Encouraged by the strong revenue growth in Q3 of FY 2019, Ahmedabad-based e-commerce player Infibeam Avenues Ltd. has now set its sight on large-scale government and PSU (public sector unit) buying to drive its future growth in India.

But are its shares really worth buying in the stock market?

Let me show you what is happening with this company in detail.

Infibeam Avenues: Overview

Infibeam Avenues Limited, formerly known as Infibeam Corporation Limited, is an Indian e-commerce conglomerate involved in online retailing, e-commerce software, digital payments, and internet services.

It is leading e-commerce and payment solutions provider to businesses and the government of India. Also, it is the only profitable and publicly-listed e-commerce company in India.

Infibeam Avenues: Businesses

Infibeam Avenues hold many businesses in India which include online retailing through its flagship website infibeam.com, e-commerce platform software service through buildabazaar.com, e-commerce marketplace dhamaal.com and its own branded e-book reader.

Here is the complete detail of businesses under Infibeam Avenues Ltd.

Businesses Description
Digital Payments In India, CCAvenue is one of the largest digital payment platforms. The payment gateway caters to more than 100,000 merchants across industry verticals including education, online retail, travel, hospitality, event management etc.
Online retailing Infibeam.com is the online retail website of the company which sells books, electronics and lifestyle products. The website has a base of 12 million products across electronics, books, lifestyle, gifts, and media. Infibeam is the only authorized online seller of iPhones in India and maintains its bestsellers list for books sold on the site. Infibeam owns Picsquare.com, is a digital photo printing and personalized gifts website.
E-commerce platform Buildabazaar is an end-to-end SaaS (software as a service) solution platform built by Infibeam Avenue with operations in India and MiddleEast. The company initially extended its e-commerce platform to build online stores for HiDesign, TTK Prestige and Crossword Bookstores and NDTV Shopping. The e-commerce platform was opened to everyone through Buildabazaar in 2011, which allows users to create their own web store in India.
ThemeJungle ThemeJungle, a subsidiary of BuildaBazaar, is a conglomerate of many themes brought under one roof by Infibeam Avenues Ltd. and its website launched in January 2018 to support BuildaBazaar stores. It is a marketplace of various themes designed by professional designers in India.
Music streaming platform Infibeam Digital Entertainment, a subsidiary of Infibeam Avenues, builds Music Streaming and Download Platform solutions for Music Labels, Brands and OEMs. In 2013, the company built Sony Music’s Jive HD streaming and downloading app embedded in Sony’s Xperia smartphones.
Digital marketing services Infibeam Avenues also offers Digital Marketing Services through its subsidiary ODIGMA, which it acquired in 2014. ODIGMA employs 70 people and serves digital marketing campaigns for around 400 brands.
Generic top-level domain name registry Infibeam owns the license of the generic top-level domain granted by Internet Corporation for Assigned Names and Numbers (ICANN). On 22nd September 2014, it launched the ‘.ooo’ domain for trademark holders.
Logistics aggregation platform On January 5, ShipDroid, a logistics aggregation platform launched by Infibeam Avenues, to provide uniformity of logistics services to small merchants across all courier partners. The platform covers around 20,000 pin codes across 600 cities in India. This platform allows Indian merchants to choose modes of delivery such as road, rail, or air mode, along with an option for delivery commitment SLAs such as express or regular.
Marketplace In August 2013, Infibeam Avenue launched the e-commerce marketplace Dhamaal.com in association with CCAvenue. Dhamaal has a selection of 15 million products and the website is built on the Buildabazaar platform, along with extended as a co-branded marketplace with 50 Indian banks.

Infibeam Avenues: Key Milestones

Major events and milestones of the Infibeam Avenues Ltd. are:

Year Events
2011 Infibeam Avenues launched 10 million SKUs across multiple categories and also launched rewards platform of Crossword, Tata AIG and more than 100 Brands.
It also entered into a memorandum of understanding with the Government of Gujarat to power rural e-commerce under the scheme of Vishwagram.
2012 Infibeam launched Buildabazaar enterprise platform.
2013 It established Infibeam Digital Entertainment (INDENT) with Sony Music for digital downloads and distribution.
Infibeam launched JIVE HD on Sony Experia phones in the Asian market.
Infibeam Avenues integrated travel technology solutions into the Buildabazaar platform for travel and theme park ticketing.
It expanded the Buildabazaar platform for foreign clients.
2014 Infibeam Avenues launched Adlabs Imagica on Buildabazaar large theme park implementation.
It also acquired 100% of OdigMa Consultancy Solutions Private Limited for providing online marketing services to merchants.
Infibeam launched Shipdroid for merchants to use last mile logistics solution software.
Also launched “.OOO” global top-level domain (gTLD).
2016 Launced IPO and became first publicly-listed e-commerce company in India

Infibeam Avenues: Share Price

Infibeam Avenues Ltd. share price: ₹ 35.60 (26th Feb 2019)

The Initial Public Offering (IPO) was open for subscription during the period from 21st March 2016 to 23rd March 2016 where the company issued 10416666 equity shares at face value of ₹ 10, a premium of ₹ 422 and aggregate issue price of ₹ 432 per equity share.

Infibeam Avenues Ltd. had posted healthy profits in the two financial years, FY2016 and FY2017, which led to its share price from continuing to soar up in 2017 and 2018 as stock analysts continued to forecast high share prices.

