Vernacular-Based Apps In Regional Languages Will Broaden Future Audience

Key Takeaways

• Launching a vernacular-based app and revamping community apps may boost revenue through market expansion and engagement.
  
• Cost optimization and new monetization strategies could enhance net margins and revenue growth.
  
• Matrimony.com faces challenges with declining registrations and revenue, inefficient marketing, and potential market share loss, raising concerns about profitability and growth.

Catalysts

A consumer internet company, provides online matchmaking services on internet and mobile platforms in India and internationally.

• Matrimony.com is launching a vernacular-based app across multiple regional languages to reach a broader audience, likely increasing future revenue through market expansion.
  
• The company is revamping its suite of community matrimony apps to improve user engagement and conversion, potentially leading to increased earnings.
  
• Matrimony.com is experimenting with new pricing strategies and additional monetization plans, which could improve net margins by optimizing revenue streams.
  
• The company is implementing cost optimization initiatives expected to improve net margins once market revival occurs.
  
• New initiatives in personalized services are projected to grow in double digits, contributing positively to revenue growth.

Matrimony.com Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Matrimony.com's revenue will grow by 9.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from 10.5% today to 12.2% in 3 years time.
• Analysts expect earnings to reach ₹755.6 million (and earnings per share of ₹31.03) by about February 2028, up from ₹488.5 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.2x on those 2028 earnings, down from 23.6x today. This future PE is lower than the current PE for the IN Interactive Media and Services industry at 23.6x.
• Analysts expect the number of shares outstanding to decline by 1.35% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 14.44%, as per the Simply Wall St company report.

Matrimony.com Future Earnings Per Share Growth

Risks

• The matrimony industry has seen an 8% decline in search queries, which aligns with a drop in Matrimony.com's member registrations, potentially impacting future revenue growth.
  
• Matrimony.com reported a decline in both billing and revenue for Q3 FY '25, indicating challenges in monetization and profitability.
  
• Competitors are maintaining growth despite industry challenges, suggesting potential market share loss for Matrimony.com, which could negatively affect future earnings.
  
• Significant marketing expenses have not resulted in corresponding revenue growth, raising concerns about marketing efficiency and the potential impact on net margins.
  
• The continuous financial losses in Marriage Services & Other business and new initiatives like wedding loans and astrology could strain net margins and overall earnings if not managed effectively.

Valuation

• The analysts have a consensus price target of ₹560.0 for Matrimony.com based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹6.2 billion, earnings will come to ₹755.6 million, and it would be trading on a PE ratio of 22.2x, assuming you use a discount rate of 14.4%.
  
• Given the current share price of ₹535.55, the analyst price target of ₹560.0 is 4.4% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.