Add Matrimony.com Ltd For Target Rs.180 - Yes Securities
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Maintains Steady Performance
Our view
Overall, the result was mostly along expectation. Rising penetration and shift from unorganized to organized players would continue to drive revenue growth; while positive operating leverage would drive EBITDA margin in medium term. Online matchmaking accounts for just 6% marriages in India. Marriage services in India is Rs 3500 bn in size, but highly fragmented and offers long term growth opportunity for the company. We maintain ADD Rating on the stock with revised target price of Rs 1,195/share
Result Highlights
* Reported revenue of Rs 1.1bn(up 4.3% QoQ, up 17.9% YoY). The sequential growth was mainly led by increase in average realisation by 3.5% QoQ.
* The number of paid subscription was almost flat QoQ at 0.22mn.
* The wedding services segment grew 43% QoQ on low base, aided by Shaadisaga merger.
* Q2FY22 also had 15 days of Shaadisaga revenue consolidated in it; The acquisition has strengthened the position of Matrimony in marriage services segment
* Billings remained strong as it grew 1.5% QoQ to Rs 1.07 bn.
* EBITDA grew 18% QoQ to Rs 263 mn. EBITDA margin improved by 280 bps QoQ to 23.9% as focus on cost optimisation led to decline in employee cost by 7.7% QoQ.
* It has guided that it should be able to sustain double digit (YoY) percent growth in revenue going ahead, led by strong billing momentum
Valuation
The stock trades at P/E of 28.2x on FY24E Earnings. It is expected to maintain double digit revenue growth momentum along with improving EBITDA margin trajectory. The competitive intensity in the online matchmaking remains high and any decrease in competitive landscape in the industry is critical for optimizing marketing expenses. We value the stock through DCF method to arrive at target price of Rs 1,195/share.
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