About the IPO
One of the poster boys of Indian Startup Industry is going to get listed soon. India’s biggest food delivery company is going to hit Dalal Street with its Initial Public Offer of Rs.9375 Cr. The subscription period for IPO will be from the14th of July to the 16th of July. Zomato’s IPO would be first from an online food aggregator and also first amongst a list of Unicorn startups.
Zomato is aiming to raise Rs.9375 Cr via IPO, out of which Rs.375 Cr is an offer for sale from InfoEdge, it held 18.65% of shares in Zomato; and the remaining 9000 Cr will be through a fresh issue.
The Price band of the IPO is Rs.72-76 per Share and Face Value is Re.1, retail investors can bid for a maximum of 13 lots at the upper end of the price band. Each lot consists of 195 shares. Zomato is going to use Rs.6750 Cr for all expansion and business growth and remaining towards corporate use.
About the Company
Zomato is an Indian multinational restaurant aggregator and food delivery company founded by Pankaj Chaddhah and Deepinder Goyal in 2008 as Foodiebay. In 2010 it got renamed as ‘Zomato Media Pvt Ltd.’. In 2011, Zomato expanded its business in many cities like Delhi, Mumbai, Bangalore, Kolkata, and Pune. They expanded their business in Sri Lanka, United Kingdom, South Africa, the Philippines, New Zealand, Brazil, Portuguese, and many more countries. Currently it has presence in 24 Countries and 525 Cities with 1,48,384 Active food delivery restaurants and 1,69,102 active delivery partners with 5 lakh Zomato Pro members and 25,443 Pro restaurant subscribers.
Zomato provides 2 types of services B2C and B2B:-
B2C includes all services the company is providing to consumers which helps consumers to get connected with restaurants and delivery partners, to read and write reviews about particular hotels or restaurants, order food, book a table, find the suitable dish with customer's choice, etc.
B2B includes the services which company provide to businesses which include providing marketing tools and connecting with customers to expand their business, etc. They have also started Hyperpure where restaurants can buy fresh produce and other ingredients. This helps restaurants as Hyperpure acts as a one-stop destination to acquire vegetables, etc. which are then used to prepare meals.
Acquisitions of Zomato:-
Zomato is expanding its business as per growing market needs and patterns. They have invested in multiple startups:
● In July 2014, Zomato made their first acquisition by acquiring Menu Menia, a New Zealand based company for an undisclosed sum.
● In September 2014, Zomato acquired Poland's leading restaurant search service Gastronauci for an undisclosed sum.
● Zomato also acquired Lunchtime in the Czech Republic and Obedovat in Slovakia for a combined US$3.25 million and in December 2014 it acquired Cibando, an Italy based restaurant.
● In 2015, Zomato acquired Urbanspoon, which was a Seattle-based food portal for $60 M, and Mekanist an online restaurant search and discovery space in Turkey.
● Zomato acquired a tech-based Delhi startup MapleGraph, cloud-based point sale product called Maple POS and NexTable, a US-based table reservation and restaurant management platform.
● Zomato acquired a logistic Technology startup Sparsh Lab and food delivery startup Runnr, to improve the food delivery experience.
● Zomato had acquired Bengaluru based startup TongueStun Food for about $18 Mn in a cash and stock deal.
● Lucknow based start-up called Tech eagles, a company that provides drone-based services was acquired by Zomato to launch a Drone-based delivery service in India.
● Zomato acquired Uber Eats by giving them 10% of its own business in 2019.
● In 2021, Zomato invested nearly $130M in Grofers which is an online grocery delivery service.
(Source: www.finshots.com and www.joinditto.com)
Numbers at a glance:
(Source: Annual Report, Zomato)
Conclusion
The Business is brilliant and it is a duopoly. The business will surely grow and dominate but there is no correct way to value it. It is a story being valued differently by everyone. I personally like the business and think it has high scope to expand. Major IPO amount is a fresh issue that means it will be able use it to expand further in the market. The current Grey Market Premium (GMP) is around 15%, thus, listing gains can be negligible.
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