Zomato IPO: Reading between the top and bottom lines

Zomato IPO: Reading between the top and bottom lines
Photo Credit: 123RF.com

In a step closer to India’s first unicorn public listing, food delivery firm Zomato on Tuesday filed its SEBI approved red herring prospectus (RHP) or IPO Final Prospectus, with a few changes in certain metrics from its DHRP

The offer opens July 14 and closes on July 16 on the stock exchanges. 

Key takeaways from the 420-page document, before one chooses to bid.

  • The total IPO size stands at Rs 9,375 crore ($1.25 billion as per current exchange rate). The company chose to exercise the option of raising an additional 20% in proceeds that that were decided at the time of filing the DRHP.
  • The primary issue is worth Rs 9,000 crore and the secondary issue from early investor Info Edge is Rs 375 crore. At the lower band, it is priced at Rs 72 and Rs 76 at the upper band.
  • The expected valuation, post-IPO, on fully diluted basis would stand at Rs 64,365 crore ($8.61 billion) at the upper band of the issuance price. 
  • The offer includes a reservation of up to 6,500,000 equity shares for purchase by eligible employees, not exceeding 5% of the post-offer equity share capital. The QIB portion will be not less than 75% of the net offer, the retail portion not more than 10% of the net offer, and the non-institutional portion at not more than 15% of the net offer.
  • Zomato’s platform include two core B2C offerings -- food delivery and dining-out. While the startup generates a majority of its revenue from food delivery and related commissions, it also has restaurant partners who spend for advertisements on its platform. Thereby, it currently monetizes its dining-out offering through advertisement sales.
  • Other offerings include B2B services – Hyperpure and Zomato Pro, a customer loyalty programme which encompasses both food delivery and dining-out. Revenues from farm-to-fork supplies offering Hyperpure are included in sale of traded goods, which was at Rs 200 crore in FY21, Rs 107.6 crore in FY20, and Rs 14.9 crore in FY2019. Subscription product Zomato Pro in India reported revenues of Rs 57.5 crore in FY21, Rs 87.9 crore in FY20, and Rs 56.2 crore in FY19.
  • Unique restaurant partners that received at least one order in India from Zomato were 94,286 in March 2019, 143,089 in March 2020, and 148,384 in March 2021. Monthly number of unique transacting customers identified by customers’ mobile number that have placed at least one order in India were 5.6 million in FY19, 10.7 million in FY20 and 6.8 million in FY21.
  • Gross Order Value (GOV) or total monetary value of orders including taxes, customer delivery charges, gross of all discounts, excluding tips were Rs 5,387 crore in FY19, Rs 11,220.9 crore in FY20, and Rs 9,482.9 crore in FY21.
  • The company has presence in 525 cities in India and 23 countries. However, the founders in a press briefing on Thursday said that they will divert most of their focus on advancing their Indian business and in other countries they would be providing services like restaurant search platform through remote.

Gurugram based Zomato has raised a total of Rs 12,666.8 crore (about $1.69 billion) since it was founded in 2008. The investors in its cap table are Naukri parent Info Edge, Sequoia Capital India, Alibaba Group, Shunwei Capital, and Temasek Holdings, among others. The company last raised capital in a $195 million pre-IPO funding round led by New York-based private equity firm Luxor Capital Group.

Sign up for Newsletter

Select your Newsletter frequency