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Matrimony.com: Monetisation of clients holds key

Going forward, the company plans to expand its user base via continuous investments in its mobile platform and increasing its service offerings

Sheetal Agarwal 

Matrimony.com -- the company which owns matrimonial classifieds portal BharatMatrimony.com, EliteMatrimony.com, CommunityMatrimony.com, AssistedMatrimony.com, MatrimonyDirectory.com and Tambulya.com — is set to launch an Initial Public Offer (IPO). The company has filed a draft red herring prospectus with the Securities and Exchange Board of India (Sebi).

While the company aims to raise Rs 350 crore through the IPO, the actual offer size is bigger (estimated at 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 primarily offers these services to Indians through websites, mobile sites and mobile apps.

Nearly half the Rs 350 crore (i.e 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 possibly expanding the gap with peers such as Shaadi.com (number two player), JeevanSathi.com (number three player) further, unless peers also react in equal measure. Notably, JeevanSathi.com is owned by Info Edge (also owns naukri.com and 99acres.com, amongst others), a listed company. However, given the segment's small contribution to revenues (about six per cent), it is unlikely to have any meaningful impact on Info Edge stock, believe analysts.

With respect to the remaining funds that the company plans to garner, 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 four per cent of marriages in India) is a positive, pulling customers into the paid-service has not been easy, say analysts. “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.

While this is also partly reflected in Matrimony.com's financials, one must note that the company is in a growth phase wherein it is investing in the business to achieve scale. While its consolidated revenues and Ebitda (earnings before interest, tax, depreciation and amortisation) have grown at a healthy 19 per cent compound annual growth rate over FY11-15 to Rs 243 crore and 34 per cent 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 seven per cent 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. Increasing the number of paid subscriptions will be a key revenue driver going forward. The good part is that Matrimony.com is ahead of Jeevan Sathi in terms of revenues, Ebitda as well as the number of paid subscriptions. Given its lead, hopefully it should be among the first ones to start making profits on a consistent basis.

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 among its key strengths.

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First Published: Wed, September 16 2015. 23:44 IST
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