Everybody loves ordering food from Zomato & Swiggy. Before IPO listing of Zomato there was a craze in the retail investors about taking 1 IPO lot of zomato. After zomato listing in Indian stock market
About Company
- Incorporated in 2010, Zomato Limited is one of the leading online Food Service platforms
- As of December 31, 2020, Zomato has established a strong footprint across 23 countries with 131,233 active food delivery restaurants
- Zomato had 389,932 Active Restaurant Listings
- As of FY22, Zomato is active in 1000+ cities with 500+ cities added in FY22
Market Cap Comparison
What if I say zomato is bigger than Ambuja Cements , Pidilite Industries, LTI Mindtree, SBI life Insurance & Tata Power
Note- Figures in Crore
| Sr no | Company Name | Market Cap | PE ratio | Revenue (2024) | Net Profit (2024) |
| 0 | Zomato | 1,61,893 | 452 | 12,114 | 351 |
| 1 | Ambuja Cements | 1,56,482 | 44 | 33,160 | 4,738 |
| 2 | Pidilite Industries | 1,51,161 | 87 | 12,383 | 1,747 |
| 3 | LTI Mindtree | 1,43,335 | 31 | 35,517 | 4,585 |
| 4 | SBI Life Insurance | 1,43,843 | 75 | 1,31,988 | 1,894 |
| 5 | Tata Power | 1,42,895 | 39 | 61,449 | 4,280 |
Yes you heard it right Zomato with a market cap of 1,61,893 Crore it is bigger than many companies though I have mentioned a few of them.
Why is this happening ?
- Zomato has Revenue (2024) of 12,114 Crore & Net profit of 351 Crore
- PE ratio is way high which is 452
- With no strong fundamental & the hype in the retail investors, Zomato has gone too far.
Key ratios
| Market Cap | ₹ 1,61,314 Cr. |
| Current Price | ₹ 183 |
| High/Low | ₹ 207 / 66.2 |
| Stock PE | 460 |
| Industry PE | 45 |
| ROCE | 1.77% |
| ROE | 1.76% |
| PEG Ratio | 27.5 |
| Debt To Equity | 0.04 |
Revenue Mix
Zomato has 4 major revenue streams
- Delivery – 48.3%
- Hyperpure- Hyper pure is Zomato’s farm-to-fork supplies offering for restaurants in India. 26.7 % revenue contribution.
- Blinkit- Quick commerce business contributes 21.6% of total revenue
- Dine Out Advertising- 2.6% of total revenue
- India- 95.8%
- UAE-3.2 %
- Other – 1%
Financial Trend
Revenue
- Revenue in 2020- 2,605 Crore
- Revenue in 2024- 12,114 Crore
- Change in Revenue (5 years) – 365% Growth
Net Profit
- Net Loss in 2020- 2,367 Crore
- Net Profit in 2024- 351 Crore
Profitable in 2024
- Until 2024, Zomato is a loss making company , it never book net profit in positive
- Now in 2024, it turns profitable with a Net Profit of 351 Crore.
5,369 Crore loss in 4 years
- Zomato book 5,369 Crore loss in 4 years
Shareholding Pattern
Change In Shareholding Pattern
| | Sep-21 | Mar-24 | Change |
| FIIs + | 10.27% | 55.11% | 44.84% |
| DIIs + | 4.73% | 15.28% | 10.55% |
| Public + | 81.43% | 28.05% | -53.38% |
| Others + | 3.57% | 1.58% | -1.99% |
FIIs (Foreign Institutional Investors)
- September 2021: 10.27%
- March 2024: 55.11%
- Change: +44.84%
Analysis: FIIs have significantly increased their holdings by 44.84%. This indicates a strong growing confidence from foreign investors in the company or market during this period.
DIIs (Domestic Institutional Investors)
- September 2021: 4.73%
- March 2024: 15.28%
- Change: +10.55%
Analysis: DIIs have also increased their holdings, though not as dramatically as FIIs. The 10.55% increase reflects a substantial boost in confidence from domestic institutions.
Public
- September 2021: 81.43%
- March 2024: 28.05%
- Change: -53.38%
Analysis: Public holdings have decreased significantly by 53.38%. This could indicate that a large number of shares held by the general public have been acquired by institutional investors (both foreign and domestic), or it may reflect a shift in investment patterns among the general populace.
Others
- September 2021: 3.57%
- March 2024: 1.58%
- Change: -1.99%
Analysis: There has been a slight decrease in the holdings categorized as ‘Others’ by 1.99%. This category might include holdings by corporate bodies, non-institutional private investors, etc. The small change suggests relative stability in this category compared to others.
Company Valuation
Stock Price for 5 years
- Zomato launched its IPO in Juy 2021 at price of 126, since then share price fall by 63% to 46
- From this 47 level, stock price is up by 287% to a new price of 182.
- In this 5 years (2020 to 2024) company has given 45% returns to their investors
If we talk about returns in 1 year , zomato gave a returns of 171% returns in 1 year
171% returns in 1 year
Valuation
- By looking at just the Price to Earning Ratio, Zomato PE is 460
- At this Revenue & Net Profit, this PE is not justified
- In order to justify this PE , company has to increase their Net Profit but in case of Zomato it seems nearly impossible within 5 years as well.
- By looking at the PE ratio, zomato is highly overvalued company
- If we look at the PEG- 27.5, which is really high. (Generally PEG=1 means company is fairly valued) but in case of Zomato it is not justified & highly overvalued.
What Should Investors Do ?
- At this price level of Rs 180, this is definitely not the right time to invest in Zomato if you are long term investors
- In 2024 , Zomato turns profitable. In the future as well zomato will struggle to increase their net profit margins because of the Fix cost associated with the delivery partners , Tech team
- In short, consistent increase in net profit is highly uncertain
- Promoters holding in the company is big Zero so be careful about such companies
- Fundamental of the company is weak, it might improve in the coming future.
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Disclaimer
- Money Minded School is not a SEBI registered investment advisor, Please do your own research before investing
- This article is a complete guide about Zomato Ltd.
- These information and forecasts are based on our analysis, research, company fundamentals and history, experiences, and various technical analyses.
- Also, We have talked in detail about the share’s future prospects and growth potential.
- Hopefully, this information will help you in your further investment.
- If you have any further queries, please comment below. We will be happy to answer all your questions.
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