Hi, friends hope you are doing well, today we know Zomato share price target is 2023! You know seeing most of the global markets near their 52-week lows only to find that the Indian market is barely three percent away from its all-time high, sounds magical, doesn’t it? There is a section of people who are extremely unhappy as their stocks have hit new lows every day I am sure there is no cost to speculate.

I am talking about investors of new-age platform companies or people who have invested in these loss-making tech platform IPOs. Last year a lot of Nike The Last Man Standing or since it’s Nike, should I say Last Woman Standing two have fallen. You name Stock Beat Zomato, Paytm Policy Bazaar Car Vyapar, or even Nika.

Zomato share price target 2023

All are over halved I am sure I can give you 10 reasons why these stocks dropped like nine pins but my point is not to do postmortem analysis but to talk about the future in markets and life. Because they say the past is the past but it is worth learning a lesson from.

So, friends, the billion rupee question is, do these stocks become attractive after a fall of more than 50 percent? If you are a long-term investor then my answer is no. If your investing style is fundamental analysis only and you derive company value using valuation methods then my answer is definitely no. It is extremely difficult to predict the future cash flows of these loss-making companies.

If you are a trader and have the appetite to take risks then my answer is yes. Valuations and earnings are the kings and queens of the stock market. A stock at X price will be overvalued. While the same stock can become attractive at X minus 50 percent as they say beauty is in the eye of the beholder.

The same is the case with valuations which are relative. So friends among the above I find Zomato the most attractive. The memes people shared on ITC tested the patience of long-term investors. But when the time for ITC came in 2022, the stock became 55 percent in one year. I am sure you must have seen people predicting the price of Zomato and the price of Tomato that the share price of Zomato was falling.

Zomato share price chart 2023

Zomato stock price today

Why the huge fall in Zomato’s stock?

the question is what do we do about Zomato after this huge fall? My reasons are very simple why I am bullish on Zomato at the current price. Top Zomato listed at 1 trillion market cap and reached the highest ever valuation of 1.4 trillion market cap. Jubilant Foods which owns Domino’s Pizza trades for massive cash flow. Zomato trades at a discount of 60 If your starting point was wrong, I am sure the outcome is unlikely to be materially different and that is exactly what happened. Where Zomato was delisted. Earlier it never deserved those valuations, now the valuation has come down.

Zomato share price target 2022

Let us look at Zomato one year ago Zomatologically. Where very poor financial condition was available. At a 1.4 trillion market cap whereas today the same Zomato is available at a 60% discount with better financials and less cash burn. Another reason for the sharp decline in the stock was the end of the pre-IPO lock-in, which saw a massive supply glut in Zomato adding early investors like PE funds and Uber exiting Zomato completely. Thereby, the massive supply took the stock to an all-time low, with major PE funds exiting Zomato. Supply being absorbed by marquee domestic mutual funds Risk supply overhang does not exist for Zomato unlike many of its newly listed peers in the platform and tech space.

why Zomato stock is falling

Why is the share price of Zomato falling in India?

We talk about the fundamentals and some logical points related to the industry, let me give you some industry statistics, India with a population of 1.38 billion has an internet penetration of 49 percent. Compared to US and China where internet penetration is 94 percent and 68 percent respectively, just imagine what will happen if we read about China’s internet penetration in 10 years, you will be shocked to know these two figures. The food of a household accounts for 90 percent.

While only 10% of food consumption is catered through restaurants. Only eight percent of all Internet users in India use an online food delivery app. Just imagine the scope of the addressable market of the food delivery industry according to the research. An average household in a metro city orders food from outside only twice a month. In fact, in Tier 1 and Tier 2 cities, it happens only once a month on average.

You know if you take all of the above statistics and add them up imagine the headroom that is generated for growth.
Increase in the frequency of placing two orders in one internet penetration I mean only twice a month, even if it triples. Industry volume will increase by 50 percent and order value will increase by a third, even though I anticipate five to eight percent growth each year. The food delivery market in India is worth $57 billion, while the United States and China are at $552 billion and $613 billion, respectively, even as Brazil is at $83 billion. If all these factors converge then the growth will be exponential.

When you look at the industry dynamics it is a monopoly with only Zomato and Swiggy which I personally believe have around 50% market share. If competition were to come, it would have come by now. In fact, there was talk of Amazon entering but nothing has happened so far considering the cash outlay required to set up the business.

Zomato share price target 2023

It is difficult to enter at a time when the cost of money is rapidly becoming expensive, I believe that over the years since both players want to generate profit, rationality will prevail, as happened in the telecom sector, Where JIO shut down after three years
Its free-for-all lion and tiger become friends with the intent of making money that benefits the industry in the wild so that both get to eat the prey and no one who comes to Zomato as a company sleeps hungry.

I like two or three things that they’re doing. One is that their cash burn has come down significantly, really adjusted from a bitter break the company’s food delivery business took during the last quarter. Even though the company is on track to bring the entire Zomato business to Ebitda breakeven, the other thing is that there are many people including me who were skeptical about the Blinket acquisition which the company is now in the past, but the encouraging factor is that that the company has reduced additional funding in Blinket from $400 million to $320 million

Is it profitable to buy Zomato shares now?

It is not going to make any further minority investments in companies as conserving cash is one of its main priorities. It is really encouraging, in fact, the losses are coming down every quarter. If you evaluate things multiple levers have started firing simultaneously for Zomato to make this a net end result. On the upside, Zomato is getting its act together and the stock has corrected over 60 percent from the upside. While I can’t predict the exact bottom but I can tell you it certainly looks interesting from the short and medium term.

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