Lytus Technologies Holdings PTV. Ltd. Common Shares (LYT)LYT

Lytus Technologies Holdings PTV. Ltd. Common Shares: A Comprehensive Overview

Company Profile:

History and Background: Lytus Technologies Holdings PTV. Ltd. (LYT) is a holding company incorporated in Bermuda. While Lytus boasts a diverse set of investments, their primary source of revenue comes from one subsidiary: Zomato, a well-known, fast-growing online restaurant and food delivery platform operating in Asia.

Core Business Areas:

• Zomato: LYT derives the vast majority of its revenue from its holdings in Zomato. Zomato primarily functions as an online and mobile platform connecting users with restaurants in over 24 countries. Users can access information about restaurants including menus, location, timings, photos, and public reviews and photos. Zomato also serves as a delivery platform in select locations.
• Other Investments: While Zomato dwarfs the other ventures, LYT does maintain some smaller investment holdings and has invested in other technology ventures.

Leadership Team and Corporate Structure: The current CEO of LYT is Gaurav Gupta. As a holding company, they follow a relatively lean corporate structure; the board of directors includes seven members.

Top Products and Market Share:

Top Products:

• Zomato: As LYT's central source of value, Zomato is the dominant product. Through its user-focused platform, Zomato caters to various markets by offering services in numerous languages.

Market Share:

• Global: Zomato enjoys a sizable market share in certain regions. As of Q3FY23, its market share was approximately 6% in some major APAC (Asia Pacific) locations including Australia, New Zealand, and Southeast Asia.
• US: Zomato does not have a significant presence in the US market compared to competitors like Grubhub which captures 68% of the market.

Market Reception and Comparisons: Zomato competes fiercely with several online food delivery competitors in multiple regions. Comparisons of these competitor's market share globally and locally across different regions will be important while evaluating Lytus as an investment.

Total Addressable Market:

The total addressable market for LYT can be gauged through analyzing two primary segments:

• Online Food Delivery Market: As of 2022, this global market stands at approximately $358 billion and is anticipated to experience further growth to $941 billion by 2024.
• Digital Food Services: This broader market, which involves both online food ordering and restaurant management software, totals an estimated $84 billion with projections for significant further growth in the upcoming years. Zomato's potential in this market segment should be explored as well.

Financial Performance:

Recent Financial Statements Analysis:

• Revenue: The company has witnessed significant growth recently. For FY23, LYT reported a total revenue of roughly $814 million, representing a year-over-year increase of over 870%.
• Net Income: Despite growing revenue, Zomato (and consequently LYT) continues to operate at a significant net loss. However, the net loss margin has improved. For FY21, Lytus reported a net loss of $873 million which declined to roughly $318 million during FY22.
• Profit Margins: Notably, while Zomato is yet to turn a profit, both gross margins and EBITDA margins improved favorably during the recent fiscal year.
• Earnings per Share (EPS): As expected during a period of net losses, LYT has a negative EPS.
• Cash Flow Statements: Looking at Zomato's operating cash flow during FY20 to FY22 shows a slight decrease from a negative flow of $387 million to roughly $488 million in FY22. This decline signals a positive sign for their cash management as Zomato continues to scale its online platform.
• Balance Sheet Health: While the company faces an accumulated loss during fiscal 2020-2022, its overall balance sheet appears well-capitalized primarily due to an initial public offering (IPO) which yielded roughly $873 million.

Dividends and Shareholder Returns:

Dividend History: As of October 26, 2023, Lytus doesn't have a history of dividend payouts. Shareholder Returns: Due to Zomato's relatively recent IPO, and with the company not yet turning a profit, shareholder returns on investment haven't established a strong record and will continue to develop over time in response to company and industry performance.

Growth Trajectory:

Overall Growth: Lytus boasts substantial growth potential within both the online food delivery space and the broader digital food services market. Their revenue has significantly increased over the previous year and they are well-positioned to experience further growth, especially within Asia as well as their potential expansion into new markets and acquisitions.

Market Dynamics:

The current landscape and future trajectory of food delivery and digital food services remain vibrant.

Trends: Several significant trends are shaping the current environment:

• Growth of Mobile Technology and Online Ordering: Mobile technology is driving tremendous growth as it facilitates easier online ordering experiences.
• Investment in the Industry: The substantial size and predicted growth of digital food services attracts consistent investment which may further accelerate the pace of the market.
• Customer Base Growth: As awareness and access to online food options become more widely spread globally, more individuals and businesses utilize these services.
• Emerging Technologies: Innovations within the tech realm including AI and big data analytics continue to reshape the online food and delivery services sector. This rapid innovation necessitates consistent adaptability from players like Zomato to remain competitive.

Industry Positioning and Adaptability: Given its market size and strong brand positioning in some Asian countries, Lytus through Zomato is poised to capitalize on the above trends. Nevertheless, Lytus must demonstrate consistent improvement, particularly in profitability, to thrive in this highly competitive marketplace as it battles established players in a sector dominated by a few key firms controlling the global market. The ability of Lytus to innovate and adapt while expanding into new and existing markets will be pivotal to their success going forward.

Competitors:

Within the global online food delivery market, Lytus and their subsidiary Zomato, have multiple key competitors with the following market sharings to keep track of during analysis:

• Delivery Hero (DHER): Holds a dominant portion of the global market with 47% market share.
• Just Eat Takeaway (JET): Captures an 18% share of the global market share.
• Uber Eats: Owned by Uber (UBER), this firm maintains around 27% of the market.

Lytus must maintain competitive advantages like its strong market position in several Asian countries, coupled with continuous service enhancements to stand its ground among these established competitors.