Dear Aswath, thank you and greetings from Germany. As usual, great content, a thorough evidence based analysis. A scientist and researcher in its truest sense.
Prospectus being 420 pages long; there also being 69 different risks in their risk profile. There seems to be another game being played by Zomato here that must be incorporated into the analysis.
His videos are addictive. I dont know anything about valuation yet... but I still keep watching them videos. All those numbers and simulations... I'm a big fan!
Thanks for the video prof. Everyone should know that IPOs are mostly overpriced because company wants the money and the insiders want to cash out. Let it play out for 2-3 years and then watch the story. Indian scene for home delivery of prepared food, groceries etc is currently unimaginable to when the prof left India. I go back to India on vacation and I am shocked at the number of food delivery folks on the road. The business is no doubt huge and will continue to grow. The only question is what is the right price?
The real business is not of food delivery it's of cloud kitchen. Unlike US India had home delivered food since ages. It's not a new or a profitable concept. The game here is the data of eating habits and patterns.
Never heard a better session. Thank you very much. I am new to market and this session is so so helpful. I had no idea as to how to think about a company. Now I feel much better.
As expected, the take is a well balanced approach and reinforces what I read of your perspectives and approaches over the past 20 years. Insightful, enlightening and yet simple to understand. Thank you Sir for this analysis.
No one’s story is bigger than yours Professor. If you are putting a point on the table it will make sense. People rely on emotions you rely on story and numbers that itself speaks everything
To add to your point about Indian eating habits. One of the things that can hold people back from ordering food via delivery is that there are so many dietary restrictions in communities based on their personal beliefs. There are communities that don't eat onions or they worry about cross-contamination with meat. So, the issue of Indian eating habits creating a barrier makes a lot of sense. .
the counterargument to this is that many new-age Jains I know staying away from their family in cities like Mumbai, Bangalore often consume onions. Staying away from family and alone in PG hasn't allowed them to maintain the dietary restrictions with which they grew up. This trend is only going to increase. And there is no reason why Zomato or Swiggy cannot spin up a dedicated Jain ghost kitchen with zero contamination. Probably the market size is not that large enough or attractive enough to warrant an immediate investment. The key is unit economics more than anything else. The current levels of marketing and promo are not sustainable. Without promo, customers are unlikely to order frequently. And without a substantial rise in per capita income, individual order ticket size is unlikely to increase. I will stay away from Zomato and let it crash below the IPO price band closer to what Prof has estimated, then possibly a buy trigger.
@@adarshagrawal4557 agreed, it cannot be generalized. The question is do you belong to a minority of overall vegetation customer segment of these food delivery app that they do not see the cost benefit equation play out favorably for a Jain ghost kitchen. I believe it is so at least in Chennai, Bangalore and Hyderabad. Mumbai is different because of a huge Gujarati population. A Jain ghost kitchen in Mumbai will make perfect sense because the order volume will be enough to break even on the ghost kitchen Capex investment. I doubt the same for other cities
Story with number this is most amazing thing about legend aswatha damodaran sir. Amazing insights, thought provoking, really fabulous. Thank you very much.
7:30 Sir, would it not be misleading to be using per capita income figures for India and comparing them with advanced countries as the gap is obvious? Would it not be better to figure out a way to capture the most possible buyer pool and ascertain their demand levels? I only say because using a GDP per capita of USD 2,000 has the effect of killing the analysis before even beginning (of course, I am a nothing and a novice). Would it not be better to ascertain the characteristics of people most likely to use a service like Zomato: young to middle-age, urban to semi-urban, white-collar, college-attended etc etc. Then we are narrowing down the relevant population to - I don’t know - 100 million or less - and looking at the potential income of this segment which can be well above USD 10,000 or USD 20,000 (whatever is middle income in India). Is it not better to match the growth rates of companies like Zomato with those of the growth of this particular market segment? Thank you, sir.
