At the closing price on Friday, Zomato is trading at a multiple of 49.6 times the FY21 revenues. This is significantly higher than Doordash’s EV/Revenue valuations of 15 times, says Divam Sharma of Green Portfolio.
Considering a market cap of Rs 67,000 crore, Info Edge looks attractive on valuations. The cash generated by the company from Zomato IPO can be deployed for further business growth and supporting new ventures, Divam Sharma, Co-founder of Green Portfolio said in an interview with Moneycontrol’s Kshitij Anand.
Q) What should investors do after Zomato’s listing? Buy, sell or hold?
A) Investors should now wait to buy Zomato at these valuations. The IPO has seen a bumper listing and this is one of its kind listings in the Indian markets. Valuations in comparison to global peers also look expensive.
Let the valuations settle down. Zomato’s capability in the future to leverage its moats of technology, high market share, and high addressable market potential will lead to wealth creation beyond these valuations.
Q) What does the Zomato listing mean for Info Edge investors? Zomato’s market cap has already surpassed Rs 100,000 cr mark on listing day.
A) Info Edge, which, post the IPO also holds a significant stake in Zomato, and Policybazaar which is going for an IPO looks attractive on valuations.
The company also operates Naukri.com and Jeevansathi.com which are leaders in their respective segments.
Considering a market cap of Rs 67,000 crores, Info Edge looks attractive on valuations. The cash generated by the company from Zomato IPO can be deployed for further business growth and supporting new ventures.
Q) How does Zomato fare on price to sales basis among global peers?
A) At the closing price on Friday, Zomato is trading at a multiple of 49.6 times the FY21 revenues. This is significantly higher than Doordash’s EV/Revenue valuations of 15 times.
Q) Is strong listing gains driving retail investors to the IPO party? What are your views?
A) There is a FOMO driving the Indian investors to invest in IPO’s. Even many of similar tech stories are getting high valuations in the unlisted market.
This euphoria of high applications for IPO, 100% run-up immediately post a listing, and grabbing high attention of investors is not sustainable. Money on the table for someone investing now is not there.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Reference Link :-