Zomato - Institutions & Media are mesmerising and confusing retail investors

Everyday for last 1 month, since the time of its listing on 23rd July, 21, you will find Media, Investment Bankers and Experts seen giving a buy call on Zomato. Yesterday, stock was down by 8% to almost its 52 week low, (if we exclude first 2 days of  listing and count from 27th July), when it made 52 week high of 148 as well. But ICICI came out with a buy call on the stock yesterday.

Zomato has all the negatives to its credit. No Promoter. Face Value Re.1. Net loss of Rs. 813 cr in FY 21 on an income of Rs. 2,118 cr. In Q1FY22, net loss is at Rs. 356 cr, on an income of Rs. 917 cr. Institutional Investors , FIIs and Bodies Corporates, with Employee Trust are holding 96.5% stake of Zomato, with about 3.5% being held by the retail investors. M Cap is huge at Rs. 1 lakh crore. It is seen evident that these 96.5% investors are willing, keen or desperate to exit from the stock. So, retail investors are targeted as Bakra by Media and these investors.

Remember that same Media and Investment Bankers, convinced to the gullible retail investors to invest in R Power and other ADAG Stocks in 2008-2015. Media and Investment Bankers made Crores and flourished, by burying the wealth of small and poor retail investors. History is seen being repeated here in case of Zomato, which may be seen fructifying in the next 3-4 years. Because, this time the game is of Rs.1 lakh crore, M Cap, while it was of Rs. 11,000 cr IPO and M Cap of same of over Rs. 1 lakh cr in case of R Power in 2008. So, Big stake of 1 lakh cr in both cases, where M cap got evaporated in R Power.

Those who understand the Accounts and financials, and even a Commerce graduate will not advice to buy Zomato. But, highly sophisticated (so called and self acclaimed intelligent) journalists and MBAs are advising to buy Zomato, as a Concept stock.

Indeed, it will be a new and innovative concept to vanish Rs. 1 lakh crore, but of the retail investors.
Those who are buying it at 127, may be able to see it rising to 150, for a brief time, but certain to see it turning in a Penny stock in the next 3 years.  

This is not a Buy or Sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.