Demand-supply equation may drive Zomato stock | Economic Times

From a purely demand-supply perspective, stock prices of Zomato should continue its upwards trajectory, says Mahantesh Sabarad, Head - Retail Research, SBICAP Securities in this interview. Edited excerpts: Given the premium valuation that Zomato is trading at, what is your advice for investors who missed out the IPO?This is an industry which is growing quite substantially. The penetration is low and the future outlook seems to be something like 30-40% CAGR growth on revenues. There is a possibility of margins going up; that means profitability coming in. Mind you, Zomato is not profitable as we are speaking but for a long-term investor what needs to be looked at is the valuation. Do not remain static. History tells us that valuations keep altering. They go through cycles of rerating and derating. Currently Zomato is at a stage, given the growth, where the valuations are on an uptrend.Another feature you should remember is that this IPO attracted higher QIP bids relative to the retail bids. We expect that there would be a follow-on institutional buying. Therefore, from a purely demand-supply perspective, stock prices should continue its upward valuation trajectory.What is the expectation from Tata Motors quarterly result?In the last quarter, it came with the guidance of a large restructuring cost. They have now once again guided that JLR will have a negative EBIT, not only in the quarter gone by but also in the September quarter. That itself paints a pretty bleak picture for Tata Motors as a whole. The entire growth story right now hinges upon how JLR is able to integrate itself and reach its goal towards becoming completely EV. June and September quarters are going to be a disappointment. There would not be any positive surprises within those disappointments.