ICICI Securities
Target: ₹700
CMP: ₹579.10
Matrimony.com’s revenue trend in Q4FY23 improved sequentially after two consecutive quarters of decline. Also, billings in matchmaking increased 8.6 per cent QoQ and 76.9 per cent YoY in Q4FY23 vs 1.6 per cent QoQ and 2.1 per cent YoY in Q3FY23.
Paid subscriptions were up about 12 per cent YoY. We believe this indicates improving sentiment and augurs well for revenue growth in FY24. Management commentary also reflected improving outlook.
Management guided for over 10 per cent revenue growth and 300bps YoY EBITDA margin improvement in FY24. Given the improving outlook and subdued present valuation, we think the stock is likely to re-rate.
We believe Matrimony is well placed to capture penetration-led growth in matchmaking classifieds space in the medium term. Its foray into marriage services is also a step in the right direction, in our view. Strong billings in the current quarter indicates double-digit growth in FY24/25.
We upgrade Matrimony to Buy with a revised (increased) target price to ₹700 (from ₹575). earlier.
Key risks: Weaker-than-expected conversion of active profiles into paid subscriptions; slower -than-expected scale-up in marriage services; and lower-than-expected recovery in matchmaking business.