IPO Note | Online

Sep 8, 2017

Matrimony.com

Issue Open: Sep 11, 2017

Issue Close: Sep 13, 2017

Incorporated in 2001, Matrimony.com (MCL) today is the leader in match making

services. The company provides online matchmaking and marriage services

Issue Details

through Internet and mobile platforms in India and internationally. Currently, the

company has a huge database comprising of 3.08 million active profiles. Its

Face Value: `5

flagship brand, BharatMatrimony, has 15 language based domains under its

umbrella.

Present Eq. Paid up Capital: `10.6cr

A trusted brand with strong consumer base and 140 retail centers: Strong brand

Offer for Sale: **0.38cr Shares

recall and trust are the factors which determine the growth of Matrimony services

in India. According to comScore Report, the average number of website pages

Fresh issue: `130cr

viewed by unique visitors in June 2017, render Matrimony.com to be the leader in

matrimony services. Further, the company has 140 retail centers distributed

Post Eq. Paid up Capital: `11.3cr

across India where potential or existing customers can walk in and seek the

assistance of retail executives to register on websites and/or make payment for

Issue size (amount): *`500cr -**501 cr

the matchmaking product or service of their choice.

Leader in online matchmaking service space in India: According to the comScore

Report for June 2017, Matrimony.com is the leader in online matchmaking

Price Band: `983-985

services in India in terms of the average number of website pages viewed by

Lot Size: 15 shares and in multiple

unique visitors, time spent and total pages viewed vis-à-vis peers, mainly on the

thereafter

back of the large database of profiles.

Huge untapped market opportunity: According to a KPMG report, unmarried

Post-issue implied mkt. cap: *`2220cr -

**`2224cr

population in CY2016 was 107mn, in which active seekers were 63mn, out of

which only 6mn were active users of online matrimony. Currently, MCL has

Promoters holding Pre-Issue: 56.0%

3.08mn active profiles, leaving a scope for a huge untapped market opportunity

for company.

Promoters holding Post-Issue: 50.6%

Continuous expansion into marriage services: The company’s key strategy for

*Calculated on lower price band

driving monetization is to strengthen the length of relationship with customers and

increase the amount of revenue earned by offering additional marriage services

** Calculated on upper price band

to online matchmaking user base like availing wedding-related services i.e.

photography & videography, wedding apparel & make-up, venue, stage

Book Building

decoration, catering and honeymoon packages from various vendors to meet

QIBs

75% of issue

customers’ wedding needs.

Outlook & Valuation:

Non-Institutional

15% of issue

Going forward, we expect the company to perform better on top-line and bottom-

line front considering strong brand value, leadership position, robust technology

Retail

10% of issue

and expansion into marriage services segment. Further, it has strong user data

base, which provides competitive edge to the company. At the upper end of the

price band, the pre issue P/E multiples works out be 35.7x of 1QFY2018

Post Issue Shareholding Patter

Annualized EPS, which is lower compared to peers (Info edge is trading at 46.4x

its 1QFY2018 Annualized EPS). Hence, we recommend ‘SUBSCRIBE’ on the issue

Promoters

50.6%

for a mid-to-long term period.

Others

49.4%

Key Financial

Y/E March (` cr)

FY2014

FY2015

FY2016

FY2017

Net Sales

205

241

255

293

% chg

18%

15%

Net Profit

(18)

(20)

(75)

EBITDA (%)

1.0%

-0.3%

2.6%

20.2%

EPS (Rs)

(8.6)

(9.4)

(35.3)

20.6

P/E (x)

254

47.8

Amarjeet S Maurya

EV/Sales (x)

10.1

8.6

8.2

7.1

+022 39357600, Extn: 6831

Source: RHP, Angel Research; Note: Valuation ratios based on pre-issue outstanding shares and at upper end of the price band

[email protected]

Please refer to important disclosures at the end of this report

Matrimony.com Limited | IPO Note

Company background

Incorporated in

2001, Matrimony.com is engaged in providing online

matchmaking and marriage services. They offer their services through Internet and

mobile platforms in India and internationally.

It is one of the first companies to provide online matchmaking services in India,

having a database comprising of 3.08 million active profiles (being profiles that

have been published or logged in at least once during the prior 180 day period).

They offer a range of targeted and customized products and services that are

tailored to meet the specific requirements of customers based on their religious or

caste preferences or other criteria such as marital status and age bracket.