I might be wrong but I believe he did this for simplicity and consistency. Should we narrow down the segment then we would be introducing a lot more assumptions, complicating the model. By narrowing down, we would also have to do the same for the other countries and other figures used like Online access would also have to be segemented for consistency. However, maybe median income would be a better indicator of wage in each country. End day you would have to weigh the pros and cons to your proposed change. Will it really affect model so significantly that it warrants all the additional effort and assumptions?
He did mention % of users with an internet connection, which moves in that direction. As someone in the US I have no way to identify the customer base of Zamato without going there and talking to people, seeing the difference in different urban areas and different more suburban/lightly rural areas, so it would be nice to get some more insight than just percent of users who have internet. At least it's a good starting point. My address is not within a [proper] city and Zamato makes the same mistake Grubhub, UberEats, and all the other delivery companies make that Yelp does not: It shows you food within a city, instead of food within a map near you. It's not a technically challenging problem but a well studied and solved problem (this is how hit boxes in video games work) yet all of the companies can not find food near me. To me this is a useless service until they fix this, but to be fair so is their competition useless. I'm not the only person on the planet who lives within a city with borders that are long and thin instead of a circle.
I think that’s a fair argument, but it’s difficult to filter that segment out. Overall, the given aggregates must given us a decent valuation of the company.
Sir..Just in 2nd day of listing its at Rs 138/- ( it was 10% up today/almost doubled from the ipo issue price).. Its crazy...not sure whats playing around... excess liquidity or greater fool theory or the hoopla around tech aggregator business model or FOMO....Some say forget valuation ....just enjoy the Cruise party till the music is around.
Wonderful Insights Professor..Just to mention that Zomato also does consultancy business wherein they provide the analytics of current trends, people likings which is cashflow positive..
Can someone explain how is EBIT(1-t) is computed in 10 yrs working of DCF. The numbers are not adding up for me at -10%/35% OM and given tax rate . Not sure what am I missing.
Sir, thank you for the insights into this valuation. I have a couple of questions and i'm hoping you will help me out.First is how did you arrive at the value for terminal value and pv(Terminal value) ?.
What a great session on valuation that was. Absolutely delighted 😊. How beautifully you extrapolated Chinese internet access to india and catching up with GDP/Capita. You are Dean of valuation for a reason!!!
Jai gurudev. Zomato in 50's. Thank you so much for sharing you views, worksheet and above all teaching us. ❤️ You are a perfect 'Guru' as mentioned in our indian text. Thank you ❤️
Very useful session. Well, I did not invest in Zomato because it is overvalued from all corners. The stock opened today in the market and closed with a 66% premium at INR 126. I believe the stock will behave like burger king.
Sir can you please make a video on the followup of zomato, how they get to Rs.147 from the listed Rs.76. is the Indian market too positive about young companies or it is being pushed up by the NSE/BSE scammers. 'cos zomato has clearly defied the market logic.
Loved the presentation and the explanations . Its truly a pleasure . One factor that i believe will have a tremendous impact, is the mood of the indian consumers post covid . That will be interesting to watch . Great work Professor Damodaran .. loved the simplicity with which you try to explain and make your case . Thank you!
Sir, Truly remarkable...I am also on my way to get my lazy ass working and start making justifiable models. Your book and series really helped me a lot in building my valuation basics
Zomato at 45. Is it a good buy at current price? You said its fair price is 41. That time situation was different. Now after this BlinkIt Deal & other events in last 1 year, will it be a good buy.. new video is needed. Waiting for it..
In my opinion, 2 reasons that boosted the online food market in China are the 9-9-6 culture & DINK - Double Income No Kids i.e. both husband & wife work 12 hrs a day and prefer online food overcooking as they are exhausted.
Thank u sir for breaking my perspective about Investment in the money losing company. I usually don't prefer to invest in such companies. But now, I can based on future possibilities
In fact when ever criticise that India with all it’s IT strength does not have a single truly global product, Zomato is often offered as the exception to the rule
I try to understand all businesses in very simple way. I think value of Zomato 40/- as suggested by u is cost of that business. It is like cost of growing grain is 10/- per kg. But u don't get it at 10-/ kg in market. The running price of Zomato is balance of demand and supply. Now, demand is high that why it is selling at premium. But, times comes when u get grains below 10/- per kg. when demand is low and supply is abundant. Same thing may or may not happen with Zomato price. Only future can tell.
