Market Cap: 1738 Crores.
CMP: Around 735
Current P/E: Around 24 against FY18 EPS.
POSITIVE: B2C business, Recession Proof, Under tapped market, Political intervention Proof.
NEGATIVE: No entry barriers, Competition.
Matrimony.com (MCL) incorporated in 2001 is an online matrimony venture headed by Murugavel Janakiraman. It is India’s first pure play Consumer Internet Company to get listed. The company provides both matchmaking and marriage related services to Indians living in India and abroad through a wide portfolio of websites, mobile sites and mobile apps etc.
The flagship brand (BharatMatrimony.com), EliteMatrimony.com, SecondShaadi.com, religion wise (Jain Matrimony.com) etc and Community wise (GujaratiMatrimony.com etc) are operated by MCL. The company also has websites like ManglikMatrimony.com. BharatMatrimony flagship brand of MCL is the largest and the Most Trusted Matrimony Brand (as per the Brand Trust Report 2014).
With a strong leadership in matchmaking, it is now expanding into the highly unorganised marriage services Industry by offering a solution from wedding venues, photographers, apparel to honeymoon packages etc. The goal is to build a billion dollar revenue company and a long lasting institution with a legacy for the generations to come.
According to an analytics firm com SCORE’s report in 2017, As compared to Shaadi.com or JeevanSaathi.com, MCL’s online properties registered far more visitor traffic and a lot more of time was spent on its portals. Over 3 Million active members are served by over 4000 associates.
A shift from offline services to online services across industries is seen, backed by swelling penetration of internet technologies & mobile and availability of low cost data services. Only 6% of the population in India go online to find a match and about 1-1.2 crores wedding take place in India annually. The online matrimony option is bound to find a more influential place in match-making system with the changing dynamics.
An area of concern for the company would be a rise in popularity of dating applications offering dating services such as Tinder and Facebook. However, Orkut, Facebook, HI5 etc are used by people to date since years and now Tinder has taken all the limelight. But the fact is dating and marriage are lot different from each other. More Indian parents prefer their children to create the profile on MCL websites rather than on dating apps.
One of the key reasons for MCL’s success in recent times has been their venture with CommunityMatrimony.com. Today the brands like Gujarati Matrimony.com or Tamil Matrimony.com have established their leadership with community specific individual apps and websites. Its competitor Shaadi.com was late to launch their equivalent apps such as Gujarati Shaadi.
Shaadi.com today leads in the Hindi Belt (Uttar Pradesh and Bihar sort of states) they are also the most populous states of India. MCL has launched HindiMatrimony.com to topple the competition in Hindi Belt, and are making conscious efforts to establish itself as the leading brand even in the Hindi Belt.
Another important aspect is pricing, Shaadi.com’s paid upgrade costs about Rs 2450 for 1 month while the 3 months package is offered at Rs 4550. However telecaller did not bother about the registration except a few text messages. On the other hand MCL has no monthly package and it has a 3 months package priced at Rs 4500. However, there are also extra discount given by the company as the telecaller called and offered flat 30% discount leading to a 3 months package cost of Rs 3150.
There is a great opportunity for MCL to diversify from just match-making to total marriage solutions, as Marriage Service business has not yet turned into net profits, while there is a small amount of cash burn there. An effective role of an aggregator can be played by the company by providing total marriage solutions in the long run with patience and right strategy.
As for Financials for have a look at the table below:-
Financials: The company listed last year, went through a downswing and has reversed recently to begin making profits at healthy margins. The company also declared its dividend.
MCL faced law suit staking a claim on 10% of the company’s equity from one of its investor Mr Desai of Real Soft from USA. The financial performance and business performance of the company is impacted by Litigation cost over the years. However, as of today the company shelled out a settlement amount of 50 odd crores the litigation has been settled.
Negatives: Increasing competition, and no entry barrier remain a key concern for the company.
Positives: The company is operating in an extremely under tapped sector with very high growth potentials. These facts backed by various research reports were highlighted by the promoter in a recent interview presenting an overall industry picture. Being in a B2C business political instability, trade wars etc. has no direct material impact on business and financial performance of the company. With the ever growing population this also becomes a sort of recession proof business if the management does the right things that are needed.
The shareholding pattern of the company has an interesting thing, while promoters hold 50.34% stake, 45.96% stake is with FIIs, VCs, MFs, DIIs, AIFs etc.
Another 0.42% is with Corporate Bodies, 0.48% with NRIs, 0.22% with director relatives, 0.66% with ESOP/ESOS/ESPS. That means a total of 98.08% is in strong hands (including 0.42% of corporate bodies, and 0.48% of NRIs). That leaves a float of just 1.92% for general retail investors which equals to just 4.36 Lac shares.
Another important positive point is that the market will be full of talks about political instability as we head to states and general elections, in such a scenario MCL is a political intervention Proof business, Matchmaking and Marriages should continue to take place, irrespective of who comes into power.
Valuations: The stock is available at P/E of 24x its earnings against FY18 and at 4.88 Mcap/Sales. The company has just one listed peer Info-Edge (Naukri.com) which is trading at valuations of 56x to its earnings and at a Mcap/Sales of 15.77. However Info-edge has various portals across industries from job market (Naukri.com) to real estate (99acres) it also has a 10% stake in Zomato. Another peer Justdial in last 3-4 years has been punished heavily by the markets due to deteriorating margins, topping out of growth and google’s venture into locals rendering Justdial with little utility left still trades at a valuation of 27x to its earnings.
Generally, Internet businesses are rated at far higher valuations, such as INFIBEAM today is trading at a P/E of more than 100 and Mcap/Sales of about 13+. For Internet companies astronomical valuation is a global trend. Overall, the stock seems to be in the under-valued territory and multiplication from CMP should not be ruled out.
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