Technology-driven food delivery start-up, Zomato is making its debut on the stock exchanges on Monday. The response to its Rs 9,375 crore fundraising had already indicated investors’ interest in the newer business model, despite concerns surrounding its valuations and profitability.
The shares are listed at Rs115. At 10.08 am on Friday, shares are trading at Rs133, a gain of 75 per cent over the issues price of Rs76. With this, Zomato Limited’s market value touched Rs 1,03,870 crore which is much higher than the expected valuations of Rs60,000 before the bid opening.
With these valuations, Zomato becomes the 45th most valued company in India ahead of Bharat Petroleum Corporation, Godrej Consumer Products, Vedanta Limited and many others. In the pre-open bidding, shares of Zomato limited settled at Rs115, which is 39 per cent higher than the issue price.
Between July 14 and 16, Zomato Limited had offered its shares to the public in the price band of Rs74-76 a share. The mega public issue of the food-tech unicorn saw a subscription of over 38 times, receiving a robust response from all pockets of investors. The issue had received bids for over 2,751 crore equity shares against the 71.92 crore shares on offer.
Zomato is one the largest food delivery platforms, however, it has 99.3 per cent market share in the share of food orders from the mobile application, draft prospectus filed by the company with market regulator claimed.
In terms of its reach, it has 1,61,637 delivery partners and 1,31,233 restaurants on board. Total orders served in 2017-18 were 3.06 crore, which increased to 40.31 crores in 2019-20.
However, the technology startup is still running into losses and needs to infuse cash every year to remain in the business. As per the financial information in the draft prospectus, the total revenue for the company in 2017-18 was Rs466 crore, which increased to Rs2,604 crore in 2019-20 – almost a four-fold rise. However, with revenue increase, losses are also mounting. For 2017-18, Zomato recorded a loss of Rs106 crore, which increased to Rs2,385 crore in 2019-20.
Zomato’s Financial Performance
| Rs Crore | 2018 | 2019 | 2020 | 9M2020 |
| Revenue | 466 | 1312 | 2604 | 1301 |
| Loss | 106 | 1010 | 2385 | 682 |
| Cash Used | 69 | 1742 | 2143 | 269 |
Befoe the listing, founder and CEO Deepinder Goyal wrote a letter to stakeholders thanking them for the support in a decade long journey of the Zomato. “The tremendous response to our IPO gives us the confidence that the world is full of investors who appreciate the magnitude of investments we are making, and take a long term view of our business,” Goyal said in the letter. He added that Zomato and Swiggy are two of the best food delivery apps in the world today.
“Jio’s prolific growth has set all of us up for unprecedented scale. Flipkart, Amazon, Ola, Uber, Paytm – have also over the years, collectively laid the railroads that are enabling companies like ours to build the India of the future, Goyal said.
