Matrimony.com Ltd - Lot of opportunity to grow

prabhatg1 · December 1, 2021, 12:32pm

What is the business ?

Matrimony.com Ltd offers online matchmaking services. It was founded in 1997 by Murugavel Janakiraman, who later met his wife through his own matrimony site. The company has 130 offices in India, with offices in Dubai, Sri Lanka, the United States, and Malaysia to cater to its customers beyond India.

Is business is a niche with low or zero competition like Facebook, Twitter, LinkedIn/ Is there any entry barrier

No business is not niche there are a lot of local and national players are present. There is no entry barrier anyone can make a website, advertise it and you are in the game.

Why this business is worth studying ?

This business is based on network effects like Twitter, Facebook, WhatsApp, Dating Apps. The business grows when more and more people join the platform. In my opinion, any business that has a network effect is worth studying.

Who are the competitor and what is the market share of matrimony

Jeevansathi.com (owned by InfoEdge) - Leading share in North India
Shaadi.com (owned by People group) - Leading share in Gujrat Punjab
Bharatmatrimony.com (owned by Matrimony.com) - Leading share in South India

The marker share of matrimony is 60%

Is the company profitable ?

Yes, Matrimony.com is a profitable company but its peers are not profitable, so this business is not a hunky-dory business where everyone makes money. This business is something where the winner takes it all and the obvious reason for it is network and optimization.

What is the major cost for these companies ?

The major spend of these companies is on the advertisement to attract more and more customer and it will not stop any time soon.

Does this company should deserve valuation like amazon, Facebook, Flipkart?

In my opinion, it doesn’t deserve valuation like amazon, Facebook because customers for matrimony are not repetitive, unlike Amazon, Facebook.

What is the growth opportunity ?

In India 80% of marriages are still arranged so there is a lot of room to grow plus the trend of a nuclear family increasing
Adoption of Digitization
Nowadays Parents ask for their children’s opinion as well unlike in history where parents decide and children will not have any say in their marriage, Nowadays I have seen parents are somewhat ok if their children find partners online.

More on business

The company follows Micro Market Strategy: The company offers a range of targeted products and services that are tailored to meet the requirements of customers based on their linguistic, religious, and community preferences for which it has 17 regional portals and 300+community websites. Matrimony.com also caters to the NRI community through its operations in USA and Dubai.

In 2015, the company ventured into marriage services with Mandap.com which offers one of the largest wedding venue booking platforms with over 10,000 wedding venues and Wedding Bazaar, which is India’s largest wedding planning marketplace offering over 10,000 wedding services providers.

They recently started business in Bangladesh (launched website) and by next quarter they will be able to set up the payment gateway and transactions will start.

Financials

ROC for three years: 20%+

ROE: 15%+

DEBT TO EQUITY: 0.24

SALES GROWTH 5 YEARS: 10%+

PROMOTER HOLDING : 50.2%

Cash on Books : INR 2849 Million

The other business of matrimony is still loss-making so didn’t talk too much about it as they are minuscule

What can be the good valuation for this company ?

The value lies in the eyes of the beholder

I will be researching/gathering more information in the coming days and publishing the article on my app as well Finbloggers.com

Disclaimer : Invested in this stock and will add more based on how the business grows

gnaveen4 · December 1, 2021, 4:44pm

Liked your post. What needs to be really understood is, that this is truly a platform. It has got both push and pull working for it. Many standalone generic e-comm or specialized e-comm such as say easytrip, to some extent JD also, command very high valuations. Matrimony is a respected and well-established brand in India. It also owns ~250+ websites (that’s right) that are either possible ventures or customer engagement portals.

Names like Nalanda and MIT are heavily invested in Matrimony. It will definitely command new age kind business valuations, sooner or later.

Chaitanya_Motani · December 1, 2021, 6:13pm

Hi, Everyone. Thank you @prabhatg1 for creating this thread, always wanted it for this particular company. I am a relatively new investor with experience of around 1.5 years

In my portfolio, I had bought a portfolio of profitable consumer tech companies like Easemytrip, Saregama, Tips Ind, Infoedge, and Matrimony.com over the past few months. I have profited quite significantly from the former ones except for Matrimony itself. I must confess that I had not researched any of them much but just bought them as they are consumer tech companies. They still are about 25% of my portfolio. I have researched a lot about them all now.

Now, coming to Matrimony. As all other stocks that I bought have gone up quite aggressively except matrimony, it has the smallest allocation in my portfolio. Hence, I have not researched much about it, relative to others. What I want to ask and request is that:

These companies’ profits are supposed to grow very aggressively as their revenue grows as they have very high operating leverage potential. But as shown in the below picture it hasn’t. Why is this?

matrimony1675×683 95.3 KB
If someone has any information on shaadi.com, its other competitor whose information is not publically available like Jeevansathi, please share it.

They have acquired a wedding services business and I think that this could be a major source of income for them if they keep doing it in other regions also, as they are cash-rich.

