Matrimony.com IPO opens today: Should you subscribe?

Matrimony.com, the operator of online match making business under the BharatMatrimony brand, will launch its initial public offer (IPO) today.

The Rs 500-crore IPO consists of a fresh issue of Rs 130 crore and offer for sale of 37.7 lakh equity shares at a price band of Rs 983-985. Matrimony.com is the first matrimony or match-making company to bring an initial public offer in India.

In August 2015, the firm had filed its draft IPO papers but did not go ahead with the share sale. The company was incorporated in 2001.

The firm's business comprises two segments: (i) Matchmaking services and (ii) Marriage services and related sale of products. In FY17, Matrimony.com reported revenues of Rs 292.8 crore where matchmaking services comprised 95.9% of total revenues while marriage services contributed 4.1% to total revenues.

Leading brokerage Motilal Oswal Securities said the firm deserves the premium multiple due to leadership position in terms of larger client base, limited competition and expected pick-up in earnings after negative earnings in fiscal years 2014-2016. Motilal Oswal has assigned a 'subscribe' rating for the issue from a long-term perspective.

Angel Broking too has given a 'subscribe' rating for medium to long term. Angel Broking analysts said ina research note said, "Going forward, we expect the company to perform better on top-line and bottom line front considering strong brand value, leadership position, robust technology and expansion into marriage services segment."

"Further, it has strong user data base, which provides competitive edge to the company," added Angel Broking.

In a note, IIFL Wealth Management analysts have given a 'subscribe' call for the IPO.

The company intends to use the proceeds for advertising and business promotion activities, purchase of land for construction of office premises in Chennai, and repayment of overdraft facilities.

"Its proceeds are expected to be gainfully utilised leading to higher revenues from increased brand awareness and lower rentals and interrest expenses. Focused expansion of its marriage services business through cross selling and assisted services could also help firm move up the value chain," the note said.