Matrimony.com IPO may be good match for investors: Analysts
Mumbai: Analysts are upbeat on the long-term prospects of Matrimony.com, which opens its Rs500-crore initial public offer (IPO) on Monday. The firm, which runs online match maker BharatMatrimony.com, has fixed a price band of Rs983–985 per share.
Despite a recent track record of poor financials, brokerage firms gave a thumbs-up to its unique business, and expect the firm to strengthen an earnings recovery that started last fiscal.
The firm returned to profitability in fiscal 2017 after three consecutive years of losses, according to its share-sale prospectus. It posted a consolidated net profit of Rs43.8 crore for fiscal 2017 against a net loss of Rs75.07 crore a year ago. In the June quarter, too, it reported a profit of Rs14.65 crore. However, at the end of June, it still reported a negative net worth of Rs16.16 crore, albeit narrower than the Rs66.8 crore a year earlier.
Motilal Oswal Securities Ltd said it believes the firm deserves the premium multiple due to leadership position in terms of larger client base, limited competition and expected pick-up in earnings post negative earnings in fiscal years 2014-2016.
In a research note on Friday, the brokerage recommended a “subscribe” rating for the issue from a long-term perspective.
Angel Broking, too, recommended investors to subscribe to the issue for medium to long term. “Going forward, we expect the company to perform better on top-line and bottom line front considering strong brand value, leadership position, robust technology and expansion into marriage services segment,” Angel Broking analysts said in a note on Friday.
“Further, it has strong user data base, which provides competitive edge to the company,” added Angel Broking.
Analysts differed on whether they could compare Matrimony.com with other internet services providers such as InfoEdge Ltd and JustDial Ltd.
“Focused expansion of its marriage services business through cross selling and assisted services could also help firm move up the value chain,” IIFL Wealth Management Ltd said on Friday, also recommending a “subscribe” rating.
The company intends to use the proceeds for advertising and business promotion activities, purchase of land for construction of office premises in Chennai, and repayment of overdraft facilities. “IPO proceeds are expected to be gainfully utilized leading to higher revenues from increased brand awareness and lower rentals and interest expended,” IIFL analysts added.
This is Matrimony.com’s second attempt to go public. It had filed its draft IPO papers in August 2015 but did not go ahead with the share sale. It re-filed draft papers in May, and received regulatory approvals in July. The company has two business segments—matchmaking services and marriage services. It operates multiple portals such as BharatMatrimony.com, CommunityMatrimony.com and EliteMatrimony.com.
It has a database of 3.03 million active profiles. In financial years 2015, 2016 and 2017, the firm had 647,000, 678,000 and 702,000 paid subscriptions, respectively.