Matrimony.com IPO: Here’s All You Need To Know

Matchmaking and marriage services company Matrimony.com Ltd. is looking to raise Rs 501 crore through an initial public offering that launches on Monday.

The offer, which will remain open for three days, is a combination of fresh issue and offer for sale, with a price band of Rs 983-985. Promoters Murugavel Janakiraman and Indrani Janakiraman, and three investors are looking to sell 37.7 lakh equity shares, or Rs 371 crore at the upper end of the price band, while 13.2 lakh equity shares worth Rs 130 crore will be in the form of fresh issuance, the draft prospectus said.

The company will dedicate nearly 15 percent of the proceeds from the fresh issue for advertisements and promotions. The overall funds raised via the IPO will also be used for purchase of assets, debt repayment and for general corporate purposes.

Business

Matrimony.com was one of the first companies to provide online matchmaking services in India. The business comprises two segments – matchmaking and marriage-related services.

The company operates multiple matchmaking portals such as BharatMatrimony.com, CommunityMatrimony.com and EliteMatrimony.com. It has four websites to provide marriage-related services which contributes only 6 percent to the company’s topline.

Financial Highlights

• Consolidated net worth of the company stood at negative Rs 16 crore as of June 30, 2017.
• Consolidated revenue grew at a compounded annual growth rate of 12 percent, while the earnings before interest, tax and depreciation and amortisation grew at 38 percent over the past five years. For the June ended quarter, revenue and EBITDA stood at Rs 84 crore and Rs 20 crore, respectively.
• The company had suffered losses from FY14 to FY16 burdened with a $8 million setback in lawsuits. It reported a profit of Rs 44 crore in FY17 and Rs 15 crore for the June quarter.
• The company has a no long-term debt; short term debt stood at Rs 122 crore as of June 30, 2017.
• The annualised earnings per share (EPS) for financial year 2017-18 stands at Rs 26, after the issue of fresh shares. The price-to-earnings ratio at the upper end of the price is 38.1 times, shows data compiled by BloombergQuint.

Peer Comparison

Currently, India has three main players in the online matchmaking industry:

• Matrimony.com
• Shaadi.com
• Jeevansathi

Matrimony.com dominates states in south India and non-resident Indians from these states. Shaadi leads in Gujarat and Punjab and non-resident Indians from these states. Jeevansathi leads in certain North Indian communities and states. However, there are overlaps among these sites.

Info Edge India Ltd., the parent company of Jeevansathi, is the only listed peer of matrimony.com. However, Info Edge has a diversified basket of properties such as naukri.com, Jeevansathi, 99acres, Zomato, Policybazaar and shiksha.

Jeevansathi is still suffering losses, while matrimony.com reported a profit of Rs 44 crore and Rs 15 crore in FY17 and Q1FY18 respectively. Jeevansathi has also been incurring EBITDA losses.

Info Edge has a more stable balance sheet when compared to matrimony.com because of its diversified portfolio. But, on valuation front, the latter is available at a cheaper valuations compared to Jeevansathi’s parent company.

The offer will allow investors like Bessemer India Capital and Mayfield, to make at least three times its investment in six years after it first picked up stake in the company. Bessemer India Capital and Mayfield invested in Matrimony at an average price of Rs 308 and Rs 230.5 per share. Axis Capital Ltd. and ICICI Securities Ltd. are the book running lead managers to the issue.

Brokerage Take

Motilal Oswal

• Subscribe for long term
• Company deserves premium multiple due to leadership position in terms of larger client base compared to closed peers, limited competition and expected pick up in earnings post negative earnings in FY14-16.
• On annualised EPS based on Q1FY18 earnings, issue is available at price-to-equity of 38 times FY18.

KRChoksey

The brokerage has a subscribe rating on the IPO given the nature of an internet company, leading position in the online match-making services industry, presence in a promising industry and higher profitability compared to Just Dial and Info Edge.

IIFL

• Subscribe for listing gains.
• IPO proceeds are expected to be gainfully utilised leading to higher revenues and lower operating costs.
• Focused expansion of marriage services through cross selling and assisted services could also help the company move up the value chain.

Angel Broking

• Subscribe for mid-to-long-term period.
• Expect the company to perform better on topline and bottom-line considering strong brand value, leadership position, robust technology and expansion into marriage services.
• Strong user database provides competitive edge.