Hold Matrimony.com Ltd For Target Rs.615 - ICICI Direct
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Seasonality impacts Q2; expects recovery from Q4 onwards
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
Q2FY23 Results: Matrimony reported weak numbers.
* Consolidated revenues declined 1% QoQ while match making revenue declined 1.5% QoQ
* Matchmaking services EBITDA margins declined 50 bps QoQ
* Paid subscribers declined 3.5% QoQ and ATV declined 3.4% QoQ
What should investors do? Matrimony’s share price has dipped over the past five years (from ~| 871 in November 2017 to ~| 601 levels in November 2022).
* We maintain HOLD rating on the stock
Target Price and Valuation: We value Matrimony at | 615 i.e. 20x 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 (8% CAGR over FY22-25E)
* 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 | 1,350
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