Mumbai: Shares of Matrimony.com Ltd closed 8.5% lower on Thursday, marking the worst debut on the bourses so far this fiscal year even as the online matchmaker’s Rs500 crore initial public offering (IPO) was subscribed 4.4 times last week.
Matrimony.com shares closed at Rs901.20 on the BSE, on a day when the benchmark 30-share Sensex ended flat at 32,370.04 points. On 31 March, shares of CL Educate Ltd had slumped 16.75% on their first trading day. Matrimony.com stock had opened unchanged on the BSE at Rs985 apiece on Thursday, the same as the upper end of the IPO price band of Rs983-985. Earlier in the day, it touched a high of Rs1,025 and a low of Rs 893.20, respectively.
Murugavel Janakiraman, promoter and managing director, attributed the weak debut to the fact that the stock was given to retail investors at a 10% discount.
“We gave a 10% discount to retail investors, and that could be one of the factors,” Janakiraman said in a phone interview.
“We are here for the long term. We are not too concerned about what happened today,” he added.
Brokerage firms had recommended that investors apply for the company’s IPO due to its unique business, even though it had a poor track record in terms of financials. They expect the recent earnings recovery for the company to strengthen going ahead.
Matrimony.com returned to profitability in fiscal 2017 after three consecutive years of losses, according to its share sale prospectus. It posted a consolidated net profit of Rs43.8 crore for fiscal 2017 against a net loss of Rs75.07 crore a year ago. In the June quarter, too, it reported a profit of Rs14.65 crore.
The company’s business comprises two segments—matchmaking services and marriage services. The company operates multiple portals such as BharatMatrimony.com, CommunityMatrimony.com and EliteMatrimony.com.
Janakiraman does not expect dating apps to succeed in India.
“ I don’t think dating apps are going to work out in India. We also tried a dating app called Matchify and getting females into (using) the app has been a challenge,” he said.
He was of the view that most Indian marriages tend to happen within the community.
“India is largely lower middle class, middle class and some upper middle class, and that segment I don’t think is comfortable with dating apps,” he added.
The company raised Rs130 crore in primary capital through the IPO, while some existing shareholders sold their holdings in the company.
“Retail investors have made money as they got a 10% discount,” said Arun Kejriwal, director of Kejriwal Research and Investment Services Pvt. Ltd.
“IPOs have become a listing game. There was lack of participation from HNI (high net-worth individual) side, hence that extra cushion was missing,” added Kejriwal. The portion reserved for non-institutional investors was subscribed a mere 0.41 times.
For Matrimony.com, this was the second attempt at going public in recent times. It had first filed its draft IPO papers in August 2015, but did not go ahead with the share sale.
In May this year, the company re-filed its draft papers and received regulatory approval in July to go ahead with its public offering.
Janakiraman does not expect dating apps to succeed in India.
“ I don’t think dating apps are going to work out in India. We also tried a dating app called Matchify and getting females into (using) the app has been a challenge,” he said.
He was of the view that most Indian marriages tend to happen within the community.
“India is largely lower middle class, middle class and some upper middle class, and that segment I don’t think is comfortable with dating apps,” he added.
The company raised Rs130 crore in primary capital through the IPO, while some existing shareholders sold their holdings in the company.
“Retail investors have made money as they got a 10% discount,” said Arun Kejriwal, director of Kejriwal Research and Investment Services Pvt. Ltd.
“IPOs have become a listing game. There was lack of participation from HNI (high net-worth individual) side, hence that extra cushion was missing,” added Kejriwal. The portion reserved for non-institutional investors was subscribed a mere 0.41 times.
For Matrimony.com, this was the second attempt at going public in recent times. It had first filed its draft IPO papers in August 2015, but did not go ahead with the share sale.
In May this year, the company re-filed its draft papers and received regulatory approval in July to go ahead with its public offering.
The company intends to use the share sale proceeds for advertising and business promotion activities, purchase of land for construction of an office in Chennai, and repayment of overdraft facilities.