Limited IPO Review

Matrimony IPO< Limited the operator of online match making business under the BharatMatrimony brand, will launch its initial public offer (IPO) on September 11. which is engaged in providing online matchmaking and marriage services plans to raise over Rs 500 crores. Matrimony IPO Issue comprises fresh issue of up to Rs 130 crore and an offer for sale (OFS) of up to 37,67,254 shares with Rs 5 face value each.

Related Post : IPO: Comparison with Internet based Services Companies IPO Details:
Issue Opens Monday, September 11, 2017
Issue Closes Wednesday, September 13, 2017
Price Band Rs.983 – 985
Retail & Employee Discount Rs.98/- per share
Bid Lot 15 Equity Shares and multiple thereof
Issue Size  Fresh Issue of  Equity shares  upto Rs.130 Crore
  Offer for sale of  3,767,254 Equity Shares
Issue Size ( Rs.)  Rs. 497.48 Cr (at upper end)
Issue Structure :  
QIB 75% of the Net offer – 3,824,182 Shares- Rs.376.48 Cr
NIB 15% of the Net offer 764,836 Shares – Rs.75.30 Cr
Retail 10% of the Net offer  – 509,890 Shares- Rs.45.20 Cr
Lead  Managers Axis Capital, ICICI Securities
Registrar Karvy  Computershare Pvt. Ltd.
About Ltd. :
  • Limited incorporated in the year 2001, is engaged in providing online matchmaking and marriage services. Its offer these services through Internet, across Websites, Mobile Apps and Mobile Websites. and mobile platforms in India and internationally.
  • largely operates under its flagship brand Bharat The site has a mix of free services and paid services. The site offers limited access to free subscribers and special additional features to  paid members. Bharat has  3.08 Mn free subscribers and 702,000 paid subscribers at the end of  FY17.
  • The company also operates specialized sites like  Community and Elite As a part of Marriage services, the company offers Directory Services, Photography & Videography, Apparal, Decorations, catering, etc and Venue Booking Services which operate under Matrimony Directory,  Matrimony Photography, Matrimony Bazaar and Matrimony respectively.
( Rs.  In Crores)
Particulars Qtrly Results Yearly Results
2017(3) 2016(3) 2017(12) 2016(12) 2015(12)
Revenue from Operations 78.9 68.5 280.7 244 231.9
Revenue Growth (%) 15.20% 15.00% 5.20%
EBITDA  19.5 12.2 59.2 7.2 17.8
EBITDA Margin (%) 24.70% 17.80% 21.10% 3.00% 7.70%
Profit Before Tax 17.3 9.5 43.8 -75 -2.8
Net Profit as restated 14.6 9.5 43.7 -75 -2.9
Net Profit Margin (%) 18.50% 13.90% 15.60% -30.70% -1.30%
Share Capital 10.6 9.2 10.6 9.1 9.1
Reserves -26.7 -76 -41.7 -85.2 -10.1
Net worth -16.2 -66.8 -31.1 -76 -0.9
Key Ratios
EPS (Rs.) 7.7 6.4 23.1 -50.8 -2
Net Asset Value (Rs.) 8.53 -31.5 -14.6 -35.9 -0.4
RoNW (%) 90.4%^ 14.20% 140.60% -98.60% -314.60%
Face Value (in Rs.) 5
EPS (FY 17) 23.1      
IPO Price 985        
PE Ratio 42.64      
Post Issue Equity 11.26
Market Cap 2218.20 crores
Market Cap/ Sales 7.90

For the quarter ended June 2017, net sales was up by 18% to Rs 83.84 crore with OPM at 24.4% resulting in a 57% increase in Operating Profit to Rs 20.45 crore.