Sir, One more thing which is not considered, that Zomato is working in 6+ Countries. So doesn't it makes the Market bigger than what we are considering here?
This sector is projected to hit 33.36B this (2023) financial year while on the other hand the rest of the parameters (eg. per capita income ) have remained the same(i think) , what happened in the span of a year ?
Wow! it's the first time in seeing such kind of evaluation on an IPO sir! Kudos- If you could do an analysis of AI based stocks in india or the IT stocks for future or you may have done it I don't know pls let us know 👍 P.S --- new to the channel subscribing now 🙂
I think that the eating habits will change for two reasons, as the economy matures, the hygiene standards at the restaurants with improve. Also, the cost of home cooks will rise significantly
around 16:00 you talked about the network effect at these shared economy companies. I think the phrase "network effect" might have been overloaded and the more accurate term might be "economy of scale". The network effect in Facebook is strong, it's almost impossible for its users to switch. However, compared to Facebook, for uber and the likes, it's very easy for user to switch to a new platform, as long as the new platform has the capital to gain enough market share of suppliers in that geo market. A slight nitpick of terminology. Wonderful video as always and I have learned immensely from your video lecture and series.
I would assume that "economy of scale" is a consequence of "network effect". The network effect itself - as it is being explained - is a phenomena of a self-reinforcing mechanism when growth in number of participants of the network/platform causes further on-boarding of new participants as the platform becomes more and more popular attracting more and more customers what attracted more and more suppliers of services and visa versa
@@vadimgusiev4930 the issue is that "economy of scale" focuses on scale, as in, more players. And "network effect" focuses on network, as in, the players interact with each other. For Facebook or any social networks, it's definitely true for the "network effect", for two sided marketplace, it's about scale. Drivers don't network with each other, nor do they network with riders. It's about having more drivers so my next ride can arrive sooner rather than later.
@@sen2737 You may be quite right, eventually "network effect" is not the best term to use ... but it is being used so to indicate that, for example, the more restaurants are onboarded into the marketplace/platform - what means the network becomes bigger - the more customers are attracted due to the fact they more options among which to choose, on the other hand the more customers are attracted the more restaurants are expected to be onboarded. This is a sort of self-reinforcing mechanism which is fairly may be called "network effect" and which leads to the "economy of scale" effect for the marketplace itself in general and for the restaurants in certain sense. In such context network effect is better term to use than economy of scale, although in this situation scaling is a consequence of marketplace growth in terms of platform users
@@vadimgusiev4930 I understand that's how it is being used today. I guess I am being pedantic for pointing out the phrase has overloaded meanings that don't necessarily ring true when you analyze what the phrase actually means.
You know it’s big when Prof. Damodaran does a review on this IPO.
he did valuation of his videos.he realised that the Indian views were undervalued all this while.
@@seeker4430 true true
@@seeker4430 does he even have ad sense enabled? I could be wrong but I haven't seen a single ad on his videos
@@JohnSmith-kj2od you can see your demographic regardless
@@POVShotgun i implied that he doesn't make money, thus taking away the incentive to make it India specific to attract a larger crowd
It's 2:10 am here in India and there is no reason to sleep when this is out 🔥
Bhaaai....relate level maxxx
Hahaha right same here
so true!!
Letsgoooo
Especially companies which are start ups and currently not making profits.
Professor knows how to keep the students awake and hungry for more information. Thank you Prof!!
hungry? Zomato!
@@BoyBombay I used that word specifically to correlate with ZOMATO :D
First time "seeing" him....
Legend
@@BoyBombay nope. Not Xerox yet.
Also, India is different. Doesn't always go on potential
I believe it's overvalued, People are pumping money like crazy in this stock.
Grateful that I found this video a year back. Now the share price has been crushed. ❤️
Dear Aswath, thank you and greetings from Germany. As usual, great content, a thorough evidence based analysis. A scientist and researcher in its truest sense.
