Hold Matrimony.com Ltd For Target Rs.640 - ICICI Direct
Guiding for flat marketing expenses in FY24; margins likely to see revival
About the stock: Matrimony.com (Matrimony) is one of the leading providers of online matchmaking services. The company also provides post marriage services.
* Apart from a common website, the company operates ~300 community matrimony sites and 15 regional matrimony sites
* Net debt free and only profitable player among its peers
Q4FY23 Results: Matrimony reported revenue recovery in Q4FY23.
* Matchmaking services revenue grew 2.3% YoY; paid subscribers grew 11.8% YoY while ATV declined 6.9% YoY
* Matchmaking EBITDA margins declined 160 bps YoY while they were up 330 bps QoQ
* Marketing expenses were up 0.8% QoQ, 7.8% YoY
What should investors do? Matrimony’s share price has dipped over the past five years (from ~| 833 in May 2018 to ~| 580 levels in May 2023).
* We change our rating on the stock from REDUCE to HOLD
Target Price and Valuation: We value Matrimony at | 640 i.e. 19x P/E FY25E EPS
Key triggers for future price performance:
* Market leadership in an underpenetrated online matchmaking segment
* Transition to online from offline, healthy subscriber addition, increased penetration in north, introduction of new products and inorganic opportunity key revenue drivers (10.5% CAGR over FY23-25E)
* Higher conversion rate (paid vs. total profiles
Alternate Stock Idea: Apart from Matrimony, in our IT coverage we also like Affle.
* Key beneficiary of advertising shift to digital medium and healthy growth in converted users
* BUY with a target price of | 1,255
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