Matrimony.com IPO: Subscribe for listing gains or avoid?
The company plans to raise over Rs 500 crore by offering nearly 38 lakh equity shares. Analysts have mixed feelings on this IPO.
- Matrimony.Com to raise over Rs 500 crore from IPO
- 75% for QIB, 15% is for NII and remaining 10% kept for RII
- Matrimony.Com raised about Rs 266 crore from anchor investors
Matrimony.com's initial public offering (IPO) began on Monday. The company wants to raise over Rs 500 crore. The issue closes on September 13, 2017.
The IPO consists of fresh issue of up to Rs 130 crore and offer for sale up to 37,67,254 equity shares (including anchor portion of 2,293,277 equity shares).
Price band has been fixed at lower end of Rs 983 per piece and upper end of Rs 985 per piece.
75% of the issue has been allotted to qualified institutional buyers (QIB), 15% to non-institutional individuals (NII) and remaining 10% has been kept for retail individual investors (RII).
Axis Capital Limited and ICICI Securities Limited are acting as book running lead managers for Matrimony's IPO issue.
From its anchor investors, Matrimony has raised nearly Rs 226 crore. About 22.93 lakh shares would be allotted to 10 anchor investors, including Goldman Sachs, Small Cap World Funds, HDFC Trustee Company and Baring Private Equity India AIF.
Yogesh Hotwani analysts at Motilal Oswal said, “At upper price band, the issue is available at PE of 48x FY17 pre issue EPS and 50.8x post issue capital. Further based on annualized EPS based on 1QFY18 earnings, issue is available at PE of 38x FY18.”
According to Motilal, the company has delivered strong earnings and has positive factors like leadership positioning in Online Matchmaking Services in India, diversification from single product online matchmaking company to marriage services provider and following Micro-market strategy and personalized services.
Between FY13 – FY17, Matrimony has witnessed revenue and EBITDA (earnings before interest tax depreciation and amortisation) growth of 12% and 39% respectively. In FY17, its profit after tax stood at Rs 43.8 crore and EBITDA margins at 20%.
Rahul Jain, Ankit Tikmany analysts at IIFL Wealth Management said, “IPO proceeds are expected to be gainfully utilised leading to higher revenues from increased brand awareness and lower rentals and interest expenses. Focused expansion of its marriage services business through cross selling and assisted services could also help the company move up the value chain."
The duo also added, “It may be noted that the nature of the Matrimony.com business is not comparable to that of Just Dial and Info Edge. We recommend subscribe for listing gains.”
Hotwani also added, "We believe the company deserves premium multiple due to leadership positioning in terms of larger client base compared to closed peers, limited competition and expected pick up in earnings post negative earning in FY14-16. Hence we recommend SUBSCRIBE to this issue for long term (10% discount to retail investors on issue price).”
However Geetanjali Kedia, analyst at Sptulsian Investment Adviser has recommended to avoid this issue due to fluctuating margins, negative networth, unconvincing issue objects and expensive valuations.
She said, "Besides aggressive pricing, the company has offered an eye-popping 10% discount to the issue price for retail investors. In the past 12 months, no private issuer has offered any retail discount. Despite being in the business for nearly 2 decades, financial has not been achieved, which is a huge risk for any prospective investor."