zomato ipo filing details

Zomato IPO Filed: Ready for it? Here are Details to Know!!

Zomato IPO Filing Details: If you’ve not heard of the Zomato IPO you’ve been missing out. Zomato an Indian food delivery and restaurant aggregator platform, has filed its DRHP with the market regulator SEBI proposing an IPO with hopes of raising Rs. 8,250 crores ($1.1 billion).

In this article, we cover important details about Zomato IPO, company details, their goals, and plans for the initial public offering. Keep Reading!

Who is Zomato?

zomato logo

Zomato was founded by Deepinder Goyal and Pankaj Chaddah initially with the name Foodiebay in 2008 as a platform to review restaurants, find menus and receive their fine details at one place. The company was renamed Zomato in 2010.

Following their rapid expansion within the country and several acquisitions in different markets worldwide, they also provided new features like delivery. There was no looking back as currently, the company holds a 45% market share in the Indian food tech industry.

Why is Zomato applying for an IPO now?

The pandemic brought many sectors to a standstill. This impacted Zomato too affecting them during the initial lockdown last year. However, what followed was a swift recovery and a boom in their business.

Zomato now seems to be focussing on utilizing this period to further build their war chest for the extremely competitive food tech industry. Their main competitors include Swiggy – another food-delivery platform that stands toe to toe with Zomato when it comes to its market share. 

This was also noticed in the US and UK markets too as companies like Doordash and Deliveroo also have come up with IPO’s in an attempt to seize better valuations and successful IPO’s. 

Purpose of the Zomato IPO?

Now the question remains as to what will the company do with over a billion dollars. The IPO also includes an offer for sale from one of its early investors Info Edge for Rs 750 crore. The rest of the funds will be through a fresh issue of equity shares. It intends to use 75% of these proceeds i.e. Rs 5,625 crore to fund its organic and inorganic growth initiatives for the next 5 years. 

The organic initiatives include user acquisition and improving their platform and delivery infrastructure. Its inorganic growth initiatives include funding its strategic initiatives and acquisition costs.

The company has benefitted greatly from the strategic acquisitions in the past which it also used to enter new markets globally. 

Quick Read

Upcoming IPOs in 2021: 8 Indian Startup IPOs You Should Watch Out For!

Zomato Financial Details to Know

— How does Zomato make money?

Zomato’s food delivery business model is relatively simple to understand. The company pays gig workers for delivery from the various restaurants part of their app. They also charge a commission along with every order delivered. Their app also provides a subscription model for users interested in premium services.

As of December 2020, Zomato had 162,000 active delivery drivers and 350,000 active restaurant listings on its platform. As of December 2020, Zomato had over 1.4 million premium customer subscribers.

The company currently operates in 23 markets around the world but most of its revenue is still generated across India. The company also mentions in its DRHP that it “We have taken a conscious strategic call to focus only on the Indian market going forward”.

— Profitability of Zomato: How profitable is Zomato?

Unfortunately, Zomato is not profitable. This however must not be mistaken for lack of growth as Zomato has come to hold 45% of the Indian food-tech industry which is expected to grow to $11 billion over the next five years.

According to its DRHP, the company’s revenues have grown from Rs. 466 crore in FY 17-18 to Rs. 2,604 crores ( 5.5 times) in fiscal 19- 20. The company however still posted a net loss of $320 million.

With its growing revenues, the company has been increasingly taking losses. Their losses for the year 19-20 were double the losses incurred the year before and 22 times the losses 2 years prior. 

Zomato Revenue Growth in last 4 FY

— Zomato Performance during Pandemic

Zomato too just like companies in other industries was impacted during the initial lockdown. This was because customers feared ordering from restaurants during the initial Covid panic. 

But all this turned around in the months that followed. Zomato adapted by cutting its costs between April and December. This was done by reducing discounts and offers, in addition, they also increased their commission. This was met by consumers also responding by taking precautions to order instead of dining out. Zomato recorded the highest gross order value in its history in the third quarter of FY21.

To put it numerically per unit, Zomato was earlier losing Rs 30.5 per delivery as of April 2020 and currently earns Rs 22.9 per delivery. This actually meant they were finally making money per order instead of burning cash.

For the 9 months, that followed the initial lockdown Zomato’s revenue from operation stood at Rs. 1,301 crore. This growth however came at a cost as their expenses increased from INR 3,608 Cr to INR 5,006 Cr and their losses for the year increased by 2.3 times from Rs. 1,013 Cr. to Rs. INR 2,363 Cr.