Professor laying it down. Value investors "how have your investments been the past 20 years?"
Damodaran sir don't know how we Indians love him.
Dec 2024. They are profitable. Love this stuff, and its so nice to see Prof. Damodaran is a Bayesian!
Prospectus being 420 pages long; there also being 69 different risks in their risk profile. There seems to be another game being played by Zomato here that must be incorporated into the analysis.
it should give a humour premium of 20% 😂😂😂
@@madhav5378 😂
You should also do valuation I can see your love for numbers 🤣🤣
His videos are addictive. I dont know anything about valuation yet... but I still keep watching them videos. All those numbers and simulations... I'm a big fan!
Right here after one year Sir, you're too bright ahead of time.
Continually thankful to you Guruji
Thanks for the video prof. Everyone should know that IPOs are mostly overpriced because company wants the money and the insiders want to cash out. Let it play out for 2-3 years and then watch the story.
Indian scene for home delivery of prepared food, groceries etc is currently unimaginable to when the prof left India. I go back to India on vacation and I am shocked at the number of food delivery folks on the road. The business is no doubt huge and will continue to grow. The only question is what is the right price?
The real business is not of food delivery it's of cloud kitchen. Unlike US India had home delivered food since ages. It's not a new or a profitable concept. The game here is the data of eating habits and patterns.
Amazing ..I never saw anyone explain valuation like this ...thank you so much sir
Zomato ipo has finally set in motion the bursting of the Indian startup valuation bubble
I'm a banker working at a different region at real estate completely unrelated to the Indian food business. This has be riveted
And thank you very very much for putting forth the argument in numbers, sir. You have saved me from FOMO and a bad investment decision.
Never heard a better session. Thank you very much. I am new to market and this session is so so helpful. I had no idea as to how to think about a company. Now I feel much better.
Just started reading Dark side of Valuation! Video is great as always Prof, learned a lot. Thanks
As expected, the take is a well balanced approach and reinforces what I read of your perspectives and approaches over the past 20 years. Insightful, enlightening and yet simple to understand. Thank you Sir for this analysis.
Prof. Damodaran's valuation is 40.79
No one’s story is bigger than yours Professor. If you are putting a point on the table it will make sense. People rely on emotions you rely on story and numbers that itself speaks everything
Watched your video for the first time mesmerized by your teaching skills sir
Thanks for educating us on Valuation with Zero price expenses. I'm a big fan of you sir..
Your views are spot on. Prophetic.
Hello Professor,
Thanking you in advance before I watch the video because I know it will be of tremendous quality
And the price hit the exact same Damodaran number 41 INR - all time low exactly after 1 year of IPO. Mind blowing!!
PLZ DO UPCOMING STARTUP IPO VALUATION ALSO LIKE PAYTM, POLICYBAZAR, DELIVERY.
biggest fans sir
Great Video Mate!
how such a valuable session free , thanks a lot sir !
To add to your point about Indian eating habits. One of the things that can hold people back from ordering food via delivery is that there are so many dietary restrictions in communities based on their personal beliefs.
There are communities that don't eat onions or they worry about cross-contamination with meat. So, the issue of Indian eating habits creating a barrier makes a lot of sense.
.
the counterargument to this is that many new-age Jains I know staying away from their family in cities like Mumbai, Bangalore often consume onions. Staying away from family and alone in PG hasn't allowed them to maintain the dietary restrictions with which they grew up. This trend is only going to increase. And there is no reason why Zomato or Swiggy cannot spin up a dedicated Jain ghost kitchen with zero contamination. Probably the market size is not that large enough or attractive enough to warrant an immediate investment. The key is unit economics more than anything else. The current levels of marketing and promo are not sustainable. Without promo, customers are unlikely to order frequently. And without a substantial rise in per capita income, individual order ticket size is unlikely to increase. I will stay away from Zomato and let it crash below the IPO price band closer to what Prof has estimated, then possibly a buy trigger.
