, diversify its revenue streams, and leverage technology to improve the overall user experience. The outcome of these initiatives will be closely watched by investors and analysts as the company seeks to regain its footing in a competitive B2B eCommerce landscape.
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