Zomato to launch Rs 9,375-crore IPO on July 14

Zomato will launch its Rs 9,375-crore initial public offering (IPO) on July 14, the company confirmed on Thursday. The offer includes fresh issuance of Rs 9,000 crore, about 20% higher than the initial estimate on the back of “strong investor demand”, and a Rs 375-crore offer for sale by existing shareholder Info Edge.

The company is eyeing a post-money valuation of Rs 64,365 crore at the top end of the price band. The price band of the offer has been fixed at Rs 72 to Rs 76 per equity share. The offer will close for subscription on July 16.

The Gurugram-based start-up said it will have about $2 billion worth of cash in the bank after the IPO, which is understood to be the biggest after the Rs 10,355 crore offer by SBI Cards and Payment Services.

“Losses in the business are currently low and hence we have a long runway with the cash that we have to continue to invest in the business that we are building — the core thing that we do today and the newer areas which we might explore going forward as well,” chief financial officer Akshant Goyal said at a virtual press conference.

Zomato’s total comprehensive losses narrowed to Rs 822.27 crore on a consolidated basis in the year ended March 31, 2021 from Rs 2,362.8 crore in FY20 as the company managed to keep a check on costs. Total expenses shrunk by nearly 48% y-o-y to Rs 2,608.78 crore in the previous financial year. Revenue from operations, however, declined to Rs 1,993.78 crore in FY21 from Rs 2,604.73 crore in FY20, the company’s red herring prospectus filed with Sebi on Thursday showed.

Although Covid-19 impacted business in FY21 leading to a 15.46% y-o-y dip in food delivery GOV (gross order value) to $1.29 billion, Zomato said recovery has been quick and there has been no negative impact from the second wave. In a presentation, the firm said that India food delivery GOV hit a record $451 million in Q4FY21.

“Every part of our business is actually growing,” said co-founder Gaurav Gupta. He said all operational cities, including those in Tier IV, are showing good growth. Given that only 8% of total consumers with access to the internet use food delivery, there is a large headroom for increase in food delivery adoption.

Goyal said the firm will soon launch grocery services on the app, without giving further details. He said the strategy behind the company’s investment in Grofers was to get more exposure to the space and build strategy around the e-grocery business.

The firm reiterated that the bulk of the IPO proceeds will go towards funding new customer acquisition, expanding the delivery network and building on its technology infrastructure.