@@ROHITKUMAR-mx5fr I am a new age agrawal and still eat only Jain food. So we can't generalise
@@adarshagrawal4557 agreed, it cannot be generalized. The question is do you belong to a minority of overall vegetation customer segment of these food delivery app that they do not see the cost benefit equation play out favorably for a Jain ghost kitchen. I believe it is so at least in Chennai, Bangalore and Hyderabad. Mumbai is different because of a huge Gujarati population. A Jain ghost kitchen in Mumbai will make perfect sense because the order volume will be enough to break even on the ghost kitchen Capex investment. I doubt the same for other cities
@@ROHITKUMAR-mx5fr Or old people who are extremely religious who avoid eating outside due to onion garlic can be included over the platform.
What a MASTER CLASS!!
This is analysis is gold! Thanks, Aswath!
Wasn't expecting this ..... thank you Sir for making the video...
Story with number this is most amazing thing about legend aswatha damodaran sir. Amazing insights, thought provoking, really fabulous. Thank you very much.
7:30 Sir, would it not be misleading to be using per capita income figures for India and comparing them with advanced countries as the gap is obvious? Would it not be better to figure out a way to capture the most possible buyer pool and ascertain their demand levels? I only say because using a GDP per capita of USD 2,000 has the effect of killing the analysis before even beginning (of course, I am a nothing and a novice).
Would it not be better to ascertain the characteristics of people most likely to use a service like Zomato: young to middle-age, urban to semi-urban, white-collar, college-attended etc etc. Then we are narrowing down the relevant population to - I don’t know - 100 million or less - and looking at the potential income of this segment which can be well above USD 10,000 or USD 20,000 (whatever is middle income in India).
Is it not better to match the growth rates of companies like Zomato with those of the growth of this particular market segment?
Thank you, sir.
I might be wrong but I believe he did this for simplicity and consistency. Should we narrow down the segment then we would be introducing a lot more assumptions, complicating the model. By narrowing down, we would also have to do the same for the other countries and other figures used like Online access would also have to be segemented for consistency. However, maybe median income would be a better indicator of wage in each country.
End day you would have to weigh the pros and cons to your proposed change. Will it really affect model so significantly that it warrants all the additional effort and assumptions?
He did mention % of users with an internet connection, which moves in that direction. As someone in the US I have no way to identify the customer base of Zamato without going there and talking to people, seeing the difference in different urban areas and different more suburban/lightly rural areas, so it would be nice to get some more insight than just percent of users who have internet. At least it's a good starting point.
My address is not within a [proper] city and Zamato makes the same mistake Grubhub, UberEats, and all the other delivery companies make that Yelp does not: It shows you food within a city, instead of food within a map near you. It's not a technically challenging problem but a well studied and solved problem (this is how hit boxes in video games work) yet all of the companies can not find food near me. To me this is a useless service until they fix this, but to be fair so is their competition useless. I'm not the only person on the planet who lives within a city with borders that are long and thin instead of a circle.
I think that’s a fair argument, but it’s difficult to filter that segment out. Overall, the given aggregates must given us a decent valuation of the company.
Another one out of the park - thank you!!!
He doesn't forecast. He tells the story and future.
Pretty reasonable valuation. Thank you !
Absolutely Brilliant. Great insights & analysis. Thank you prof ! :)
Sir..Just in 2nd day of listing its at Rs 138/- ( it was 10% up today/almost doubled from the ipo issue price).. Its crazy...not sure whats playing around... excess liquidity or greater fool theory or the hoopla around tech aggregator business model or FOMO....Some say forget valuation ....just enjoy the Cruise party till the music is around.
Wonderful Insights Professor..Just to mention that Zomato also does consultancy business wherein they provide the analytics of current trends, people likings which is cashflow positive..
Under what name , can you please tell
Can someone explain how is EBIT(1-t) is computed in 10 yrs working of DCF. The numbers are not adding up for me at -10%/35% OM and given tax rate . Not sure what am I missing.
Thanks for the brilliant presentation Professor
So calm and so to the point session ! I loved your session sir !
