Recommendation

As per CA Ajay Chouhan, SEBI Registered Research Analyst, recommendation is to ‘Subscribe’ for ‘Long Term’ and but don’t expect hefty ‘Listing Gains’. It is worth-mentioning that company has not been able to generate profits. However, futuristic digital platform startups usually display losses in early years due to high expenditure on advertising and lucrative schemes to attract customers and largely bank upon funding from institutional investors to augment their capital requirements. Funded by institutions of proven track record, the company is expected to run parallel with ESG compliance that increases the confidence of market participants. On financial front, 88% revenues from sale of services from platform such as Food ordering, zomato pro and dining out while rest comes from Hyperpure and other operating expenses. Zomato has been able to increase their revenues by 137% in last two years. Gross order value from food delivery business has been doubled to 11,220.9 crores, which is the major component of revenue mix. Considering the upper price band of Rs. 72, the company is valued at 56,240 crores. EV/Sales of the company stands at 20.5x while the other competitor Swiggy is trading at 7.5x of EV/Sales. Enterprise Value/Sales of Amazon-backed British food delivery firm Deliveroo is trading at 4.4x. Comparison of valuation parameters with other players signal that issue is aggressively priced. However, the strong footprints and high popularity of Zomato offset the same.Grey Market Premium is surged 20% after Info Edge reduced their OFS size by half that has infuse confidence in investors.