Neurtal Matrimony.com Ltd For Target Rs.605 - Yes Securities
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Mixed operating performance; lower margin on high advertisement expense
Result Synopsis
Matrimony.com (MATRIM) reported mixed financial performance for the quarter. Both, sequential revenue growth and EBITDA margin were below expectation. Revenue declined by 3.9% QoQ, led by decrease in Matchmaking services business (down 4.2% QoQ). Consolidated Billing stood at Rs. 1,114 Mn (up 2.0% QoQ). There was sequential decline in EBITDA margin(down 484 bps QoQ) on account of higher A&P expense. Average transaction value was up 3.0% QoQ to Rs 4,535.
The average realization remains under pressure as the key competitor, Jeevansathi, has started offering certain features free to its users. 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 and expected to grow going ahead. Also arranged marriages still account for 80% of marriages in India. Marriage services in India is Rs 3500 bn in size, but is highly fragmented currently, and offers long term growth opportunity for the company. We estimate revenue CAGR of 7.0% over FY22?24E with average EBITDA margin of 16.7% over the period. We maintain our NEUTRAL rating on the stock with revised target price of Rs 605/share based on DCF methodology. The stock trades at P/E of 26.2x/21.4x on FY23E/FY24E.
Result Highlights
*Reported revenue of Rs. 1,104 million. (up 1.7% Y-o-Y, down 3.9% Q-o-Q). The dip in revenue was led by decrease in Matchmaking services business (down 4.2% QoQ). Lower billings in Q2FY23 impacted revenue growth for Q3FY23.
* EBITDA margin dipped by 484 bps to 11.3% Q-o-Q due to higher advertisement and business promotion expenses (up 2.0% Q-o-Q) on lower revenue.
* PAT decreased to Rs. 116 Mn (down 1.1% Q-o-Q) on lower revenue, partially offset by increase in Other Income (up 137.0% Q-o-Q).
* Paid subscriptions during the quarter were 0.24mn (up 12.0% Y-o-Y). Average transaction value was up 3.0% QoQ to Rs 4,535.
* Consolidated Billing stood at Rs. 1,114 Mn (up 2.0% Q-o-Q), and Matchmaking Billing stood at 1,083 Mn (up 1.6% Q-o-Q).
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