Target: ₹601
CMP: ₹540.85
The matchmaking services industry continues to be in a state of flux given muted revenue growth as user behaviour evolves rapidly. Matrimony continues to be the market leader in the space. However, litigation costs have impacted its ability to invest more in growing the space.
The company has launched new initiatives such as: ‘MeraLuv’ – exclusive dating app for Indian-Americans and Elite Matrimony’ kiosks at airports across major cities. It is also planning to launch ‘Love.com’ by Q2-FY25, an app for people looking for serious relationships. However, according to the management, the upside from these initiatives is unlikely to manifest in the near term.
According to the management, PAT margin would have been 300bps higher, if not for litigation expenses. It guided for breakeven in ‘marriage services’ business to be achieved by the end of FY25. The company is on track to achieve revenue of ₹1,000 crore on an annual basis over the next 5 years.
We maintain Add given the relatively inexpensive valuation with a target price of ₹ 601.
Key risks: Weaker-than-expected conversion of active profiles into paid subscriptions, slower-than-expected scaleup in marriage services and lower-than-expected recovery in matchmaking business.