Zomato also managed to double its monthly transacting users to over 10.7 million people.

Who Owns Zomato: Zomato’s Shareholding Pattern

Zomato's Shareholding Breakup | Zomato IPO

Zomato’s latest shareholding pattern shows Info Edge as the largest shareholder with an 18.7% stake in the company. Zomato’s CEO Deepinder Goyal holds 5.6% shares in the company.

Other holders with significant stakes include Uber B.V., Alipay Singapore Holding Pte. Ltd, and Antfin Singapore Holding Pte. Ltd holding 9.2%, 8.4%, and 8.3% respectively. Uber received this stake as a result of Zomato’s acquisition of Uber’s Indian food delivery arm. The company includes investments from China as Alipay and Antfin are Chinese investors. 

Zomato had raised $660 million at a $3.9 billion valuation. This included 10 new investors Tiger Global, Kora, Luxor, Fidelity (FMR), D1 Capital, Baillie Gifford, Mirae, and Steadview. Just a few months later their valuation increased as they once again raised $250 million a couple of months ago at a $5.4 Billion valuation. 

In addition to this, the company also plans to take a pre IPO placement amounting to  Rs 1,500 crore.

When is the Zomato IPO?

The SEBI generally takes 2 weeks to review the DRHP. The IPO will likely be held post this period provided the market conditions are favorable. 

Closing Thoughts 

The Zomato IPO will be one of the most exciting IPO’s that will come up this year. Investors now have to choose to participate based on Zomato’s explosive growth or stand this one out due to their profitability.

Their close competitor, Swiggy, too is in plans to build a war chest to compete with Zomato but has preferred not to take the IPO route. Swiggy has also decided to further increase its footprint by also entering delivery for groceries. It will be interesting to find out how Zomato counters this.

Missing out on this IPO may create an innate feeling of FOMO. But Indian investors will still have an exciting year ahead as Zomato will only be the first in a series of public listings, including startups like Policybazaar, Nykaa, and Delhivery. You can apply for an IPO with Zerodha account. Happy Investing! 

List of Upcoming IPOs of Startups in 2021 cover

Upcoming IPOs in 2021: 8 Indian Startup IPOs You Should Watch Out For!

List of Upcoming IPOs of Startups in 2021: Looking back at the history of the stock market everyone wishes to find hidden gems like the next Google or Apple. For retail investors like us startups going for an IPO give us the closest opportunity to find these gems and the added excitement in the market is a bonus.

We have prepared a list of top startups that are eyeing an IPO to watch out for. 

Upcoming IPOs of Indian Startups in 2021

1. Zomato Ltd. 

Zomato Logo | Upcoming IPOs of Indian Startups in 2021

Zomato on Wednesday filed for an initial public offering. It is expected to be one of the largest initial public offerings ever for an Internet startup in India.

The 12-year-old Gurgaon-headquartered Indian startup plans to raise $1.1 billion from the IPO, as reported in its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi), detailing plans for its long-awaited public listing. Zomato intends to list on Indian stock exchanges NSE and BSE.

Zomato was founded by Pankaj Chaddah and Deepinder Goyal in 2008 as a website that provided information on restaurants, access to their menus, the ability to view and provide reviews. However, they eventually ventured into the food delivery segment and are currently one of the top players in the market. 

Although you may associate Zomato with the Indian markets they have also expanded to 24 countries including UAE, Sri Lanka, Qatar, UK, Philippines, South Africa, New Zealand, Turkey, Brazil, Indonesia, Portugal, Canada, Lebanon, Ireland, etc. 

They have received over $2.1 billion in funding so far, which counts Info Edge and Ant Group among its largest investors, and generated Rs. 2,451 crore in revenue in 2020.  

2. Nykaa

Nykaa Logo | Upcoming IPOs of Indian Startups in 2021

Nykaa is a one-stop online destination for beauty and wellness products. The company was founded by IIM-A Alumnus and Investment Banker Falguni Nayar. She left her high-paying job as the managing director at Kotak Mahindra Capital Company to become an entrepreneur and founded Nykaa in 2012.

Over the years the company has successfully expanded its product base to offer over 3 lakh products across 1,500 brands to its customers. The company began selling its products online in 2012 but also ventured into the retail space using brands Nykaa Luxe and Nykaa On Trend.

In 2019 Nykaa acquired 20Dresses.com. The company had raised over $22 million dollars at a $1.2 billion valuation in 2020 making it a unicorn. In 2020 Nykaa also roped in Bollywood stars Alia Bhatt and Katrina Kaif as investors. The company has also entered into a celebrity partnership with Katrina Kaif under Kay Beauty. 

The lockdown had a little negative impact on the e-tailer as a significant portion of the market began shifting to digital means. 

Nykaa is said to be eying an IPO by the end of 2021 or early 2022 at a valuation of $3 billion. This IPO will be the first by a cosmetic retailer in the Indian markets.

3. Paytm

 

Paytm Logo | Trade Brains

Founded in 2009 by Vijay Shekhar Sharma, Paytm stands for Pay through mobile. It provides users with a platform to make payments through their mobile app. The company was the first digital payments app that crossed 100 million users in 2017 and currently has a user base of over 350 million users. The company held a 14.86% market share in February 2021 while competing with other UPI apps. 

Paytm has raised over Rs. 220 crore in funding and is eyeing an IPO. The company is veiled at $16 billion and it is one of the much-awaited upcoming IPOs this year.

4. Delhivery Ltd. 

Delhivery Logo | Trade Brains

Delhivery was founded by Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan, and Kapil Bharati in 2011 as an Indian Delivery company. They offer their services to e-commerce clients looking for logistics services. The company delivers 1.5 million orders per day and its clients include Urban Touch, Flipkart, Snapdeal, eBay, Amazon, Myntra, Jabong, Healthkart among various others.

The unicorn is expected to file for IPO and is expected to raise $800 million at a valuation of $3.2 – 4 billion.

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5. Mobikwik Ltd

MobiKwik Logo | Upcoming IPOs of Indian Startups in 2021

MobiKwik was founded by husband and wife Bipin Preet Singh and Upasana Taku in 2009. The company is a mobile phone-based payment system and digital wallet. They also provide services like loans, insurance, credit card payments, IMPS facility, investment facility for mutual funds, and DTH recharge.  

MobiKwik has received over $140.1 million in funding and has generated Rs. 199 crore revenue in 2020. They have also expanded their customer base to over 120 million users and 3 million retailers across the country.

The company is targeting an IPO of $200 million to $ 250 million could value the startup as a unicorn.

6. PolicyBazaar.com

Policybazaar Logo | Trade Brains

PolicyBazaar was founded by Yashish Dahiya, Alok Bansal, and Avaneesh Nirjar. in 2009 as a platform for users looking for insurance products allowing them to compare and select the best. They then further expanded into an insurance marketplace allowing its users to purchase insurance policies online. The company holds a 90% market share in third-party online sales and a 40% market share in total online sales. 

The company has received over $766.6 million in funding and has generated Rs. 854.7 crore revenue in 2020.

The company is targeting an IPO of Rs 4000 cr at a $3.5 billion valuation.

7. Pepperfry

Pepperfry Logo | Upcoming IPOs of Indian Startups in 2021

Founded in 2011 Pepperfry is an e-tailer for furniture and home decor. The company was started by ex-eBay executives Ambareesh Murty and Ashish Shah. After its initial success, the company also opened its offline store in Mumbai in 2014 which grew to 70 stores in 2019. The company has also partnered with brands like Hettich, Bosch, Siemens, Kajaria, Gyproc etc. 

The company has received over $245.3 million in funding and is expected to file for IPO by the end of 2021 or by mid-2022.

8. Ola

Ola Logo | Trade Brains

Founded in 2010 by Bhavish Agarwal and Ankit Bhati, Ola Cabs offers vehicles for hire through their app. Despite competing with MNC like Uber, Ola has still managed to capture 72.44% of the revenues generated in the Indian online taxi market. The company has also expanded its presence in Australia, New Zealand, and the UK. 

The company has received $3.8 billion in funding and is in plans to opt for an IPO during 2021. 

Closing Thoughts 

This list makes up companies eying for an upcoming IPO this year. However, the Indian markets include numerous startups that have aimed at IPO in the coming years. These include companies like Oyo and Byjus. In addition, there are several companies like PineLabs and Druva that are eying for IPOs in the US markets.

One thing for sure is that these startups would bring back the added excitement into the markets. You can apply for an IPO through Zerodha. Thanks for Reading, Happy Investing!