Meet man whose take on Mukesh Ambani’s Reliance, Ratan Tata’s business, Zomato has gone viral

NYU finance expert Aswath Damodaran also known as the ‘Dean of Valuation,’ has shared a detailed analysis of some of the biggest companies in India such as Reliance, Zomato, Tata, and Paytm. During an interview with ET Now, Damodaran talked about where these major companies that dominate most sectors of the Indian market currently stand in their life cycles and what it infers about their road ahead. He shared his take on the country’s healthcare sector, indicating promising avenues for those considering investment.

Reliance: Perfect Cocktail Of Old And New

Damodaran views Reliance as a fascinating case study in managing mature and emerging business industries. He specifically points out the petrochemical division, a seasoned branch that sure-handedly drives the primary cash flow of the firm. “Petrochemicals is the cash-making powerhouse,” he says. He further sheds light on the younger Reliance Jio sector, which is thriving yet still attempting to establish its foothold by using cash to further progress. Such a scenario, he emphasizes, is a common instance in organizations that juggle mature and expanding sectors.

According to Damodaran, “Middle-age is not bad; it just means you have to act your age.” He further stated that the ability of any business to manage its life cycle determines its success in the long run. Damodaran believes that the Mukesh Ambani-owned company’s diverse portfolio is suitable to navigate future growth as it has with a mix of middle-aged and younger entities.

Tata: More Optimism

Damodaran’s perspective on Tata Group has noticeably brightened compared to past years. He noted Tata’s substantial advancement in acknowledging the obstacles their older businesses faced. “TCS struggled under some dated practices, yet they tackled the reality of these companies’ capabilities,” he commented. He praised Tata for their preparedness to revise their approach, highlighting TCS’s robust areas while also dealing with the limitations of their older businesses.

Paytm vs. Zomato: A Mix Feeling

Expressing his views on India’s tech world, Damodaran gave some interesting insights on Paytm and Zomato. Looking at these budding application-based firms, are at varying progression levels. He mentioned that Zomato is showing signs of business maturity, recognising that there’s more to growth than merely expanding operations. And he nicely put it as “Zomato is starting to grow up”, underlining its drive to make money from its services and improve client loyalty. Damodaran found Zomato’s move to buy Blinkit, a quick delivery service, remarkable as it allowed Zomato to expand beyond its primary role in restaurant delivery.

On the other hand, Paytm really does paint an interesting picture. There’s a bit of doubt in Damodaran’s words when it comes to Paytm’s path forward, as he suggests they’re too focused on getting bigger rather than building a lasting business foundation. He notes, “It seems like Paytm hasn’t quite grasped this yet, and I wonder if they ever will,” highlighting the company’s unsure future if they don’t start prioritizing profits over expansion.

India’s Healthcare Sector – The Next Big Thing

Damodaran believes it’s critical to keep a close eye on healthcare in India. He feels the growing need for healthcare services, catapulted by a prospering populace, could greatly influence the industry. As he puts it, “Healthcare has an amazing capacity to improve countless lives in India.” Moreover, he expressed that Indian healthcare companies are uniquely positioned to introduce new ideas, unhampered by the historical systems that lead to high costs and inefficiencies in the U.S. healthcare field.