But finally, on 29th September 2018, the company’s share price crashed by almost 70%, from ₹ 212 to ₹ 53.8, due to a message circulated in WhatsApp which sparked rumors of the Infibeam’s poor financial health.

Infibeam Avenues: Financial Health

Infibeam Avenues  Ltd. has reported its net profit grew manifold to ₹ 26.6 crores during the Q3 of FY 2019 from the year-ago period. The net profit stood at ₹ 1.9 crores in the October-December 2017 period.

The company’s total revenue more than doubled to ₹ 150.3 crores in the same quarter, compared with ₹ 73.6 crores in the October-December 2017 period, it added.

Look into the financial performance of this company over the last 6 years.

Particulars 2018 (in ₹ Cr) 2017 (in ₹ Cr) 2016 (in ₹ Cr) 2015(in ₹ Cr) 2014 (in ₹ Cr) 2013 (in ₹ Cr)
Total Assets 2472.39 787.12 614.26 38.96 33.16 43.28
Total Debt 56.95 85 2 2 4.37 17.24
Total Current Assets 560.13 647.95 494.02 20.29 7.91 29
Total Current Liabilities 205.25 75.23 34.65 11.49 1.15 0.18
Net Sales 305.86 53.15 43.11 29.23 10.79 2.56
Other Income 26.95 36.12 18.15 0.4 0.02 0.04
Total Income/Revenue 332.81 89.27 61.26 29.63 10.81 2.6
Total Expenditure 245.46 33.45 34.41 35.14 10.83 2.05
Operating Profit 87.35 55.8 26.85 -5.52 -0.02 0.56
Interest 4.26 3.36 0.22 0.14 0.01 0.73
Gross Profit 83.09 52.44 26.63 -5.66 -0.03 -0.17
Depreciation 43.26 6.33 4.24 2.55 1.18 0.86
Profit Before Tax 39.83 46.11 22.39 -8.21 -1.21 -1.03
Tax 8.35 13.58 0.01 0 0 0
Deferred Tax 18.01 32.36 -19.48 0 0 0
Reported Net Profit 13.47 0.18 41.87 -8.2 -1.21 -1.02
Dividend 5.41 0 0 0 0 0
Preference Dividend 0 0 0 0 0 0
Equity Dividend % 10 0 0 0 0 0
Earnings Per Share-Unit Curr 0.25 0.03 7.89 0 0 0
Earnings Per Share (Adj)-Unit Curr 0.25 0 NA NA NA NA
Book Value-Unit Curr 47.73 149.36 137.29 63.78 35.34 15.08

Over the past few years, Infibeam Avenues Ltd. has many fold its earnings, with its most recent figure exceeding its annual average over the past five years.

In addition to beating its historical values, Infibeam also outperformed its industry, which delivered growth of around 18%.

This is kind of stats, the investors like to see!

Also, the company’s ability to maintain an adequate level of cash to meet its upcoming liabilities is a good sign of financial health.

This suggests prudent control over the cash in hands and cost by management, which is a crucial insight into the health of the company.

Infibeam Avenues: How a WhatsApp message destroyed its market value?

Infibeam Avenues Ltd. lost nearly 70% of its market value on a single day after a WhatsApp message raised concerns about the company’s accounting practices.

With this great slump, around ₹ 92 billion worth of investor’s wealth was destroyed in a single day and the market capitalization of the company fell to ₹ 39 billion from more than ₹ 131 billion on 29th September 2018.

If you were a shareholder of Infibeam Avenues, it is shocking to realize that an investment, worth ₹ 10,00,000 just a day before, is worth ₹ 3,00,000 a day later.

According to the sources, the WhatsApp message was sent a few months ago by an Equirus analyst to some clients and resurfaced on the messaging platform on 29th September 2018.

The WhatsApp message alleged, among other things, that the firm had given unsecured and interest-free loans to its business units.

The recorded plunged of its share value prompted the Infibeam to make a voluntary clarification to exchanges and SEBI saying there was no pending information that impacted its share price.

Infibeam Avenues: Growth Prospects

Over the past few years, the industry has seen a large number of investments in e-commerce businesses. As a result, many e-commerce owned stores and marketplaces have crowded this space.

At the same time, there is a notable change in customer’s mindset towards acceptance of e-shopping, from the conventional retail-showroom- based shopping.

Significant shifts in technology innovation, user interface, security measures, and connectivity are driving the convergence of physical and digital transactions in the world of commerce.

The online space in India is further evolving with improving internet connectivity.

Today India is on track towards becoming the second largest internet user base globally. With the introduction of 4G and increasing penetration of wireless and broadband services, people are using the internet in more ways than before.

As a result, the current Internet penetration is expected to grow to 40% within the next five years. The encouraging growth figures are further driving the online players towards developing a robust payment ecosystem. This would further lead to a 6x growth of the online retail market US $ 44 Bn by 2020.

Infibeam Avenues has developed, integrated and synergistic business model for B2B and B2C segment of customers on cloud-based infrastructure that will enable the online sale of products and services for merchants both locally and globally.

The Bottom Lines

One reason why investors are attracted to Infibeam stock is its notable earnings growth potential in the near future.

The optimistic bottom-line growth is supported by similarly outstanding revenue growth over the same time period, which indicates that earnings are driven by top-line activity rather than purely unsustainable cost-reduction initiatives.

Happy Investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww.