Zomato IPO

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Zomato is a technology platform connects customers, restaurant partners and delivery partners, serving their multiple needs. Customers use this platform to search and discover restaurants, read and write customer generated reviews and view and upload photos, order food delivery, book a table and make payments while dining-out at restaurants.

On the other hand, they provide restaurant partners with industry-specific marketing tools which enable them to engage and acquire customers to grow their business while also providing a reliable and efficient last mile delivery service. They also operate a one-stop procurement solution, Hyperpure, which supplies high quality ingredients and kitchen products to restaurant partners. They also provide delivery partners with transparent and flexible earning opportunities.

According to RedSeer, Zomato is one of the leading Food Services platformsin India in terms of value of food sold, as of December 31, 2020. During Fiscal 2020, 41.5 million average MAU visited platform in India. As of December 31, 2020, they were present in 526 cities in India, with 350,174 Active Restaurant Listings. The mobile application is the most downloaded food and drinks application in India in each of the last three years since 2018 on iOS App store and Google Play combined, as per App Annie’s estimates.

Zomato Platform Offerings

1. Food Delivery– According to RedSeer, Zomato is consistently gained market share over the last 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. Zomato have experienced rapid growth in food delivery in India with the Orders increasing by 13.2 times from 3 Crores in Fiscal 2018 to 40 Crores in Fiscal 2020 and Zomato GOV (Gross Order Value) growing 8.4 times from ₹1334 Crores in Fiscal 2018 to ₹11220 Crores in Fiscal 2020.

2. B2B Supplies (Hyperpure)

Hyperpure is Zomato farm-to-fork supplies offering for restaurants in India. They source fresh, hygienic, quality ingredients and supplies directly from farmers, mills, producers and processors to supply to the restaurant partners, helping them make their supply chains more effective and predictable, while improving the overall quality of the food being served.

Zomato started started Hyperpure in 2019 and are growing rapidly. In the month of December 2020, we supplied to over 6,000 restaurant partners across six cities in India. Hyperpure helps us increase our engagement with restaurant partners on its platform, and in turn retain and grow our loyalty with them.

Ecosystem of Zomato Business

1. Customers: food delivery allows customers a convenient, on-demand solution to search and discover local restaurants, order food, and have it delivered reliably and quickly. On an average, 10.7 million customers ordered food every month on our platform in India in Fiscal 2020 with an average monthly frequency of over three times.

2. Delivery partners: Zomato is one of India’s largest hyperlocal delivery networks in terms of number of delivery partners as of December 31, 2020, according to RedSeer. They had 161,637 Active Delivery Partners during the month of December 2020. In Fiscal 2020.

3. Restaurant partners – On an average, in Fiscal 2020, they had 131,233 Active Food Delivery Restaurants every month. Restaurants are the backbone of the business, and Zomato strongly believe that they can only be viable if they help the restaurant industry grow and succeed more than what it could do without us.

Zomato Journey and its business model?

Understanding Unit Economics of Zomato and Financial Analysis

Zomato Valuation and Like Price Band?

Objects of the Zomato IPO:

A) Offer for Sale (375 Crores) The Selling Shareholder will be entitled to its respective portion of the proceeds of the Offer for Sale after deducting its proportion of Offer expenses and relevant taxes thereon. Our Company will not receive any proceeds from the Offer for Sale and the proceeds received from the Offer for Sale will not form part of the Net Proceeds. B) Fresh Issue of 9000 Crores
DRHP of Zomato IPO
RHP of Zomato IPO

Zomato IPO Details:

Open Date: Jul 14 2021
Close Date: Jul 16 2021
Total Shares: 123 Cr
Face Value: ₹ 1 Per Equity Share
Issue Type: Book Building
Issue Size: 9375 Cr.
Lot Size: 195 Shares
Issue Price: ₹ 72-76 Per Equity Share
Listing At: NSE,BSE
Listing Date: Jul 27 2021

Promoters And Management:

(i) Kaushik Dutta is the Chairman and an Independent Director of the Company. He is a fellow member of the Institute of Chartered Accountants of India with over 25 years of experience. He is co-founder of Thought Arbitrage Research Institute, an independent not-for-profit research think tank working in areas of corporate governance, public policy and sustainability. (ii) Deepinder Goyal is our Founder and is the Managing Director and the Chief Executive Officer of the Company. He holds an integrated master’s degree of technology in mathematics and computing from the Indian Institute of Technology, Delhi. Prior to founding Zomato, he worked with Bain and Company. (iii) Sanjeev Bikhchandani is a Non-Executive Director of our Company, and a nominee of Info Edge on our Board. He holds a bachelor’s degree of arts in economicsfrom the University of Delhi and a post graduate diploma in management from the Indian Institute of Management, Ahmedabad. He is the founder and an executive director on the board of directors of Info Edge.

Financials of Zomato IPO:

(Fig. in Crores)
Year Revenue Salaries Other Expense EBITDA OPM PAT NPM Shares EPS
2018 487 290 267 -72 -15% -106 -22% 666 -0.16
2019 1397 600 2938 -2160 -155% -1010 -72% 666 -1.52
2020 2742 798 4000 -2168 -79% -2385 -87% 666 -3.58
9MFY21 1367 549 946 -255 -19% -682 -50% 666 -1.02

Comparison With Peers:

There is no peer in the market for Zomato IPO.

Recommendation on Zomato IPO:

Review and Recommendation of Zomato IPO by IZ team is 6/10. PROS: 1. It is a new-age company and first of its kind business to be listed on the bourses. The company with no competitor in the market in the past have given excellent returns. 2. The company has brand and they will utilize the power of brand to venture into other products. For example, they are now venturing into grocery business. Similarly, more such businesses can be opened up which will lead to multiple revenue generating options for Zomato. 3. Food delivery business is still at nascent stage in India and lot of growth opportunity available for the company. CONS: 1. The valuation looks very steep as compared to other player in the global markets. 2. Threat from offline to online application such as Dotpe which are giving option for restaurants owners to setup their own online shops and help save on heavy commission which is currently charged by Zomato and Swiggy to the tune of 20%. 3. Amazon is also trying to enter into the food delivery space which will make market more competitive. 4. The company is in loss and very difficult to predict when they will come up in profit.

Lead Manager of Zomato IPO:

  1. Citigroup Global Markets India Private Limited
  2. Credit Suisse Securities (India) Private Limited
  3. Kotak Mahindra Capital Company Limited
  4. Morgan Stanley India Company Private Limited

Registrar of Zomato IPO:

  1. Link Intime India Private Limited

Discussion on Zomato IPO:

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