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I valued Zomato a little over a year ago (on July 21), ahead of its IPO, and estimated a value of ₹41 per share. The market, as it almost does, had other ideas and the stock, which had an offering price of ₹74, soared 51% on the first day of trading and stayed at stratospheric levels for much of 2021, even as earnings reports from the company reported steeper losses. In 2022, the company’s stock has come back to earth, and the mood has shifted, partly as a result of macro shifts (increased inflation and a flight of risk capital). The stock which has been dropping all year has seen the bottom fall out in the last few weeks, first in response to a conflicted and questionable investment in Blinkit, and next as the lock-in period for insiders expired, and the stock was priced at close to ₹41 on July 26. While I view this convergence as luck (even a broken clock is right at least twice every day), I updated my valuation for the company incorporating the most recent earnings reports and the macro changes (higher riskfree rates and risk premiums) to yield a value per share of ₹35, with much of the decline due to macro changes. (The attached spreadsheet has a do-it-yourself valuation that you can use to tell your own story and arrive at your own value for Zomato. Good luck!)
Slides: https://www.stern.nyu.edu/~adamodar/pdfiles/blog/ZomatoUpdate.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2022/07/a-zomato-2022-update-value-pricing-and.html
Valuation Spreadsheet: https://www.stern.nyu.edu/~adamodar/pc/blog/ZomatoDIY2022.xlsx
The post A 2022 Zomato Update: Price, Value and the Gap! appeared first on HumanitasConnects.
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