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You are here : IndiaNotes >> Research & Analysis >> IPOs >> Matrimony.com IPO

Matrimony.com IPO: Nirmal Bang recommend subscribing to the issue

Nirmal Bang | 11 Sep, 2017  | Follow Author | Add to my Favourites 
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Matrimony.com  Ltd. - IPO Note

Price Band: Rs. 983– Rs. 985

Issue Date: 11th  – 13th   Sep

Recommendation: Subscribe

 
Background


Incorporated on July 13, 2001 Matrimony.com Ltd is the leading provider of Online Matchmaking Services in India. As of June 2017, the total registrations stands at 27.65mn and the company had 140 retail centers distributed across India. As of June 2017, the unique visitor’s stands at 991000 and the average pages visited per visitor stands at 463.  The company delivers matchmaking services to their users through their websites, mobile sites and mobile apps. The company is also into marriage service business which is still at a very nascent stage


Investment Rationale:


a)   No 1 position


b)  Higher Sales will lead to improvement in margin


c)   Increasing Internet Penetration


 

Details & Objects of the Issue:


The public issue of Matrimony .com consists of fresh issue of Rs 130 cr and offer for sale of equity shares of around Rs 371 cr by the promoter group and others. The object of the issue is


a)    Advertising and business promotion activities – Rs 20 cr


b)   Purchase of land for construction of office premises– Rs 42.5 cr


c)    Repayment of our overdraft facilities – Rs 43.3 Cr


d)   General corporate purposes


 


Valuation and Recommendation:


Over FY13- FY17 the company sales have grown at a CAGR of 11.6%, however, Ebitda has grown at a CAGR of 38.6%. EBITDA in FY17 was higher on account of restructuring steps taken by the company, improving the overall CAGR for the period mentioned above. Ebitda margins in FY17 improved drastically by 1758 bps to 20.2% from 2.6% in FY16. In Q1FY18, Ebitda margins came in at 23.3%, which indicates margins are going to be sustainable going ahead. There was a litigation filed against the company for which the company had to pay a sum of USD $8,000,000 in full settlement which was leading to loss to the company. As per the management, this litigation has been factored in the P&L. Adjusting to this from FY13- FY17 PAT margins has grown at a CAGR of 40.8%. Being an internet user company the capex requirement by the company is less. Other than this, Ebitda to Cash flow from operations is around 85% indicating lower working capital requirement by the company. Going forward, shift from unorganized to organized sector and already having high database we expect the company to maintain its No1 Position even going ahead. Other than this, with increase in internet penetration & easy availability of sites we expect the number of visitors to increase going ahead and in turn fuel in growth to the company. Apart from this, the company’s new marriage services business (currently loss making) is likely to gain traction with cross selling opportunity available .On the valuation front, at the given upper price band of issue of Rs 985, Matrimony.com is offered at PE of 38x, EV /EBITDA of 27.6x and EV/Sales of 6.4x for Q1FY18E annualized EPS, EBITDA and sales respectively which looks attractive considering its leadership position and as compared to its peer. We recommend subscribing to the issue.


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About Nirmal Bang

Founded in 1986 by Nirmal Bang, the Nirmal Bang is recognized as one of the largest retail broking houses in India, providing an array of financial products and services. Their retail and institutional clients have access to products such as equities, derivatives, commodities, currency derivatives, mutual funds, IPOs, insurance, depository services and PMS. The Group is headed by Mr. Dilip Bang and Mr. Kishore Bang.


For more information please write in to [email protected]


Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.




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