SUMMARY
Chief financial officer Akshant Goyal said 60% of the food delivery business recovering well
Zomato’s IPO is opening for subscription on stock exchanges on at a price band of INR 72 – INR 76 per share
In addition to its B2B supply chain business Hyperpure, the company is also doubling down on B2C online grocery delivery
Zomato has reported narrower losses in FY2021 with 60% of its food delivery business recovering well after the pandemic last year, according to the company’s chief financial officer Akshant Goyal said at the company’s call related to its initial public offering (IPO) Thursday (July 08).
The company’s revenue declined almost 25% to INR 1,994 Cr in FY21, but at the same time losses also narrowed from INR 2,363 crore in FY20 to INR 812 crore in FY21, ending March this year. Goyal added that the adverse impact of the pandemic on the business in the first two quarters of FY 2020-21, which has been made up by the recovery in the subsequent months.
Zomato’s IPO will open on the exchanges on Wednesday, July 14, according to a disclosure on the Bombay Stock Exchange (BSE). The issue will close on July 16. The restaurant aggregator’s IPO is opening for subscription on stock exchanges on at a price band of INR 72 – INR 76 per share. This is higher than the INR 70-72 value estimated by analysts. The IPO announcement follows, following the Securities and Exchanges Board Of India (SEBI) submitting its observations on Zomato’s draft red herring prospectus (DRHP).
Zomato’s offer will comprise fresh equity of INR 9,000 Cr, while majority stakeholder Info Edge will sell shares worth INR 375 Cr in the Offer For Sale (OFS) portion. Info Edge revised its quantum of share sale in the upcoming Zomato public offering to INR 375 Cr earlier this month, 50% lower than the originally planned INR 750 Cr stake sale. Zomato’s IPO size will be INR 9,375 Cr, making it the second-biggest IPO in the last four years after SBI Cards.
In the run-up to the official announcement of Zomato’s initial public offering (IPO), the food aggregator’s stock has been seeing a lot of interest in the grey market, trading at a 15-20% premium.
Investment banks BoFa Securities, Kotak Mahindra Capital, Morgan Stanley India, Credit Suisse India and Gitigroup Global markets are managing the offering.
Zomato’s Focus On Grocery To Fight Losses
The company says it’s banking on replacing the home-cooked food consumption segment to drive restaurant food consumption. “We are disrupting the Indian habit of home-cooked food. India is a large opportunity for us and we will remain focused in this space,” said Gupta.
In addition to its B2B supply chain business Hyperpure, the company is also doubling down on B2C online grocery delivery and will launch its grocery offering shortly, pitching itself against the likes of BigBasket. It has recently made a $100 mn investment in BigBasket rival Grofers but the company said that the investment is independent of its grocery plans.
The potential investment comes a year after Zomato was said to be in talks to acquire Grofers. Speculation emerged in April 2020, soon after the lockdown was announced, but since then Grofers has invested heavily as home delivery demand for groceries skyrocketed.
The acquisitions comes as Grofers cofounder Saurabh Kumar exited from the startup after almost 8 years after cofounding it with Albinder Dhindsa. In a statement on June 18, Grofers CEO Dhindsa said that Kumar will no longer be involved in day-to-day responsibilities at Grofers, but would instead continue to be a board member
