Valuation of the Zomato IPO is expensive, said Nirav Sheth, CEO-Institutional Equities, Emkay Global Financial Services. However, one must note that their brokerage house does not have official coverage on the company.
In an interview with CNBC-TV18, Sheth explained that "primarily there are two things- if you look at it today, it is largely a 550 city story and to add another 10 crore, it needs to get into 1000 towns. Secondly, what are you competing against - you are competing against home-cooked food and the degree of price difference is about two-third. So, in India, if you adjust for per capital income, everything looks rosy and you can forecast your own growth rates over the longer-term because the fact is we are still a $2000 per capita income country."
Speaking about equity markets, which were already close to all-time highs, he said that he is not too worried about where the markets are headed. “We are at all-time highs and next few quarters our GDP will also be at all-time highs. Usually, in an up-trending economy, you will have new highs. Right now the Nifty is trading at 21 times FY22 earnings and 18 times FY23 earnings. So, if we progressively look at the last 30 years, 10 and 5 years, markets have got rerated.”
He further stated that he sees value in some of the metals stocks. He also believes that earnings are behind the curve in terms of trying to estimate the price of commodities for the next several years and that opens a pocket of earnings upgrade.
Emkay is also generally bullish on the outlook of oil, he noted adding that it believes that stocks like Oil India, ONGC which are heavily levered to oil price can see an earnings upgrade. We like Banks as well, Sheth further said.For the full interview, watch video