Zomato’s Overvaluation: A Closer Look

Zomato’s current revenue stands at approximately ₹14,000 crores.
For the sake of analysis, let’s assume its revenue grows 15x over the next decade, reaching ₹2,00,000 crores by 2034. (This is an extremely optimistic scenario.)

To put this in perspective, Zomato’s projected revenue in 2034 would surpass the combined sales of companies like DMart, HUL, Nestlé, Varun Beverages, Britannia, Dabur, Emami and many more.

Now, assuming Zomato achieves a 5% net profit margin, similar to DMart.
That would translate to a profit of ₹10,000 crores.

Applying a P/E ratio of 50, Zomato’s market capitalization would reach ₹5,00,000 crores.

In this very optimistic scenario, Zomato’s stock would only double in value over 10 years.

Also Zomato has immense competition from Instamart, Big Basket, Zepto, Jio Mart, and many others.
Even Amazon and Flipkart will venture into this.

Instead of investing in Zomato, consider putting your money in a FD at 7%.
Over 10 years, you would get the same returns, but with much less risk.

This highlights the level of hype and speculation that drives Zomato’s Stock Price