Matrimony.com acquires wedding services player ShaadiSaga.com - The Economic Times.

prabhatg1 · December 1, 2021, 8:11pm

Hi @Chaitanya_Motani

As I told, they are aggressively spending on an advertisement to gain market share that could be the reason their profit doesn’t grow very aggressively and in fact, their sales growth also is not too aggressive but when I read the concall their target is to grow at least 18-20% in coming 4-5 years (reason for their acquisition)
Still, they scratched the surface in my opining because currently also in Tier 2, Tier 3 cities finding partner online comes under taboo

Both Shaadi and jeevansathi are loss-making
Few articles on matrimony

https://biginvestorblog.com/2021/06/02/how-to-make-money-via-matrimony/

Chaitanya_Motani · December 1, 2021, 8:47pm

Thanks a lot.

One positive that I found from the interviews of Infoedge (invested in it also) management is that they are focusing on North India and not aggressive on South India. On the other hand, Matrimony’s management said that they are going to aggressively advertise and acquire companies in North India.

So, Jeevansathi will be on defense while Matrimony will be on offense.

Do you agree?

I would still like to know about the Financials of Shaadi.com. As I read at number of places that till the time it doesn’t become a duopoly, the profitability will not increase significantly. Will try to find out more on Shaadi.com

Chaitanya_Motani · December 2, 2021, 9:32am

Matrimony’s CEO’s interview today.

Key Highlight for me: The wedding services is going to grow in triple digits.

prabhatg1 · December 2, 2021, 1:15pm

https://play.google.com/store/apps/collection/cluster?clp=igMuChkKEzYyMjczNjkwMzI4NzQ4OTk5OTAQCBgDEg8KCWpvZGlpLmFwcBABGAMYAQ%3D%3D:S:ANO1ljJ5miw&gsr=CjGKAy4KGQoTNjIyNzM2OTAzMjg3NDg5OTk5MBAIGAMSDwoJam9kaWkuYXBwEAEYAxgB:S:ANO1ljJmFX8&hl=en_US&gl=US

Most of the app rating is around 4. It will be good if it inches towards 4.5 and above. The comment you will see is not encouraging

prabhatg1 · May 13, 2022, 8:44am

chetanbharath · October 14, 2022, 5:53am

how is mandap and wedding bazaar doing? I guess next leg of growth going to come from this?

Also mgmt said they were expanding in Bangladesh and neighboring countries…has this panned out well for the company?

At 1400cr mcap, this profit making tech company only needs to show a clear growth path.
wrt to stock price correction, my main fear is that if a FII would want to exit, there could be a lot of pain then…

Disc: Recently invested small qty

Deven · October 14, 2022, 9:34am

As per me main issue is profitable growth, is hard to get due to competition. Am not following matrimony but invested in infoedge (they own jeevansathi), when I hear the concall their major concern is right business model for jeevanshathi. As per me big turnaround will happen if one get acquire and market is left for 2.

Just my opinion, you should hear concall of infoedge if not done.

visanty · December 8, 2023, 1:54pm

I came across the news below …

Matrimony.com approached the High Court against Google with the main contention that the US company’s payment policy violates the law and imposing 11-26 per cent fee on revenue.

Source: https://www.business-standard.com/india-news/hc-gives-matrimony-com-breather-in-legal-fight-with-google-over-billing-123042700542_1.html

Would the fee paid to run its google app affect the company’s profitability?

Disclosure: Not Invested but looking

Rezang_La · December 10, 2023, 7:21am

@visanty

This is from the last earnings call; the management had discussed this in the previous call as well.

Please go through for some insight into the Google Play Store issue.

StonePitbull · December 19, 2023, 4:26pm

I want to make a silly argument. I’ve seen Marriage brokers in tier2/tier3 cities extracting bride/groom data from these sites like Matrimony and running their own business by marketing and selling it for commissions. I don’t think there’s any way to defend against this and hence the company will miss out on potential revenue opportunities on rural areas.

Disc: Have a small position, wait and watch for few quarters and then will decide

ChaitanyaC · December 19, 2023, 4:33pm

I think, the site can monitor the traffic of a user. I don’t know if they have the tech to analyze the data gathered, unlike a person who can, looking at what is being done. So they may restrict access if they find out by themselves, or via other means. And if such people are caught, the management may take it to court and see to a judgement being given against the perpetrators.

No positions, but used the site.

Amit2saxena · February 21, 2024, 12:53pm

Sharing my notes on Matrimony posted on my blog https://growthinvestment.wordpress.com/

Investment Thesis

Operating Leverage – 10 lakh paid customers currently (FY23), bottomline will expand much faster as paid customers increase. Minimal incremental expenses on incremental revenues.

Consolidated/Oligopolistic industry – 3 player industry (Matrimony, Shaadi, Jeevansathi)

Owner Operator – Focused & Clean promoter. Incread stake during last buyback.

Market share in South and East India – Matrimony is market leader with overall 60% market share. Market leader and extremely dominant in south india. Also dominant in East India.