Objects of the Matrimony IPO:

 Advertising and business promotion activities – Rs. 20cr
 Purchase of land for construction of office premises in Chennai – Rs. 43cr
 Repayment of overdraft facilities – Rs. 43cr
 Balance for general corporate purpose

Matrimony IPO:Rationale For Investment
  • A trusted brand with strong consumer base and 140 retail centers.
  • Matrimony has an early mover advantage among consumers seeking online matchmaking services. The large database of profiles creates a consequential network effect that attracts more users to register or subscribe through its websites, mobile sites or mobile apps 
  • comScore Report indicates that Matrimony has a high degree of brand recall  as evidenced by the average number of its website pages viewed by unique visitors in June 2017. deploys robust technology and analytics
  • The company employs business intelligence, data warehousing, data analytics with IBM Unica systems for campaign management, big data analysis and search algorithms development to provide fast and responsive service to its customers.’s Intelligent Matchmaking Algorithm (MIMA) is a real-time recommendation engine developed in-house that recommends appropriate profiles to members, thereby enhancing user experience.
  • The company has high expectations from  marriage services, a new area which Limited plans to tap.It has launched aimed at  revenues in form of vendor listing fees, whereby the company charges transaction fees for photography and videography services,,to collect  transaction fees from
    customers and commission income from vendors and, to generate transaction fees from customers and commission income from wedding venue vendors.
Matrimony IPO:Concerns
  • Increased competition from online and offline companies could impact the earnings of the company.
  • Limited could face adverse effect if it is unable to keep pace with changing technology and introduce newer products for business
  • The company has incurred huge losses on account of litigation with Rajan Desai, Real Soft Inc and its settlement. It has borne 57.4 crore towards legal expenses in FY13-16 and Rs. 53.0 crore in FY16 in connection with the settlement of proceedings. Further, Consim US (or the company if Consim US fails to do so) is required to make each settlement payment by a certain due date. ailure/delay in making settlement payments on account of litigation with Rajan Desai and Real Soft Inc may have an adverse impact on the financial condition of the company
  • Settlement of above litigation has marred companies profits and turned its net book value negative
  • Limited could in future be exposed to infringement claims by third parties that, if determined adversely against it could cause significant and material damage to its business.
  • Company is vulnerable to liability for fraudulent activities on its websites, mobile sites and mobile apps.
  • Privacy and data protection legislation and regulations and public perception concerning security and privacy on the Internet may adversely affect its reputation, business and profitability.
  • Limited does not have office space till date and operates from rented properties. It is now spending more than 40 crores towards purchase of property which will hardly yield any returns.
Matrimony IPO:Assessment
  • The online matchmaking industry is still at a nascent stage and accounts for approximately 6% of marriages in India. 
  • According to the comScore Report, is the leader for online matchmaking services in India in terms of the average number of website pages viewed by unique visitors.
  • As there are no comparable listed player in the strict sense, the company could benefit on account of its being the first listed player in the matchmaking segment. However company is already charging a substantial price for this advantage as reflected in the high premium being charged.
  • Limited foray into marriage services has yet not yielded any revenues. However going ahead, the company has high hopes from this segment.
  • It is quite possible that with negatives such as settlement of lawsuit with US counterpart have been accounted for and which acted as  a big drag on company’s profit, financials may now show a much healthy trend. 
  •’s online competitors are and which could give competition.
  • Limited has earlier got permission of SEBI for IPO in 2016 but did not come out with the iPO citing unfavorable market conditions
  • Company’s consolidated revenue grew steadily at 12% CAGR between FY13-17, However EBITDA margins have shown significant fluctuations. 
  • The scrip is offered at P/E multiple of around 46.2 times FY 2017 earnings which is considered high.
  • Company’s consolidated net worth, as of 30-6-17, was negative at Rs. 16 crore which provides little comfort.
  • On the +ve side this year quarterly results have shown an uptrend which if sustained could result in improved  profit figures. Management expects increase in margin due to operating leverage in match-making business,
  • Due to rich valuations, Iam neutral on the issue and will take a decision to subscribe to IPO a day or two before the issue close, taking into consideration the response and other developments. However the chances of my putting in some applications is more than skipping it altogether at this juncture.
  • 12/09/17: With QIB subscription not moving a inch on Day2 in the IPO and HNIs expected to lie low due to valuations, no grey market activity and large discount to retail, subscription to IPO poses risks even though retail discount could come handy. Will watch today trend of QIB till 1-2 pm to take a call to subscribe full or only part. 
  • 13/09/17: Till 1400 Hrs on Day 3, the response from QIB remained at around 1.67 x (pickup after 1:30). If total QIB response in more than 2x, I may put in 2-3 applications with muted expectations only. HNI response is difficult. Iam also reminded of the fact that many times  subscription & premium on listing do not go hand in hand. This is not an issue where one can say with a good degree of certainty & one can take small amount of risk as per his appetite. 

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.being cahrged

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