Asia Consumer Research, Investory

Devi Subhakesan

Asia Consumer Sector Focus. Fundamental Research.

Experience: Equity research analyst with Buy and Sell-side Institutions. ASEAN, India & North Asia Markets. Consumer Discretionary, Media, Textiles, Oil, Gas & Coal sectors. 
Mindfulness and Meditation Enthusiast.

Asia Consumer Research

Zomato IPO: Offering Details & Index Inclusion

Zomato IPO: Floating High Above Sector Reality. Not a Linear Play on India's Rising EComm User Base

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Equity Capital Markets

Zomato's IPO has attracted robust investor interest with anchor institutional investors lapping up 45% of the issue already (shares locked up for 30 days from the day of allotment). As interest in this high-profile, big-ticket IPO mount ahead of the book closure on Friday, July 16th, we present 5-year projections for <a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a>'s revenues and earnings based on industry growth estimates and assumptions. We find the growth outlook for Zomato's food delivery business attractive but sober relative to the IPO's premium valuations; food delivery's potential need for funds isn't significant either. Investor expectations on Zomato expanding into other related/unrelated businesses by effectively deploying part of its IPO proceeds may be driving the bullish sentiment. Zomato's projected financials. What is different about our approach and assumptions? We have adopted a top-down approach to project Zomato's food delivery revenues, deriving it from estimates for the overall market for foodservice and online food delivery. On the operational front, we believe more stimulus will be needed to drive demand growth in the near term as COVID-led circumstances normalize. Hence expect higher discounts and lesser ability to pass on delivery charges leading to higher cash spend in FY22. However, the IPO proceeds seem significantly higher than the potential cash needs of food delivery operations; Zomato may have plans to expand into other businesses.Detailed revenue and operating income projections, as well as key assumptions, for Zomato's food delivery business, are in the report below.In our earlier report <a href="https://www.smartkarma.com/insights/zomato-ipo-floating-high-above-sector-reality-not-a-linear-play-on-india-s-rising-ecomm-user-base" target="_blank" data-smartkarma-citation="insights:54087" rel="noopener">Zomato IPO: Floating High Above Sector Reality. Not a Linear Play on India's Rising EComm User Base</a> we had discussed why we believe India's online food delivery players like Zomato is unlikely to witness a steep growth trajectory like those in developed markets.

Zomato's IPO has attracted robust investor interest with anchor institutional investors lapping up 45% of the issue already (shares locked up for 30 days from the day of allotment). As interest in this high-profile, big-ticket IPO mount ahead of the book closure on Friday, July 16th, we present 5-year projections for Zomato (ZOM IN)'s revenues and earnings based on industry growth estimates and assumptions. We find the growth outlook for Zomato's food delivery business attractive but sober relative to the IPO's premium valuations; food delivery's potential need for funds isn't significant either. Investor expectations on Zomato expanding into other related/unrelated businesses by effectively deploying part of its IPO proceeds may be driving the bullish sentiment. Zomato's projected financials. What is different about our approach and assumptions? We have adopted a top-down approach to project Zomato's food delivery revenues, deriving it from estimates for the overall market for foodservice and online food delivery. On the operational front, we believe more stimulus will be needed to drive demand growth in the near term as COVID-led circumstances normalize. Hence expect higher discounts and lesser ability to pass on delivery charges leading to higher cash spend in FY22. However, the IPO proceeds seem significantly higher than the potential cash needs of food delivery operations; Zomato may have plans to expand into other businesses.Detailed revenue and operating income projections, as well as key assumptions, for Zomato's food delivery business, are in the report below.In our earlier report Zomato IPO: Floating High Above Sector Reality. Not a Linear Play on India's Rising EComm User Base we had discussed why we believe India's online food delivery players like Zomato is unlikely to witness a steep growth trajectory like those in developed markets. 

Zomato: Bullish IPO Outlook Vs Sober Financials. Value Lies in the Views of the Investor