Incorporated in 2001, Matrimony.com - a leading online matrimonial company through its flagship brand BharatMatrimony - has emerged as the market leader over the years. Leveraging its micro-market strategy, the company provides a range of customised services based on customers' religion, caste and other preferences such as communities. Apart from traditional matchmaking services, the company has also ventured into various other marriage-related services such as MatrimonyPhotography, MatrimonyMandaps, MatrimonyDirectory and so on over the years. However, the contribution of this business is less than 1 per cent to the overall revenues. Also, the company caters to customers offline through its more than 130 offline stores and has a separate service named EliteMatrimony for its rich clientele.
Even though the pandemic has badly affected businesses over the last one year, the company was able to record its highest number of paid subscriptions in the last five years. In FY21, the company's subscription rose to 8.4 lakh, thereby resulting in healthy cash flows for the company. Since the company receives its subscription fee in advance and has zero debt on its balance sheet, it enjoys a strong position.
What makes it stand out
- Matrimony.com is the only listed company in the online matrimony business.
- Unlike traditional matchmaking, online matrimony enjoys its vast reach and diversity.
- The growing demand for one-stop solutions for wedding and matrimonial services can fuel the future growth of the company's business.
Financials & valuation
Since Matrimony.com is the sole listed entity in the underpenetrated online matchmaking market, it commands a high premium to its earnings. Currently, the company's P/E trades at a P/E of 55.4 times its earnings as against its three-year median of 32.5 times. The company has an asset-light model due to which, its P/B also looks inflated and stood at 8.6 times as on June 15, 2021. Its platform-based business has helped it earn a healthy median operating margin of 22.5 per cent in the last five years. The company further plans to expand in tier-I and tier-II cities to increase its foothold. Also, the presence of high cash on its balance sheet will allow the company to grow inorganically.
What should investors do?
Being a leader in the matchmaking space, the company's growth prospect is high, as our country has a large unmarried population spread around the globe. As a young country, India has more than 50 crore of the unmarried population within the marriageable bracket. It means that approximately 1.1-1.3 crore weddings are likely to happen every year. This will pave the way for the company to grow, as most weddings in India are arranged. This, coupled with increasing internet and mobile penetration in the country, will augur well for the company.
However, with the increasing disposable income and the freedom of choice over life decisions, a shift in cultural receptivity towards arranged marriages has been observed, which could be a hindrance for the company. Also, the company's marriage-services business, such as photography and mandap classifieds, is likely to face the brunt of the ongoing pandemic due to lower consumer demand and the less probability of any high-scale weddings taking place in the near future. However, factors like the easing of lockdowns restrictions, better vaccination drives and increased subscriber growth through expansion can augur well for the company in the future. Thus, the company can be seen as a good investment play in the online matrimony business.