Zomato Lists at 53% Premium but Its Worth Only Rs 41, says Aswath Damodaran
By Aditya Raghunath
Investing.com -- Zomato Ltd (NS: ZOMT ) may have listed at a 53% premium to its offer price of Rs 76 and is currently trading at Rs 128.7, up over 69% but valuation guru Aswath Damodaran says the stock is not worth more than Rs 41 a share.
“With my upbeat story of growth and profitability, the value that I derive for equity is close to Rs 39,400 crore (about $5.25 billion). That may seem like a lot to pay for a money-losing company with less than Rs 2,000 crore in revenues in the most recent year, but promise and potential have value, especially when you have a leader in a market of immense size. That said, the stock's pricing (Rs 72-75 per share) makes it too expensive,” Damodaran wrote in his blog Musings on Markets.
If you download his spreadsheet on the valuation, he says the total value per share comes at Rs 40.79.
He said, “… the value that I derive for equity is close to 394 billion INR (about $5.25 billion), translating into a value per share of 41 INR. That may seem like a lot to pay for a money-losing company with less than 20 billion INR in revenues in the most recent year, but promise and potential have value, especially when you have a leader in a market of immense size. That said, the stock's pricing (72-75 INR, per share) makes it too expensive.”
He said that he sees a 10% chance of failure for Zomato. He said, “On the minus side, this is a company that is still burning through cash and will need access to capital in future years to continue to survive. Overall, I will attach a likelihood of failure of 10%, reflecting this balance.”
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With such pessimistic view, why 10% failure? It should be 90% failure. 🤠Like 1
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what is price of 1 stockLike
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126Like
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hiLike
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it's all because of new commers of market.. like me😉Like 2
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to exit kar de ?Like 1
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@Pragnay Gupta Yes kar do...profit bookingLike
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Do not invest in zomato its a loss making companyLike
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Loss making company giving listing profits. Strange!!Like 1
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@Ajay Uppal its start up.....same like FB from beginingLike
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If you got the ipo then ...set a stop loss at 120 and relax.Like
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List has giving super profits, compared to other biggies in the market Zomato is overpriced.Like
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