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Matrimony.com, which owns matrimonial classifieds portal BharatMatrimony.com, EliteMatrimony.com, CommunityMatrimony.com, AssistedMatrimony.com, MatrimonyDirectory.com and Tambulya.com, is all set to launch an initial public offer (IPO) to raise Rs 350 crore. The company has filed a DRHP with SEBI for the same.
While the company aims to raise Rs 350 crore through the IPO, the actual offer size is bigger (estimated around Rs 600-800 crore) after including the offer for sale by existing private equity investors.
BharatMatrimony.com is India's largest online matrimonial portal and provides services in three segments namely, matchmaking, marriage services and related sale of products/services such as mobile-only relationship app "Matchify". It offers these services through websites, mobile sites and mobile apps.
Nearly half of the Rs 350 crore (ie Rs 150 crore) flowing into the company will be deployed towards advertising and promotional activities. This means the competitive intensity in this market will increase, and possibly expand the gap with peers such as Shaadi.com (number two player), JeevanSathi.com (number three player) further.
Notably, JeevanSathi.com is owned by Info Edge (who also owns naukri.com and 99acres.com, amongst others), a listed company. However, given the segment's small contribution to revenues (about 6%), it is unlikely to have any meaningful impact on Info Edge stock, believe analysts.
Matrimony.com plans to use Rs 34 crore for purchase and development of office premises in Chennai, Rs 28.7 crore towards repayment of overdraft facilities, Rs 17.4 crore for procurement of hardware/software for a centrally controlled contact center and rest for general corporate purposes.
While the low penetration of online matrimony business (accounts for just 4% of marriages in India) is a positive, monetisation may not be easy.
"We consider the matrimony business difficult to monetise as apart from being a C2C model, this business largely sees a one-time transaction where the consumer does not come back", say analysts at Bank of America Merrill Lynch.
This is also reflected in Matrimony.com's financials. While its consolidated revenues and EBITDA have grown at a healthy 19% CAGR over FY11-15 to Rs 243 crore and 34% to Rs 18 crore, the company has posted net profit in just one year in the past five years. The EBITDA margin too is thin at 7% owing to higher employee as well as advertising and promotional spends. The company will have to grow its revenues at a consistent pace and sustainable profits will start flowing in once it achieves a higher scale, believe analysts. Ramping up the number of paid subscriptions will be a key revenue driver going forward. However, Matrimony.com is ahead of JeevanSathi in terms of revenues, EBITDA (the latter has an EBITDA loss) as well as number of paid subscriptions.
Going forward, the company plans to expand its user base via continuous investments in its mobile platform and increasing its service offerings. Strong brand value, large database of profiles and micro market strategy are amongst its key strengths.
