Zomato IPO - Lesson on valuation
Overpriced. Over subscribed, Overheating
Please watch this video where Dr. Aswath Damodaran breaks down Zomato’s valuation and the response to its IPO.
It is a great lesson in:
How to value a company that does not make money today
How to read their filings
How to extract data and use it to create your own model
Aswath’s model shows a per share price of INR 40 vs the offer price of INR 70!
How to incorporate country risk
How to incorporate chance of failure
How to use a monte carlo model to simulate your assumptions
What’s the key problem in valuing companies in India and China
Zomato is trading at an incredible INR 138 today