This Small Cap Internet Co. To Buyback Shares At A Premium Of Over 48%; Shares Gain Over 17% Intra-Day

Matrimony.com offering online matchmaking services in India is a small cap entity. The firm on May 12, 2022 announced a buyback of Rs. 75 crore at Rs. 1150 per share. This implies a straight premium of over 48% from the stock's last traded price of Rs. 775.

Matrimony buyback details:

In its board meeting held on May 12, 2022, the board approved the buyback of fully paid-up equity shares of face value of Rs. 5 for an an amount not exceeding Rs. 750 million or Rs. 75 crore at a buyback price of Rs.1150 per share. The buyback shall be via the 'tender offer' route and on a proportionate basis. The record date for the buyback shall be intimated by the board or buyback committee later.

As per the Pre-Buyback shareholding pattern attached with the filing, within the retail category, 16,646 shareholders hold as many as 14,79,079 shares, while the promoter shareholding is at 50.16%, followed by mutual fund holding of 8.49%.

Typically in a buyback the company buys its own outstanding shares to reduce the number of shares available on the open market. Companies buy back shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling stake.

Matrimony Q4Fy22 results

The company reported revenues growth of 1.9% QoQ/9.4% YoY to Rs. 110.6 crore, aided by 4.5% QoQ increase of paid subscribers while

ATV declined 2% QoQ. Billing for the quarterwas up by 7.2% QoQ. EBITDA margins forthe quarter declined by 140bps QoQ to16.8% due to continued elevated marketingexpenses, which were up by 3.4% QoQ toRs. 43.2 crore. For FY22, it reported revenuegrowth of 15% to Rs. 434 crore, while EBITDA margins improved by 210bps to 20% and PAT improved by 31% to Rs. 54 crore.

ICICI Direct's View on Matrimony:

The brokerage said, The company reported billing growth of 12% for FY22 and aiming at 15% billinggrowth for FY23 which indicates anotherstrong revenue growth. However the company indicated that marketing costsare expected to be at elevated level in FY23 which would restrict margin expansion. The company aiming to reach Rs. 1000 crore billing in next 4-5 years. They have appointed independent valuer for sale of Chennai land and reiterated that
they would not sell the land below cost.The company indicated that promoters would not participate in the buyback. Likewise, the brokerage holds a positive view on the stock.