NEW DELHI: The much-anticipated IPO (initial public offering) of Zomato will hit the market on Wednesday. While the whole market is keenly watching how the IPO of the country’s most visible brand in the food tech space would perform, commentary by brokerage houses and analysts has left the investor community divided whether to aggressively approach the initial share sale or take a cautious approach.
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Motilal Oswal said that predicting Zomato’s growth trajectory at this juncture is a little tricky for the next few years. It added that investors with a high-risk appetite can subscribe for listing gains given fancy for unique and first of its kind listing in the food delivery business.
“The valuation also appears expensive at 25x FY21 enterprise value/sales (compared to an average of 9.6x for global peers and 11.6x for Indian quick-service restaurants (QSRs). Though, valuing such early-stage businesses on a plain vanilla financial matrix might not give the right picture and may look distorted,” said the brokerage firm.
Naveen Kulkarni, Chief Investment Officer, Axis Securities, said, “We expect the company to breakeven at operating levels in FY22, making the IPO more lucrative”