How did you get a value of ₹578,790.83 for terminal value? What is the formula for terminal value?
Great video! You should do more videos on indian companies. 🍻
Professor you nailed it!
Sir, thank you for the insights into this valuation. I have a couple of questions and i'm hoping you will help me out.First is how did you arrive at the value for terminal value and pv(Terminal value) ?.
Thanks again Prof. Ganesha bless!
man! I would pay for this content
What a great session on valuation that was. Absolutely delighted 😊. How beautifully you extrapolated Chinese internet access to india and catching up with GDP/Capita. You are Dean of valuation for a reason!!!
Read it again 😂
9:10 your grandmother was an exception.... never ever heard of such person untill today.
Include my grandmother and grandfather in ur list of exceptions.
@@shrenikpatel890 added ! now i realize how lucky i and people around me were born.
Great video. One slight correction. Zomato started trading on 23rd July and not 14th July. 14th July was when the IPO opened for subscription
As usual, excellent analysis. 🙏
Thank you so much for your input, Professor!
Looking forward to your valuation of PayTM.
Thanks for sharing this valuation video...Lot to learn on how to value companies like zomato...
The video that I was waiting for.
Jai gurudev.
Zomato in 50's.
Thank you so much for sharing you views, worksheet and above all teaching us. ❤️
You are a perfect 'Guru' as mentioned in our indian text.
Thank you ❤️
As a consumer ; I would prefer it’s competitor Swiggy which has an upcoming IPO ; service wise they can beat zomato
Very useful session. Well, I did not invest in Zomato because it is overvalued from all corners. The stock opened today in the market and closed with a 66% premium at INR 126. I believe the stock will behave like burger king.
Thank you for sharing such insightful content, really appreciate it!
I'm amazed!! Thank you🙏
Was waiting for this video since a while!
Thanks professor Damodaran!!
Sir can you please make a video on the followup of zomato, how they get to Rs.147 from the listed Rs.76. is the Indian market too positive about young companies or it is being pushed up by the NSE/BSE scammers. 'cos zomato has clearly defied the market logic.
Loved the presentation and the explanations . Its truly a pleasure . One factor that i believe will have a tremendous impact, is the mood of the indian consumers post covid . That will be interesting to watch . Great work Professor Damodaran .. loved the simplicity with which you try to explain and make your case . Thank you!
We are getting it listed in next 30 minutes at 10AM Indian Time today🚀
Let's see how excited foreign funds are for it.
Thalaiva on Zomato IPO!
Awesome! Thank you, Prof!
I think 1800 billion valuation of Indian food delivery market is underestimation. Only deciding factor would be per capita income.
Sir,
Truly remarkable...I am also on my way to get my lazy ass working and start making justifiable models.
Your book and series really helped me a lot in building my valuation basics
Great content, love to hear the masters valuation on UiPath
Zomato at 45. Is it a good buy at current price? You said its fair price is 41. That time situation was different. Now after this BlinkIt Deal & other events in last 1 year, will it be a good buy.. new video is needed. Waiting for it..
Professor Paytm is out with its DRHP,please share your wisdom on the same
Great sir! Thanks for this. By the way, how did you calculate the Indian market size adjusted for income and digital reach?
In my opinion, 2 reasons that boosted the online food market in China are the 9-9-6 culture & DINK - Double Income No Kids i.e. both husband & wife work 12 hrs a day and prefer online food overcooking as they are exhausted.
Another great video! Thanks for sharing!!
Thank u sir for breaking my perspective about Investment in the money losing company. I usually don't prefer to invest in such companies. But now, I can based on future possibilities
Hi professor, shouldnt the 60th percentile value be higher than the 50th percentile and not the other way around?
Thanks for the video
Sir....your videos are very knowledgeable..it's very Techincal for non financial background...but you tried to make it as simple as possible.
Hi Sir, could you share how you did the Monte Carlo simulation of value/share?
Any reference material to refer to?
Thank you.
