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Is BharatMatrimony.com targeting an ambitious valuation in its IPO?

07 October, 2016

Murugavel Janakiraman, one of the earliest internet entrepreneurs in the country who launched matrimonial website BharatMatrimony and online real estate search venture IndiaProperty, is looking to float the initial public offering (IPO) of his flagship company Matrimony.com Pvt. Ltd in November.

In a conversation with Techcircle, Janakiraman, said, “If everything goes well, we will be listing in (the next) four to six weeks.”

Although he did not spell out the valuation that the firm is seeking, he said the company is looking at an IPO worth Rs 550 crore.

Regulatory documents filed earlier by the company said it is looking to scoop Rs 350 crore through fresh issue. As a result, its selling shareholders would pocket nearly Rs 200 crore in the proposed public issue.

Some early venture capital investors in Matrimony.com (earlier Consim Info Pvt Ltd) besides Janakiraman are looking to sell shares in the offer sale. While Bessemer Venture Partners (BVP) is selling all its shares, Draper Investment and HartenBaum Trust (associated with a founding investor in Skype, Howard Hartenbaum) are selling most of their small holding.

JPMorgan Partners that acquired Canaan Partners stake in Matrimony.com and Mayfield have not offered to sell any shares in the IPO.

Based on the last disclosed shareholding structure, Matrimony.com is looking at a market valuation of around Rs 2,900-3,000 crore, according to VCCircle estimates.

This will make it the fourth most valued India-related public listed internet venture behind Info Edge (India) Ltd, MakeMyTrip Ltd and Infibeam Incorporation Ltd. It would be neck to neck with Just Dial Ltd and ahead of 123Greetings.com parent Intrasoft Technologies Ltd and London’s AIM exchange listed Koovs Plc.

The Economic Times had reported in February 2015, citing unnamed persons, Matrimony.com may look at a valuation of Rs 2,700-3,000 crore. 

Shooting for the star?

BharatMatrimony will become the second internet firm to list in India this year. Matrimony.com Pvt Ltd, which owns bharatmatrimony.com and a clutch of other matrimony-related consumer internet properties, had received a green signal from capital market regulator SEBI last December, four months after it filed its documents.

E-commerce firm Infibeam floated its IPO in March this year and managed to see it through without bells and whistles. Overall, Infibeam issue was oversubscribed by a mere 11% in a market that has seen several other firms mark bumper oversubscription.

On Friday, auto components firm Endurance Technologies Ltd was oversubscribed almost 43 times. In July, the initial public offering of business services provider Quess Corp Ltd received bids for a whopping 144 times the number of shares on sale, making it the most attractive IPO in more than eight years.

But Infibeam had floated its IPO just a month after the Indian stock markets had bottomed from a sharp slide in February. The benchmark indices have risen 10% since Infibeam listed.

However, since April, when Infibeam listed, its shares have more than doubled. The company is now worth Rs 4,865 crore.

There are no directly comparable firms for BharatMatrimony in the listed space. While Info Edge, which runs Naukri.com besides a host of other internet properties like JeevanSaathi.com, a competitor to BharatMatrimony, is a listed firm, it’s valuation is dictated more by its job portal and its stake in Zomato.

BharatMatrimony’s financials for the year ended 31 March 2015 is not in the public domain, but based on its numbers for the previous year, it could be seeking a premium compared to other listed internet firms. But, company valuations are based on forward earnings estimates rather than past financials.

The online matchmaker may also be looking to tap on to demand for consumer internet stocks in India. While valuations for internet firms at large has taken a knock over the past one year due to lack of visibility over earnings, the performance of Infibeam scrip shows the investor interest.

But this is not a general phenomenon. Just Dial has seen its value shrink by over two thirds from its peak and it currently trades below the IPO price due to growth skidding because of operational reasons.

BharatMatrimony

Founded in 1997, Matrimony.com comprises three segments – matchmaking services, marriage services and related sale of products and other services, such as the mobile-only relationship app Matchify. It started offering online matchmaking services in 2001.

Apart from the flagship brand, Matrimony.com also runs EliteMatrimony.com, CommunityMatrimony.com, AssistedMatrimony.com, MatrimonyDirectory.com and Tambulya.com.

According to the DRHP, Matrimony’s consolidated net revenues more than doubled in the four years between FY11 and FY15. The company closed the year ended March 31, 2015 with net revenues of Rs 232 crore, up over 16% than the previous year.

Its EBITDA, or operating profit, grew over four times between 2012 and 2015 and it ended FY15 with EBITDA of Rs 17.8 crore.

The company claims it had 568,000; 571,000 and 647,000 paid subscribers in fiscal years 2013, 2014 and 2015, respectively.

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Is BharatMatrimony.com targeting an ambitious valuation in its IPO?

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