Subscribe to Zomato: Ventura Securities

Ventura Securities IPO report on Zomato

We are long term constructive on the fortunes of Zomato Ltd (ZOMATO). The industry structure is likely to remain a duopoly of Zomato and Swiggy with limited disruptions from the likes of Amazon (unsuccessful global history of last mile delivery) and weaker offering proposition from direct ordering companies like DotPe and Thrive. Coupled with the moats of network effects, branding, last mile delivery, customer user behaviour (convenience and addiction) and wide geographical reach, we believe that the duopoly is likely to dominate in the visible future.

Valuation and Outlook

At the upper price band of INR 76 per share, ZOMATO’s valuation of 5.1X FY24 EV / Sales may appear optically demanding. However, given the • fledgling nature of the business, • duopoly market, • immense upside penetration potential • humungous untapped online opportunity of the adjacent verticals, and • scarcity premium we recommend a SUBSCRIBE for listing gains.