9:57 Any idea how Prof has projected the market size based on per capita GDP and internet access? Thanks in advance
In fact when ever criticise that India with all it’s IT strength does not have a single truly global product, Zomato is often offered as the exception to the rule
Prosperity without profit...
As of now
His valuation 40 rs
IPO 78 rs
Opened. 130
Max 149
Min. 123
Should you buy????
At 40 yes, unless you have a bias
Soon may be by 2026, they will be sold to Amazon
What happens then is important
I just did not understand how you calculated terminal value
I try to understand all businesses in very simple way.
I think value of Zomato 40/- as suggested by u is cost of that business.
It is like cost of growing grain is 10/- per kg. But u don't get it at 10-/ kg in market.
The running price of Zomato is balance of demand and supply. Now, demand is high that why it is selling at premium.
But, times comes when u get grains below 10/- per kg. when demand is low and supply is abundant.
Same thing may or may not happen with Zomato price. Only future can tell.
I watch this last year and today it's value is around Rs 41.
Sir, I couldn't figure out the factor that you should have used for food inflation which would reflect in the Gross Revenue.
Sir, One more thing which is not considered, that Zomato is working in 6+ Countries. So doesn't it makes the Market bigger than what we are considering here?
lol
Hi, your videos are very well made. Can u pls share what tools u use to create, edit videos.
This sector is projected to hit 33.36B this (2023) financial year while on the other hand the rest of the parameters (eg. per capita income ) have remained the same(i think) , what happened in the span of a year ?
Wow! it's the first time in seeing such kind of evaluation on an IPO sir!
Kudos- If you could do an analysis of AI based stocks in india or the IT stocks for future or you may have done it I don't know pls let us know 👍
P.S --- new to the channel subscribing now 🙂
Hi Aswath, loved your insight. Can you also do the valuation for DMart?!
I think that the eating habits will change for two reasons, as the economy matures, the hygiene standards at the restaurants with improve. Also, the cost of home cooks will rise significantly
Zomato just nearing is fair value prof, I am waiting for 41
How is the value per share in the 60th percentile lower than the value in the 30th percentile? (24:45)
around 16:00 you talked about the network effect at these shared economy companies. I think the phrase "network effect" might have been overloaded and the more accurate term might be "economy of scale". The network effect in Facebook is strong, it's almost impossible for its users to switch. However, compared to Facebook, for uber and the likes, it's very easy for user to switch to a new platform, as long as the new platform has the capital to gain enough market share of suppliers in that geo market.
A slight nitpick of terminology. Wonderful video as always and I have learned immensely from your video lecture and series.
I would assume that "economy of scale" is a consequence of "network effect". The network effect itself - as it is being explained - is a phenomena of a self-reinforcing mechanism when growth in number of participants of the network/platform causes further on-boarding of new participants as the platform becomes more and more popular attracting more and more customers what attracted more and more suppliers of services and visa versa
@@vadimgusiev4930 the issue is that "economy of scale" focuses on scale, as in, more players. And "network effect" focuses on network, as in, the players interact with each other. For Facebook or any social networks, it's definitely true for the "network effect", for two sided marketplace, it's about scale. Drivers don't network with each other, nor do they network with riders. It's about having more drivers so my next ride can arrive sooner rather than later.
@@sen2737 You may be quite right, eventually "network effect" is not the best term to use ... but it is being used so to indicate that, for example, the more restaurants are onboarded into the marketplace/platform - what means the network becomes bigger - the more customers are attracted due to the fact they more options among which to choose, on the other hand the more customers are attracted the more restaurants are expected to be onboarded. This is a sort of self-reinforcing mechanism which is fairly may be called "network effect" and which leads to the "economy of scale" effect for the marketplace itself in general and for the restaurants in certain sense. In such context network effect is better term to use than economy of scale, although in this situation scaling is a consequence of marketplace growth in terms of platform users
@@vadimgusiev4930 I understand that's how it is being used today. I guess I am being pedantic for pointing out the phrase has overloaded meanings that don't necessarily ring true when you analyze what the phrase actually means.
Hello, I felt like you did not account for Inflation in this model..