Zomato below 50 rs. Is it an opportunity?

Zomato is trading below 50 rs and is down more than 10% as the 1 year lock in period ends today.

what are ur views on da stock?

From the time of IPO, I have only 1 view on Zomata. Avoid.

For most part of the year I was wrong. And even at this level I wouldn’t put my money here. For me value of zomato is less than 10. Not many would agree with me but I have my reasons.

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Can elaborate on your perspective ?

It’s a loss making company since it’s existence.
As per the management they themselves feel they won’t profit for next 4 to 5 years. Cash flows are negative. Let’s say they start increasing delivery charges, Indians are very price sensitive. There will be another player in the market and then price war continues. Already there are so many local delivery business running much better than zomato.
I am a person who understands financials. I am interested in positive operating cash flows. Until you give me that, I won’t buy even one share.

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Also if we talk to local restaurant guys they are annoyed with the hefty commissions charged by platforms like Swiggy and Zomato. This is the reason why Domino’s decided to move inhouse with online ordering fully as well. While a stock can go anywhere my bet is same as yours at this price point.

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Adding to what @Jason_Castelino has just said, their capital allocation strategy is not encouraging at all

Buying blinkit for such a huge figure - that’s a very big red flag

Need to hear more from mgmt regarding their strategy about they are planning to achieve profitability in the near future.

Fundamentals aside - if one wants to take a technical punt looking at price, 48-40 is a zone to accumulate for trgts of 70-80

True. In my city if we call restaurant directly, they will even forgo delivery charges. They say they have to pay 20 percent to zomato. Instead they pay 100 rupees to one of delivery guy outside their restaurant and ask them to deliver to our address.

Just recently I spoke to one delivery guy. He was telling me how cheap people are. Usually on Saturday people order food from zomato and when he goes to deliver they offer him 100 rupees and say put a msg to zomato saying customer couldn’t be located. They even collect the food and eat. Zomato had to bear the loss.
I feel it’s business model is too early for Indian geography. People find ways to get free stuff.

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I’ve ordered Domino’s via Zomato app. As soon as the order s placed, I start getting status updates from Domino’s on mobile/email and it’s the Domino’s guys who come to deliver the pizza unlike other restaurants where Zomato guys come to deliver. They were already using their in house infra. I never understood why Domino’s is on Zomato at the first place.

In my city, almost all restaurants have priced their products 20-30% higher on Zomato then what they offer at shops. Once I asked the reason for this with an ice cream shopkeeper who was selling on Zomato, he said apart from commissions Zomato and Swiggy force them to buy ingrediants from their subsidiaries and those ingredients are very expensive compared to market rates. And when they protest saying it’s cheaper in market, the executives of these apps threaten to remove their listings artificially reducing their ratings on app, not clearing payments on time etc etc.

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Bro one thing business could be in negative for few year , and investment are not risk proof. Investment should be done on fundamental analysis, it’s true I agree with it. But how company treat there employee is also a factor for investment.

You can see zomato treat their employees like they are slave. Whenever they mind they will fire their employees and they don’t even single penny after kicking them out of business. No securities for the employees .
I won’t recommend zomato. If sebi would allow to do holding short position, I would be one to be short on zomota.

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Are you an ex Zomato employee?

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After watching today’s blood bath in zomato who wants to catch this falling knife . Zomato is best example that there is no place for weak one’s in the stock market .

wish during next review zomato and paytm gets removed from nifty next 50 index both have a combined weight of .85 in the index

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Yes these sort of companies shouldn’t be there in the index. Just an example what money can do even if there are absolutely no fundamentals in those business valuations.

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I think although there are questions about investing asked in the forum, this is more of a trading forum. So to look at any investment from trader’s perspective is incorrect. Investing is different.

Zomato or any other stock could be worthy of investment, provided if one understands the business, it future growth, market’s perception, owners’ vision, institutional holding etc etc. Just because it has fallen 11% in a day does not necessarily mean the business is bad, or the stock will not see highs. For value investors who have good understanding of the business, who have an idea about the fair value of the stock, may be the CMP is okay.

In fact, traders may not agree with this, but wealth is created like this too, good business model, longevity of the business, good market share, trustworthy and able management, trades at a fair or intrinsic value, troubled with short term issues, everyone one is selling, there is blood on the streets, so to speak, now is the time to buy, provided one has a very good understanding of the business, one can wait for years for the business to turnaround, one can afford to miss other opportunities etc etc.

Not invested in Zomato, don’t know much about the business except for the basic things.

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Jefferies say night is darkest just before the dawn

Yes true. But sun sets and rises half year later in some parts of the world. There is also perpetual darkness at many points of the cosmos.

The question from an investor point of view - Should we put money on a business with no positive cash flow, unrealised future growth predictions backed by a crumbling business model at ground zero ?

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Then u should have bought yesterday. And today you would be very happy :joy::joy::joy:

Long winter …night is bit long :grimacing:

Then please do buy. So that their clients who were locked since last one year can offload.