hi

Noticed a trade volume of 46 lakhs for ABB india on 21st Feb 24, result was announced today, its parent in switzerland acquired a new company, but the volume still looks way too high.
Apart from some algorithmic trading trying to manipulate it, is there any other explanation.

The reason this volume looks very high is

1. no block/bulk deals that are reported yet
2. one third of all retail holding will need to be traded today for this quantity (given stock holding and stock count and assuming promoter/fii/dii will not sell other than in block/bulk deal,
   detailed match)

detailed math
total stocks = market cap/stock price ~ 105k cr/5k ~ 21 cr ~ 20 cr
tradable holding (only retail) = 0.075 * 20 cr = 1.5 cr
total traded = 46 lakhs ~ 50 lakhs
so 50/150 ~ 1:3 retail shares were traded. Have not seen such volume actions before. Am I missing something. The math uses a lot of rounding to make it easier to follow. Am a noob so dont know enough about this, any info will be useful.

Thanks
Apurba

Sharing my notes on Matrimony posted on my blog https://growthinvestment.wordpress.com/

Investment Thesis

Operating Leverage – 10 lakh paid customers currently (FY23), bottomline will expand much faster as paid customers increase. Minimal incremental expenses on incremental revenues.

Consolidated/Oligopolistic industry – 3 player industry (Matrimony, Shaadi, Jeevansathi)

Owner Operator – Focused & Clean promoter. Incread stake during last buyback.

Market share in South and East India – Matrimony is market leader with overall 60% market share. Market leader and extremely dominant in south india. Also dominant in East India.

Network effect – High traffic of users pulls other users. Widest chioce of profiles and thus high probability of finding a match. Price take a backseat when platfirm js dominant.

Micro market strategy – Targets specific markets – Tamil Matrimony, Second Shaadi, Jodii (for blue collar workers) etc

Adjacencies – Marriage services market is huge. Matrimony is trying to penetrate in adjacencies like Catering, mandaps etc. This os a wild card.

Anti-thesis

Extreme Competitive Intensity – Matrimony spends 200 Cr on marketing expenses, on revenue of 500 Cr (FY23), majorly because other players are also spending on marketing and advertisement. For Matrimony to make money, competitive intensity should decrease in this oligopolistic industry which will result in lower marketing expense.

Disruptive by competitor – Recently Jeevansathi launched free chat option. As these companies make money by taking subscription and sharing contact information, the entire revenue source came to question mark. Will price sensitive customer go to matrimony, if jeevansathi is offering free chat

Business Model – The business model is to give paid subscription to customer and share contact information of prospect. The problem is customer comes with view that all services on internet are free. Companies like google /facebook, understands this very well and engage customers to come and spend time on net and generate revenues through advertisements. However, Matrimony business model is to charge users for browsing its site.

Marriage Culture – India has been traditionally arranged marriage market, if this culture shifts, as in developed markets, marrige sites may loose relevance.

Google – Now a days, everyone surfs of mobile by downloading apps, and Matrimony has to pay google a percentage of revenue , that’s decided by google. Its a lot of money that’s paid to google , matrimony is having legal fight with google on this.

Price sensitive customer – 95% of the revenue comes from cheapest product subscription (Rs 5000 / 3 month), despite matrimony efforts to generate revenues from elite products.

One time customer – You generally get married once, and hence its once in a lifetime business from a user for matrimony.

Growth – Despite network effect, grooth has been very tepid (7% cagr in last 10 years)

Market share in North and west – Matrimony is weak in these markets.

Triggers – Consolidation in industry may trigger reduction in competitive intensity. Westbridge (PE fund) having sizable stake in shaadi, wants to sell it to jeevansathi, but it is under legal contest from shaadi founder Anupam Mittal.

Company trades at 1100 Cr market cap with 300 Cr cash, 500 Cr Sales and 50 Cr PAT (FY23).

During last 6 years, though revenues have grown by 7% cagr, PAT has remained 50 Cr range bound, due to higher marketing spends and Google revenue cut.

Can you suggest which to remove and which ones to keep

Max 12-15 stocks should be there,
Get rid off many bad companies
Too many companies in auto ancillary industries
Sector diversification requires
For example no top technology companies or defence one