Zomato IPO

IPO Details:

Price Band: 72-76

Cutoff Price: 76

About Company:

We have covered Food Aggregator business overview in India. We have discussed what are are the growth drivers and projections for the industry. One can check the detailed blog on using this link: Online Food Delivery Business.

Zomato technology platform connects customers, restaurant partners and delivery partners, serving their multiple needs. Customers use their platform to search/discover restaurants, read/write reviews, upload photos, order food, book tables and make payments while dining-out. Zomato provides restaurant partners with marketing tools to acquire customers. They also operate Hyperpure, wherein we supply ingredients to restaurant partners. They provide our delivery partners earning opportunities. They generate a majority of our revenue from food delivery and the related commissions charged to our restaurant partners for using our platform. Restaurant partners also spend for advertisements on our platform.

Competitive Strengths:

1. Strong network effects driven by unique content and transaction flywheels,

2. Our widespread and efficient on-demand hyper-local delivery network,

3. We have a technology and product-first approach to business,

4. Zomato is a strong consumer brand recognized across the length and breadth of India.

Strategies:

1. Continuous focus on unit economics and growth, at the same time,

2. Expand and strengthen our community across our three businesses- food delivery, dining-out and Hyperpure,

3. Invest in new products and technologies and

4. Continue to build a strong consumer brand recognized across India.

Financial Performance:

Company revenue had decreased in FY 21. This might be because of the pandemic. Company is not profitable and EPS is also negative. Company is burning cash for years. Checking P/E in this case won't be useful. Surprising part is even a company that is in loss is coming out with IPO. That's what has SEBI drafted for the startup companies.

Objects of the Issue:

The Net Proceeds from the Issue are proposed to be utilised in the following manner:

1. Offer for Sale

Grey Market Premium:

Our view: GMP of the stock is decent and also the stock is valued at around 5x Price to Book Value. We can expect this IPO to list at premium because of the euphorisa and hence I would be applying for this IPO. Personally I will hold this company for long-term investment irrespective of whether I get allotment or not.

Do visit this blog and the link after 6pm to get updated details on grey market premium and subscription details.

Disclaimer: Views are shared for an educational purpose. Please consult your financial advisor or planner before taking any action based on the views or facts shared on this blog.

Like and share with others too so that they can gist of this IPO.