Sunday 1 July 2018 Ltd - Value Pick - GTS 7

Received 125 answers to the Guess The Stock 7 and only 5 got it right: Prashant G, Harsha, Ankush, Aadesh Chajjed, Animesh Chanchani, I guess this time the clues were very tough. Ltd
Market Cap: 1600 Odd Crores.
CMP: Around 730
Current P/E: Around 21against FY18 EPS.
POSITIVE: B2C business, Recession Proof, Under tapped market, Mayawati Proof.
NEGATIVE: No entry barriers, Competition. (MCL) incorporated in 2001 is an online matrimony venture headed by Murugavel Janakiraman.

The company is operating a wide portfolio of websites, mobile apps etc. providing match-making services to Indians living in India and abroad.

The company operates flagship brand (,,, religion wise (Jain etc and Community wise ( etc), The company also has websites like

The company has now also ventured into total marriage services offering a solution from wedding venues, photographers, apparel to honeymoon packages etc.

MCL is currently the market leader in online match making services in India with a market share of north to 60%.

According to an analytics firm comSCORE's report in 2017, MCL's online properties registered far more visitor traffic and a lot more of time was spent on its portals compared to or

India as we all know is a Young Country, as per an UN report backed by Census data released back in 2014, The average age of an Indian would be 29 in 2020.

We have been seeing a shift from offline services to online services across industries, backed by swelling penetration of mobile & internet technologies and availability of low cost data services.

Right now, the Indian match-making market is largely ruled by the unorganized sector, From social contacts, news paper ads to brokers (Yes brokers charge a certain % of fees of the total wedding budget from both the parties in many regions).

About 1-1.2 crores wedding take place in India annually and only 6% of the population go online to find a match. With changing dynamics the online matrimony option is bound to find a more influential place in our match-making system.

An area of concern for MCL would be a rise in popularity of dating applications such as Tinder and Facebook offering dating services. However, people have used Orkut, Facebook, HI5 etc to date since years and now Tinder has taken all the limelight but the fact is Dating is a lot different from the concept of Matrimony. More indian parents would want their children on MCL websites, create the profile on their behalf, see other profiles rather than browsing through a lot of I am looking for FUN profiles on Tinder.

One of the key reasons for MCL's success in recent times has been their venture today be it the Gujarati or Tamil the brands have established their leadership with community specific individual apps and websites. No.2 competitor was late to launch their equivalent apps such as Gujarati Shaadi. today leads in the Hindi Belt (Uttar Pradesh and Bihar sort of states) they are also the most populous states of India.

To topple the competition in Hindi Belt, MCL has launched and are making conscious efforts to establish itself as the leading brand even in the Hindi Belt.
Even though this move involving aggressive pricing in Hindi Belt can result in some margin contraction from these regions it can also aid growth in a large manner because of the large population base.

To do a Scuttle Butt i made my profile on (GujaratiShaadi) and Gujarati, while both the apps had good design, accessibility etc. GujaratiMatrimony had far more matches for me.

Another important aspect was the tele-calling, while did not bother about my registration except a few text messages, GujaratiMatrimony got Gujarati girls and boys to call me and speak to me in gujarati language letting me know about the advantages of the subscription and how the relationship manager allotted to me will help me find a suitable match.

Coming to the pricing,'s paid upgrade costs about Rs 2450 for 1 month while the 3 months package is offered at Rs 4550.

MCL's app on the other hand has no monthly package and it has a 3 months package priced at Rs 4500. However when the telecaller called me up she offered me a flat 30% discount leading to a 3 months package cost of Rs 3150.

The company's Marriage Service business has not yet turned into net profits, while there is a small amount of cash burn there, I feel it is a great opportunity for MCL to diversify from just match-making to total marriage solutions. The company can play the effective role of an aggregator by providing total marriage solutions in the long run with patience and right strategy.

As for Financials for have a look at the table below :-

Financials: The company that has listed last year, went through a downturn and has reversed recently to start making profits at healthy margins. The company also declared its dividend.

MCL faced law suit from one of its investor Mr Desai of Real Soft from USA staking a claim on 10% of the company's equity. Litigation cost over the years have said to impact the financial performance and business performance of the company.

However, as of today the litigation has been settled as the company shelled out a settlement amount of 50 odd crores.

Negatives: Increasing competition, and no entry barrier remain a key concern for the company.

Positives: The company is operating in an extremely under tapped sector with very high growth potentials. The promoter in a recent interview has highlighted these facts backed by various research reports on overall industry picture. Being in a B2C business political instability, trade wars etc. has no direct material impact on business and financial performance of the company. With the ever growing population this also becomes a sort of recession proof business if the management does the right things that are needed.

There is an interesting thing in the shareholding pattern of the company, While promoters hold 50.34% stake, 45.96% stake is with FIIs, VCs, MFs, DIIs, AIFs etc.
Another 0.42% is with Corporate Bodies, 0.48% with NRIs, 0.22% with director relatives, 0.66% with ESOP/ESOS/ESPS.

That means a total of 98.08% is in strong hands (including 0.42% of corp bodies, and 0.48% of NRIs)

That leaves a float of just 1.92% for general retail investors which equals to just 4.36 Lac shares.

Another important positive point is that as we head to states and general elections the market will be full of talks about political instability, in such a scenario MCL is a Mayawati Proof business, irrespective of who comes into power, Matchmaking and Marriages should continue to take place right?

Valuations: The stock is available at 21x its earnings on the P/E front against FY18 and at 4.88 Mcap/Sales. The company has no listed peer except Info-Edge ( which is trading at valuations of 56x to its earnings and at a Mcap/Sales of 15.77. (However Info-edge has various portals across industries from job market ( to 99acres in property it also has a 10% stake in Zomato). Another peer Justdial which has been punished heavily by the markets in last 3-4 years due to deteriorating margins, topping out of growth and google's venture into locals rendering Justdial with little utility left still trades at a valuation of 27x to its earnings.

Internet businesses in general are rated at far higher valuations, such as INFIBEAM today is trading at a P/E of more than 100 and Mcap/Sales of about 13+.

Astronomical valuation for Internet companies is a global trend.

All in All, The stock seems to be in the under-valued territory and multiplication from CMP should not be ruled out.


Corp Website
Management Interview
Annual Result FY18
KPMG Report on Digital Classifieds business

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have LTD in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.