How to read Zomato’s prospect(us)

Why read this story?

Editor's note: Yesterday Zomato, one of India’s two big food delivery companies, filed its draft papers for an initial public offering. This has been a long time coming. Never before have India’s public market investors encountered an internet stock which has never turned a dime in profit in its corporate history. Well, now we have one and we’ll see how that goes. On the face of it, it is important to establish what Zomato is not. It is not Just Dial, one of the famed public market internet stocks of its time. Zomato is certainly not Info Edge, incidentally the food delivery company’s largest shareholder. It is not Indiamart or Bharat Matrimony. All of these companies have one thing in common; they are a play on India’s internet penetration and domestic growth/consumption story. The difference is that while most of these companies turn in real cash, quarter after quarter, Zomato does not. So in that context, Zomato is closer to a company like MakeMyTrip, which listed in the US back in the day and remained loss-making for a while.  The hope of …