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Our view

Overall, the financial performance was above expectation as the impact from the second covid19 wave was minimal. The matchmaking business will continue to scale whereas the marriage services business is at nascent stage and will be developed as forward integration of matchmaking business.

The ongoing digitalization of the consumer market will help in expanding the size of potential market, with faster growth coming from T2‐T3 markets and the company will benefit from migration from unorganized to organized players. Positive operating leverage and cost optimization would drive improvement in EBITDA margins. Trades at PER of 37x on FY23 earnings. We maintain our ADD rating with revised target price of Rs 1,212 as 40x on FY23 earnings.

Result Highlights

* Delivered strong performance with minimal adverse impact from Covid19 as the business showed strong recovery since June’21.

* Reported revenue of Rs 1,055 mn(slightly above estimate), up 4.3% QoQ, led by reduction in discounts as average realization grew by 6.6% QoQ.  

* The number of paid customers was marginally down 2.9% sequentially due to impact from 2nd covid19 wave, still  up 31.6% YoY.  

* The growth was driven by matchmaking segment which grew 4.3% QoQ.  

* EBITDA margin was up 400 bps QoQ to 21.1%, above estimate, led by cost rationalization as advertisement cost(38% of sales) was down 3.8% QoQ. Other expense( 12.5% of sales) was down 6.8% sequentially.

* Billings remained robust at Rs 1,052 mn( down 1% QoQ, marginal impact from 2nd covid wave).  

* Average transaction value grew 2% sequentially to Rs 4,742.

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