As of June 30, 2017, they had 140 retail centers distributed across India, where

customers can walk in and register on their websites. The flagship brand,

BharatMatrimony, has 15 language based domains under its umbrella. They also

have other portals like EliteMatrimony, CommunityMatrimony, MatrimonyDirectory,

MatrimonyPhotography,

MatrimonyBazaar,

MatrimonyDirectory

and

MatrimonyMandaps.

Issue Details

The issue comprises of Fresh Issue up to `130cr and OFS up to 3,767,254 equity

shares. The issue comprises Offer For Sale of up to 1,461,006 equity shares by

Bessemer India Capital Holdings II Ltd, Offer For Sale of up to 155,760 equity

shares by Mayfield XII, Mauritius, Offer for Sale of up to 1,683,207 equity shares

by CMDB II, Offer for Sale of up to 384,447 equity shares by Murugavel

Janakiraman (Promoter Selling Shares) and Offer for Sale of up to 82,834 equity

shares by Indrani Janakiraman (a member of the Promoter group).

Note: A discount of up to `98 per equity share may be offered to employees and

retail individual bidders.

Exhibit 1: Pre and Post-IPO shareholding pattern (cr)

No of shares (Pre-issue)

% No of shares (Post-issue)

Promoter

1.2

56.0%

1.1

50.6%

Public

0.9

44.0%

1.1

49.4%

2.1

100.0%

2.3

100.0%

Source: RHP, Angel Research; Note: Calculated on upper price band

Objects of the offer

 Advertising and business promotion activities -` 20cr

 Purchase of land for construction of office premises in Chennai - `43cr

 Repayment of overdraft facilities - `43cr

 Balance for general corporate purpose

Sep 8, 2017

Matrimony.com Limited | IPO Note

Investment rationale

A trusted brand with strong consumer base and 140 retail centers: Strong

brand recall and trust are the factors which determine the growth of

Matrimony services in India. According to comScore Report, the average

number of website pages viewed by unique visitors in June 2017, render

Matrimony.com to be the leader in matrimony services. Further, the company

has 140 retail centers distributed across India where potential or existing

customers can walk in and seek the assistance of retail executives to register

on websites and/or make payment for the matchmaking product or service of

their choice.

Further, shift to the organized sector i.e. increasing mobility leading to shift

from local media to matrimonial portals would also assist the company’s

growth. Increased freedom of choice over life decisions by young generation

today, is the key growth catalyst for the company.

Leader in online matchmaking service space in India: According to the

comScore Report for June 2017, Matrimony.com is the leader in online

matchmaking services in India in terms of the average number of website

pages viewed by unique visitors (Matrimony.com

9,91,000, Shaadi.com

4,20,000, Jeevansathi.com

3,48,000), time spend (Matrimony.com

149minutes mn, Shaadi.com 26minutes mn, Jeevansathi.com 33minutes mn)

and total pages viewed (Matrimony.com

459mn, Shaadi.com

46mn,

Jeevansathi.com 48mn) mainly due to the company’s large database of

profiles.

Considering that internet penetration is expected to grow from 462 mn internet

users as of July 1, 2016 to 730 mn users by the end of FY2020, we believe

that online matchmaking services would also witness a boom, which will be a

positive for the company. Mobile internet users are expected to grow from

358mn in 2016 to 670mn by FY2020, and with the ease and comfort of

mobile internet matchmaking facilities, this space would register newer uses,

and hence, the company would increase its database of profiles.

Huge untapped market opportunity: According to a KPMG report, unmarried

population in CY2016 was 107mn, in which active seekers were 63mn, out of

which only 6mn were active users of online matrimony. Currently, MCL has

3.08mn active profiles, leaving a scope for a huge untapped market

opportunity for company.

Continuous expansion into marriage services

The company’s key strategy for driving monetization is to strengthen the length

of relationship with customers and increase the amount of revenue earned by

offering additional marriage services to online matchmaking user base like

availing wedding-related services i.e. photography & videography, wedding

apparel & make-up, venue, stage decoration, catering and honeymoon

packages from various vendors to meet customers’ wedding needs.

Sep 8, 2017

Matrimony.com Limited | IPO Note

Outlook & Valuation

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. Further, it has

strong user data base, which provides competitive edge to the company. At

the upper end of the price band, the pre issue P/E multiples works out be

35.7x of 1QFY2018 Annualized EPS, which is lower compared to peers (Info

edge is trading at

46.4x its 1QFY2018 Annualized EPS). Hence, we

recommend ‘SUBSCRIBE’ on the issue for a mid-to-long term period.

