Matrimony.com IPO may be a good bet for investors: Analysts
MUMBAI: Analysts are upbeat on the long-term prospects of Matrimony.com, which opens its ₹500crore initial public offer (IPO) on Monday. The company, which runs online match maker BharatMatrimony.com, has fixed a price band of ₹983–985.
Despite a recent track record of poor financials, brokerage firms gave a thumbs-up to its unique business, and expect the company to strengthen an earnings recovery that started last fiscal.
The company returned to profits in fiscal 2017 after three years of losses, according to its share sale prospectus. It posted a consolidated net profit of ₹43.8 crore for fiscal 2017 compared to a net loss of ₹75.07 crore a year ago. In the June quarter too, it reported a profit of ₹14.65 crore. However, at the end of June, the company still reported a negative net worth of ₹16.16 crore, albeit narrower than the ₹66.8 crore a year earlier.
Motilal Oswal Securities Ltd. said it believes the company deserves the premium multiple due to leadership positioning in terms of larger client base compared to closed peers, 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. “We expect the company to perform better on top-line and bottomline 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 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 the company move up the value chain,” IIFL Wealth Management Ltd said on Friday, also recommending a “subscribe” rating.
The company intends to use the proceeds of the IPO for advertising and business promotion activities, purchase of land for construction of office premises in Chennai, and repayment of overdraft facilities.
Matrimony.com 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 the financial years 2015, 2016 and 2017, the firm had 647,000, 678,000 and 702,000 paid subscriptions, respectively.