DancingDonut
DancingDonut

Zomato - Interesting Juncture

Zomato delivered another great set of results. Now they are adding 250Cr cash every quarter. The company hit two benchmarks this quarter according to my calculations, 50,000 Cr worth of orders (4x Q3) and 100 Cr orders (4x Q3), and these are growing 25-30% year on year. Why is this interesting? As some of you might know, they have started adding platform fees to the orders. Even one more rupee of platform fee will add 100 Cr to EBITDA. So, if they increase fees from 5 to 10, that's 500 Cr more EBITDA every year.

Now, If you look at this quarter's results vs last quarter's results, they have added ~3600 Cr of order value, and made 380 Cr of EBITDA (this does not include Events). Which means they are making 10% as EBITDA. In next 3 years, if Zomato doubles their order value to 1,00,000 Cr, and even make 8% EBITDA, this could mean 8000 Cr EBITDA (almost 1 billion dollars). What markets will give as multiple on this, is guess work. Could be 25-40x (Don't hold me on this). Hence the stock looks undervalued from a 3 year lens

10mo ago
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ZoomyNarwhal
ZoomyNarwhal

I am not sure if EBITDA is more applicable to zomato here. Would prefer looking at their net profits to reach at a better conclusion. Correct me if I'm wrong, but zoamto doesn't hold a lot of assets do they? (I am not getting the time to look at their financial releases)

CosmicNoodle
CosmicNoodle
Swiggy10mo

Net profit is 138 Cr

DancingDonut
DancingDonut

Cash in-cash out is the right metric. Everything else is accounting gibberish. Adding 250 Cr cash a quarter, that's much more than reported PAT. But Multiples on cash are more than EBITDA or PAT

FuzzyNoodle
FuzzyNoodle
Zivame10mo

Why everyone is ignoring ONDC?

CosmicPotato
CosmicPotato

+1, soon I'll just order from Paytm as most restaurants overcharge on Zomato.

DizzyJellybean
DizzyJellybean

So lemme tell you the problem i face with ONDC. Most of the restaurants where i live charge the same on ONdC. Also, then i have to pay the same packaging charges.
With things like swiggy one or zomato gold, i save good amount on delivery. Also delivery experience is also way better. And don’t start me in grievance resolution. That makes me choose swiggy/zomato always over ondc

CosmicNoodle
CosmicNoodle
Swiggy10mo

2x Order value in 3 years is nearly impossible

DancingDonut
DancingDonut

If they do it, it would be crazy Obviously, will need some help from the bois in orange. Keep burning that cash!

SqueakyBiscuit
SqueakyBiscuit
Swiggy10mo

3years ago was Covid.

FluffyCupcake
FluffyCupcake
Amazon10mo

There’s opex associated with platform, your analysis is ignoring the cost.

DancingDonut
DancingDonut

Why do you think I haven't?

FluffyNugget
FluffyNugget
Plivo10mo

🤷🏻‍♂️ + Zomato has completed the liquidation of its subsidiaries in Vietnam and Czech Republic.

https://inc42.com/buzz/zomato-completes-liquidation-of-czech-republic-vietnam-subsidiaries/

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