      aswathdamodaran.blogspot.com · 2021-07-22
      · 1778d
    

The Zomato IPO: A Bet on Big Markets and Platforms

Damodaran values Zomato, an Indian food delivery platform going public in 2021, at ~394 billion INR (~$5.25 billion) or 41 INR per share, finding the IPO price of 72-75 INR overvalued despite the company's potential. The valuation hinges on macro assumptions about Indian market growth, digitization, and eating behavior changes rather than company-specific factors. The article employs DCF valuation with Monte Carlo simulation to quantify uncertainty in total addressable market, market share, and operating margins.

6 metrics· Cited 0× in the knowledge base ·Open source ↗

Metrics in this report

EV/User Multiple

Lower than DoorDashmultiple

Zomato IPO pricing compared to DoorDash public valuation

Operating Margin Target

30%percent

target

Zomato steady-state pre-tax operating margin assumption in base case valuation

Revenue Multiple

Higher than DoorDashmultiple

Current revenue basis; forward multiples favor Zomato due to higher growth expectations

Subscription Revenue as % of Total Revenue

<5%percent

Zomato Gold/Pro subscription revenue in 2021

Traded Goods Revenue as % of Total

~10%percent

Zomato HyperPure and related services in 2021

Transaction Fee as % of Gross Order Value

20-25%percent

Zomato and Swiggy in India; Amazon Food targets ~10%