Zomato’s IPO has arrived. Shares of the food delivery startup have jumped more than 80% when the company debuted on the market on July 23. Here are the latest updates …
Zomato IPO: About the company
Zomato is an Indian online restaurant discovery and meal delivery platform. Deepinder Goyal and Pankaj Chaddah founded the company in 2008. It offers menus, user reviews and food delivery options from partner restaurants in a number of cities. As of December 31, 2020, the company was present in 526 cities in India and in 23 countries around the world.
Customers, partner restaurants and delivery partners can connect through the technology platform. Using the platform, customers can find restaurants, view and download reviews or photos, order takeout, reserve a table, and make payments while dining out.
Thanks to Zomato’s marketing tools, partner restaurants can attract new customers, grow their business and deliver food. The company has also created a procurement platform named Hyperpure. The platform provides high quality ingredients and cooking supplies for restaurants.
We got a glimpse of the business. So how is Zomato dominating the food delivery industry? We’ll take a look …
Zomato and Swiggy are the leaders in the online meal delivery market in India. Other players include Rebel Foods, JustEat and FoodMingo. But the race for No. 1 is played between Zomato and Swiggy. The companies have a large user base and are supported by global investors.
Zomato is one of the first start-ups in India. In Zomato’s IPO filing, the company said …
According to RedSeer, we have steadily gained market share over the past four years to become the category leader in the food delivery space in India in terms of GOV from October 1, 2020 to March 31, 2021. We have experienced rapid growth in food delivery. in India, our orders increased 13.2 times, from 30.6 million in fiscal 2018 to 403.1 million in fiscal 2020.
Financing of the IPO of Zomato
The figures below come from Zomato’s prospectus filing. It allows investors to get key information about the finances of the company. For your convenience, I have converted the current exchange rate (â¹ – Indian Rupee) to show you what company finances look like in USD. But you have to be aware that the currency is constantly changing. One US dollar is currently trading for â¹ 74.52.
Zomato’s balance sheet data can be summarized as follows …
Total income: The company recorded an increase in its total revenue. Zomato reported operating revenue of 4.9 billion yen ($ 66 million) for fiscal 2018. The company’s reported revenue reached 27.4 billion yen (368 million dollars) in fiscal year 2020. (Page 70)
Total expenses: Zomato’s total expenses have grown over the years. The company recorded 5.9 billion yen ($ 79 million) in total expenses in fiscal 2018. The total expenses of the company reached over 36 billion yen ($ 484 million) in 2019. In 2020, the company’s total expenses for fiscal 2020 were over 50 billion yen ($ 672 million).
Net loss: The company has a history of net losses and expects this to continue. Zomato’s recorded net loss for fiscal 2018 was 1.07 billion yen ($ 14 million). The company’s net loss jumped to 10.1 billion yen ($ 136 million) in fiscal 2019. Zomato’s net loss more than doubled to 23.8 billion yen (321 million dollars) in fiscal year 2020. Zomato stated in its prospectus …
We anticipate that our costs will increase over time and that our losses will continue given the significant investments expected to grow our business. We have spent and plan to continue spending significant financial and other resources on, among others, advertising and sales promotion costs to attract customers and partner restaurants to our platform, expand our platform, including expanding our platform offerings, developing or acquiring new platform features and services, entering new markets in India and expanding our network of delivery partners. These efforts may be more costly than expected and may not result in increased revenue or growth for our business.
Cash: Zomato’s cash flow has been turbulent over the years. The company recorded 2.1 billion yen ($ 28.6 million) in cash for fiscal 2019. The reported cash flow of the company decreased to 1.67 billion yen ($ 22.4 million) in 2020. But by the end of calendar year 2020, the company’s cash flow has grown to 2.48 billion yen ($ 33.4 million). – page 54
But the future is shaping up for the restaurant industry in India. Fear of catching the virus and the lockdown have made people reluctant to eat out. In Zomato’s prospectus, the company noted the impacts of COVID-19 …
In the first quarter of fiscal 2021, we saw a significant impact on our business, and our food delivery business in India hit its lowest level in terms of GOV in a quarter in two years. However, since then our food delivery business in India has recovered strongly, with GOV growth of 91.6% and 42.3% in the second and third quarters of fiscal 2021, respectively, compared to previous quarters.
Zomato IPO filing details
The company filed a Red Draft Herring Prospectus (RDHP) in April. Depending on the record, the proceeds will go to expansion, which may include mergers or acquisitions.
Zomato offered 1.23 billion shares, valuing the IPO at 93.75 billion yen ($ 1.3 billion). The company issued new shares worth up to 90 billion yen ($ 1.21 billion) as well as up to 3.75 billion yen ($ 50.4 million) of shares sold by existing shareholders.
Zomato’s IPO price was set at Rs 76 per share. Zomato made its public debut on the National Stock Exchange of India (NSE) on July 23. The stock debuted at 116, a premium of over 50% over its issue price. The company also issued shares on the Bombay Stock Exchange (BSE), opening at 115 per share. The bounty valued the company at around 910 billion yen ($ 12.2 billion).
Shares rose more than 80% on July 27 to a record high 147.80 on NSE. But shortly after the all-time high, the title lost momentum and slipped into the red. Zomato is currently trading at 133 per share.
As always, be sure to do your research before investing. IPOs can be volatile for the first few months, and stock prices are constantly changing. But if you are interested in IPO investing, check out our recent top IPOs and our IPO calendar. It is updated daily to give you the latest news on upcoming and filed IPOs.
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About AimÃ©e Bohn
Aimee Bohn is a graduate of the College of Business and Economics at Towson University. Her experience in marketing research helps her uncover valuable trends. Researching IPOs and other trends has been his main focus over the past year. When Aimee isn’t writing for Investment U, you can usually find her doing graphics or traveling with friends.