Key risks

 Increased competition from online and offline companies could impact

the earnings of the company.

 The company could face adverse effect if they are unable to keep pace

with changing technology and evolving industry standards, or fail to

develop newer products for business.

 The company is highly dependent on telecommunications and information

technology systems, networks and infrastructure to operate its business,

however, any interruption or breakdown in such systems, networks,

infrastructure or technical systems could hinder the company’s products

and services and also the efficiency.

Sep 8, 2017

Matrimony.com Limited | IPO Note

Exhibit 2: Consolidated Income Statement

Y/E March (` cr)

FY2013

FY2014

FY2015

FY2016

FY2017

Total operating income

189

205

241

255

293

% chg

8.9

17.5

5.6

14.9

Total Expenditure

175

203

242

248

234

Purchase of traded goods

Employee

106

125

117

Adv expenses

Others Expenses

EBITDA

(1)

% chg

(85.7)

7.9

(% of Net Sales)

7.3

1.0

(0.3)

2.6

20.2

Depreciation& Amortisation

EBIT

(4)

(9)

(3)

% chg

(% of Net Sales)

3.9

(1.8)

(3.7)

(1.2)

16.6

Interest & other Charges

Other Income

Extraordinary Items

Share in profit of Associates

Recurring PBT

(18)

(20)

(75)

% chg

Tax

0.0

PAT (reported)

(18)

(20)

(75)

% chg

(% of Net Sales)

4.4

(8.9)

(8.3)

(29.5)

15.0

Basic & Fully Diluted EPS (Rs)

3.9

(8.6)

(9.4)

(35.3)

20.6

% chg

Sep 8, 2017

Matrimony.com Limited | IPO Note

Exhibit 3: Consolidated Balance Sheet

Y/E March (` cr)

FY2013

FY2014

FY2015

FY2016

FY2017

SOURCES OF FUNDS

Equity Share Capital

Reserves& Surplus

(8)

(10)

(85)

(42)

Shareholders Funds

(2)

(1)

(76)

(31)

Total Loans

Minority Interest

Total Liabilities

(27)

APPLICATION OF FUNDS

Net Block

Capital Work-in-Progress

Investments

Current Assets

Inventories

Sundry Debtors

Cash

Loans & Advances

Other Assets

Current liabilities

151

106

Net Current Assets

(11)

(56)

(11)

Mis. Exp. not written off

Total Assets

(27)

Sep 8, 2017

Matrimony.com Limited | IPO Note

Exhibit 4: Consolidated Cash Flow Statement

Y/E March (`cr)

FY2013

FY2014

FY2015

FY2016

FY2017

Profit before tax

(1)

Depreciation

Change in Working Capital

(4)

(9)

Interest / Dividend (Net)

(3)

(2)

(1)

Direct taxes paid

(1)

(0)

(1)

(2)

Others

(0)

Cash Flow from Operations

-8

(Inc.)/ Dec. in Fixed Assets

(10)

(12)

(10)

(Inc.)/ Dec. in Investments

(2)

Cash Flow from Investing

(6)

(14)

(8)

Issue of Equity

Inc./(Dec.) in loans

(6)

(9)

Others

(0)

Cash Flow from Financing

(6)

-8

Inc./(Dec.) in Cash

(1)

Opening Cash balances

Closing Cash balances

Exhibit 5: Key Ratios

Y/E March

FY2013

FY2014

FY2015

FY2016

FY2017

Valuation Ratio (x)

P/E (on FDEPS)

254.4

47.8

P/CEPS

142.7

38.7

P/BV

141.3

EV/Sales

11.1

10.1

8.6

8.2

7.1

EV/EBITDA

151.1

1,045.7

314.8

35.2

EV / Total Assets

63.9

161.3

77.0

155.3

Per Share Data (Rs)

EPS (Basic)

3.9

20.6

EPS (fully diluted)

3.9

20.6

Cash EPS

6.9

25.5

Book Value

7.0

Returns (%)

ROCE

22.6

11.4

363.3

Angel ROIC (Pre-tax)

1,204.8

14.8

33.4

3.7

ROE

117.7

837.6

2,147.7

98.7

Turnover ratios (x)

Inventory / Sales (days)

Receivables (days)

Payables (days)

Working capital cycle (ex-cash) (days)

(35)

(37)

(33)

(48)

(18)

Sep 8, 2017

Matrimony.com Limited | IPO Note

Research Team Tel: 022 - 39357800

E-mail: [email protected]

Website: www.angelbroking.com

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