Why I skipped the Zomato IPO(It's not because I don't have the money(That's True😭😭), but, there are many other factors).



 As of writing this one,

Zomato IPO Update as of 5:00 PM on Day 3 - final day

Qualified Institutional Buyers (QIBs) subscribed 51.79 times
Non Institutional Investors subscribed 32.96 times
Retail Individual Investors (RIIs) subscribed 7.45 times
Employee Reserved subscribed 0.62 times
Total subscribed 38.25 times

Source: BSE


What got me curious is that the employees had not subscribed as expected.

Why wouldn't you subscribe to your own companies IPO,  Wouldn't you want to be the owner of the company that you are an employee?

Hmmm are the employees stupid?

They probably know something else.

Wait am I stupid for writing this after the IPO ended( I Probably am. I should deal with my self-consciousness. Well let me dwell upon that on my own time.)?


For any rational basic investor;

Lets see the basic data.



Just looking on the above would have wanted me to try for this IPO.

(My worthless MBA Finance grad alter ego kicks in. He would probably write next till the end of this article).


Lets dig deeper.

The first question, how would you value a company that makes loss? 

Wait am I even a sane person to discuss about this?(Probably not).

Let me bring in Tesla. They were only profitable from 2019. Look at where they are now.

Let's have an rational look at the financials of Zomato.



Its clear that that they are loss making. 

Why do they make losses you ask?

1. They sell at a loss.( Duh. I'm Looking at you- Yes you know who you are, Whenever a Zomato notification goes off saying 50% off, you jump in to buy something- Yes, you Pranavh, you are the reason they are making losses). This is called the disruption model.

2. There is a rise in commission and other charges. There are delivery-person ( Yes I used a gender neutral word. Did you see that Internet, Pranavh is using gender neutrals) charges.

3. Rising Fuel Prices. ( Thank you jeeeeeee, for those who wanna fight that it isn't jee's fault, come at me bro, well fight in chats or dm's ðŸ˜­).

4. Probably because it seems like the curve is flattening. ( But, still wear a mask and get vaccinated). Many people have started going out to get food.

Zomato also offers an online discovery of restaurants, table bookings, food and health supplements delivery, a membership that offers discounts on both dine-in and food delivery.


So, Loss making companies are valued on the  basis of Sales Multiples. They are valued for their potential. 

The following is a chart that I generously stole from KRChoksey Research.




You can figure out that they are valued on Enterprise value/Sales, or Price/Sales.

This will focus on EV/Sales.

Putting it in English (Simpler Non-finance Jargon). They are valued at 9.19 Times of the sales they make. 

Zomato is loss making at the moment. 

Let's assume that it will get listed at 76 (Higher Price band). At that price, Zomato IPO is demanding a trailing 12-month price-to-sales of 29.9 times. Which is so high, when we take into account their global peers.

People are curious to invest into emotions. Zomato has an emotional connect with people. They don't want to miss out on this.

Never Invest on Emotions. Fear and Greed are the biggest drivers of the market.


So, who should invest.

1. High risk investors.

2. Institutional Investors.

3. Investors who have time greater than 4 Years.

(why only these?

An investor has to invest in Zomato only for future growth, and not immediate profits. It cannot pay dividends instantly.)


So, if I fall in the others category, what should I do?

Patience is a virtue.

Wait till you see, if, the company is profitable.

Yes Zomato has huge potential.

There is no shame in waiting and deciding.

It might take an year. Then see if they are able to sustain these profits.

Then you can Invest in Zomato. 


Until then it will be a bumpy ride for the investors of Zomato.

(Hold Your horses da dei. Inside Joke for my mates.)


PS: As always I stole pics from various websites. Credits Where due.

If you have any queries comment below. Would love to clear them.




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