Making sense of IndiaMart’s push in digital accounting

Making sense of IndiaMart’s push in digital accounting

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Pratik Bhakta

122 reads
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Madhav Chanchani

105 reads
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Pratik Bhakta

122 reads
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Madhav Chanchani

105 reads

The B2B commerce player has made strategic investments totalling $80 million in the accounting space as it looks to build an ecosystem and cross-sell products. But unlike startups in the sector, it doesn’t have aggressive lending plans. Why?

January 31, 2022

10 Min Read

Business-to-business commerce player IndiaMart InterMesh is not known for making aggressive investments. The 25-year-old company, founded by Dinesh Agarwal, who remarkably survived the dot-com crash and financial crisis, went public in 2019 and the stock markets rewarded it for steady and profitable growth.

But last week, it announced strategic investments of over Rs 563 crore ($75 million) in the digital accounting space. It acquired Busy Infotech for Rs 500 crore ($66 million) in an all-cash deal and hiked its stake in startup Vyapar to 27% by injecting Rs 63.4 crore ($8.4 million).

  • Busy Infotech, a 24-year-old firm, sells on-premise accounting and GST software and has 2 lakh customers, mostly CAs and small to midsized enterprises. It reported revenues of Rs 42.4 crore ($5.6 million) in FY21 and a net profit of Rs 11 crore ($1.4 million).
  • Vyapar, a six-year-old operation, offers do-it-yourself, mobile-based accounting and GST software to small businesses. Its FY21 revenues stood at Rs 11.7 crore ($1.5 million). It had received Rs 36 crore ($4.8 million) from IndiaMart in 2019.

The latest developments take IndiaMart’s total investments in the bookkeeping space to nearly Rs 600 crore, or about $80 million. That’s more than double the $35 million in funding it raised over two decades before the IPO.

“After making investments for two years, we have been able to gather the courage (for this acquisition),” Agarwal said on an analyst call, referring to over half a dozen startups it has backed.

IndiaMart is moving deeper into a sector full of competitors, from legacy players like Tally and Marg (recently acquired by PharmEasy) to well-funded startups such as FloBiz, OkCredit and Khatabook. There is also a new generation of B2B unicorns like OfBusiness, Moglix and Zetwerk, which focus on end-to-end transactions and also provide credit.

$70

million

What PharmEasy is paying for 100% stake in Marg

The bets come at a time when its shares have suffered as part of a broader correction in the markets.

After the company issued shares at Rs 973 in the IPO in July 2019, the stock surged over 10 times to reach a high of Rs 9,950 last year. Since then, it has fallen over 50% and last week, it hit a new low of Rs 4,301 following tepid growth and a dip in profits for the December quarter.

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