Zomato To Seek Board Approval To Raise INR 8,500 Cr

Zomato Becomes First New-Age Tech Stock To Feature In BSE Sensex

SUMMARY

Zomato’s board is likely to review and approve the foodtech major’s proposal to raise INR 8,500 Cr (about $1 Bn) at its meeting scheduled for October 22

The Deepinder Goyal-led company could also seek approval from the Reserve Bank of India (RBI) to restrict the shareholding of foreign institutional investors in the company at 49%

In an exchange filing dated October 17, Zomato said it would seek approval from its board to raise funds by issuing equity shares via qualified institutions placement.

Zomato’s board is likely to review and approve the foodtech major’s proposal to raise INR 8,500 Cr (about $1 Bn) at its meeting scheduled for October 22 — in what would be the first fundraise by the company since its Dalal Street debut in 2021.

The Deepinder Goyal-led company could also seek approval from the Reserve Bank of India (RBI) to restrict the shareholding of foreign institutional investors in the company at 49%, CNBC-TV18 reported, citing sources.

If Zomato’s board of directors approve the proposal, it would allow the company to increase domestic shareholding in the company above 50%.

In an exchange filing yesterday (October 17), the company said it would seek approval from its board to raise funds by issuing equity shares via qualified institutions placement.

It is pertinent to note that the company will also disclose its Q2 FY25 earnings on October 22.

The fundraising plan comes at a time when Zomato is facing intense competition in the quick commerce market from incumbents Swiggy Instamart and Zepto as well as new entrants Flipkart Minutes, BigBasket and JioMart.

The fresh capital will also help Zomato scale its going out business. Earlier this year, the foodtech giant acquired Paytm’s entertainment ticketing business for INR 2,048 Cr. The Deepinder Goyal-led company has been seeing strong demand for the tickets being sold exclusively on its platform for various events.

Zomato also plans to launch a new app ‘District’ for its going-out business. As part of its efforts to scale up the events vertical, Zomato recently hired BookMyShow’s former live events and IP head Kunal Khambhati.

As per industry reports, the foodtech major is also mulling relaunching its quick parcel service Xtreme– which will now focus on the food delivery segment. Launched in October 2023, the logistics service focused on merchants with an independent application.

Shares of Zomato were trading 4% lower at INR 259.95 apiece on the BSE at the time of writing. The stock nosedived over 5% to an intraday low of INR 256.

However, on a year-to-date basis, Zomato’s share prices are up a staggering 110%.

The bull run in share prices of Zomato comes on the back of its strong financial performance. Zomato’s net profit surged to INR 253 Cr in the first quarter of the financial year 2024-25 (Q1 FY25) from INR 2 Cr in the year-ago quarter.

Operating revenue jumped 74% to INR 4,206 Cr during the June quarter from INR 2,416 Cr in Q1 FY24, as Blinkit delivered another quarter of strong growth.