Thread by @BahirwaniKrish

My thoughts on the Zomato IPO

The company’s biggest value add in my understanding isn’t delivery. If you value it as a delivery company, you’re doing it fundamentally wrong. The moat is logistics, marketing and service quality.

#ZomatoIPO #Zomato #IPO

Zomato is a marketing company where cloud kitchens and delivery places will pay for marketing and discovery. Established restaurants have spent 30% of revenues on marketing for years. A big chunk of similar marketing spends will go to Zomato and Swiggy.

Another big thing is that now most of the places that are on Zomato are restaurants. This ratio will change in favour of delivery and cloud kitchens who will have much better margins because of location and eating space not being a factor. They benefit from Zomato and vice versa.

There is a shift in discounts from Zomato provided to food source provided. This should move margins and will benefit from the move to cloud kitchens.

Zomato also excels at service quality forcing restaurants to replace or refund bad, spilled or stale food. This is a change that once experienced customers will never go back from.

The biggest optionality will come in the form of Zomato Gold. It hasn’t lived up to its potential yet but can be built into something big.

Additional revenues can come from other deliveries made in a short period of time. Alcohol being one such opportunity along with groceries and other goods found in general stores.

Risks: valuation, competition from players with deep pockets and poor execution.

What do you think? @InvestorAyush @itsTarH @Investor_Mohit @Arunstockguru @Arindam_Pramnk @ShraddhaVBagwe @tusharbohra @Hiddengems_2017 @abhymurarka @Ankush__Agrawal @ishmohit1 @Prashanth_Krish