Network effect – High traffic of users pulls other users. Widest chioce of profiles and thus high probability of finding a match. Price take a backseat when platfirm js dominant.

Micro market strategy – Targets specific markets – Tamil Matrimony, Second Shaadi, Jodii (for blue collar workers) etc

Adjacencies – Marriage services market is huge. Matrimony is trying to penetrate in adjacencies like Catering, mandaps etc. This os a wild card.

Anti-thesis

Extreme Competitive Intensity – Matrimony spends 200 Cr on marketing expenses, on revenue of 500 Cr (FY23), majorly because other players are also spending on marketing and advertisement. For Matrimony to make money, competitive intensity should decrease in this oligopolistic industry which will result in lower marketing expense.

Disruptive by competitor – Recently Jeevansathi launched free chat option. As these companies make money by taking subscription and sharing contact information, the entire revenue source came to question mark. Will price sensitive customer go to matrimony, if jeevansathi is offering free chat

Business Model – The business model is to give paid subscription to customer and share contact information of prospect. The problem is customer comes with view that all services on internet are free. Companies like google /facebook, understands this very well and engage customers to come and spend time on net and generate revenues through advertisements. However, Matrimony business model is to charge users for browsing its site.

Marriage Culture – India has been traditionally arranged marriage market, if this culture shifts, as in developed markets, marrige sites may loose relevance.

Google – Now a days, everyone surfs of mobile by downloading apps, and Matrimony has to pay google a percentage of revenue , that’s decided by google. Its a lot of money that’s paid to google , matrimony is having legal fight with google on this.

Price sensitive customer – 95% of the revenue comes from cheapest product subscription (Rs 5000 / 3 month), despite matrimony efforts to generate revenues from elite products.

One time customer – You generally get married once, and hence its once in a lifetime business from a user for matrimony.

Growth – Despite network effect, grooth has been very tepid (7% cagr in last 10 years)

Market share in North and west – Matrimony is weak in these markets.

Triggers – Consolidation in industry may trigger reduction in competitive intensity. Westbridge (PE fund) having sizable stake in shaadi, wants to sell it to jeevansathi, but it is under legal contest from shaadi founder Anupam Mittal.

Company trades at 1100 Cr market cap with 300 Cr cash, 500 Cr Sales and 50 Cr PAT (FY23).

During last 6 years, though revenues have grown by 7% cagr, PAT has remained 50 Cr range bound, due to higher marketing spends and Google revenue cut.

Disclosure - Having tracking position, biased and may turn blind

iMrunmayee · February 21, 2024, 3:04pm

Dear @Amit2saxena This is a good writeup.

I believe Matrimony is a very undervalued bet. For 1100cr, one gets 350cr of cash and a business that generates 50cr of annual PAT. In the last one year, the Company added 20cr of revenue but that unfortunately went into provisioning for the Google payments. In the next one year, the next 20cr should help grow to 65-70cr PAT. This makes it valued at <20x PE for a true consumer company with very high ROE. Should competitive intensity reduce the Company is likely to see a lot of leverage flow from the 200cr of advertising expense (that does not add to sales), which could result in disproportionate returns.

Cheers

Safe to assume, I and everyone I know may have a vested interest in everything I post about. Nothing is a recommendation

StonePitbull · February 22, 2024, 11:10am

More like fairly priced. Growth is in mid single digits and no major triggers for re-rating.

224 CR as per Screener

Unlikely, unless they make some kind of leap to capture market share.

Disc: Holding a small position, might add more if valuations get attractive

iMrunmayee · February 22, 2024, 12:23pm

Screener number for cash is accurate needs to be added to the investments number. See the company presentation for authentic data.

Safe to assume, I and everyone I know may have a vested interest in everything I post about. Nothing is a recommendation

chiragp · February 23, 2024, 10:54am

Hi ,

just a few questions to everyone. very spontaneous questions.

can anyone throw some light on the degree of operating leverage, matrimony might enjoy in the future. lets assume that they can double sales in the next 5-7 years. will this have a dis proportionate effect to margins and bottom line.
regarding the ad spends. will this increase in line with revenue in the future ? or will they remain static even if revenue was to increase ?
is there a possibility for matrimony to buy out any existing players or thats not part of their business model ?
can the business lose its charm or become redundant ?
A back of the hand calculation. On a revenue of 1000 Cr +(whenever they achieve this) , can they deliver a bottom line of close to 130-150 Crs, taking into account op leverage etc.

StonePitbull · April 1, 2024, 4:51pm

Some of your questions were answered in con call, here are the snippets

In my opinion they need to double down their focus on the incumbent platform and add cool features.

I see that they have initiatives like Luv.com which will not be a dating site but a different kind of matrimony site (along the likes of Aisle? idk ), and it will burn cash for a year or two. Instead of parallel offerings, why not make the existing platform more feature rich? or whether they feel its already hit a plateau.

Onboarding users on two separate platforms for the same purpose, I fail to grasp the point.