Zomato IPO: Here's What to Consider Before Investing In Online Food Delivery Platform

Zomato IPO will open for subscription between July 14 to July 16 and the company will finalise the IPO share allotment around July 22.

Representational Picture

Mumbai: The online food-delivery platform Zomato’s initial public offering (IPO) is set to open on Wednesday (July 14) and close on July 16. The company is aiming to raise Rs 9,375 crore. Zomato will be the first consumer internet companies and startups to raise money in a post-pandemic era.

What you should know about Zomato IPO?

The IPO will open for subscription between July 14 to July 16 and the company will finalise the IPO share allotment around July 22. The funds will be refunded or unblocked from the Application Supported by Blocked Amount (ASBA) account around July 23, 2021.

The price band of the issue is kept at Rs 72-76 per share. The issue offer includes Fresh Equity Shares worth Rs 9,000 crore and offer for Sale (OFS) by Info Edge, the parent company of Naukri.com. The company's investors include Info Edge, Ant Financials, and Uber. However, the company has no promoter. 

Kotak Mahindra Capital Company, Morgan Stanley India Company Pvt Ltd, and Credit Suisse Securities (India) Pvt Ltd are the global coordinators and book running lead managers of the issue.

What are financials of the online delivery giant?

Zomato's revenue in the first three quarters of FY 2021 was Rs 1,367 crore. The food-tech company's expenditure was around Rs 1,724 crore, resulting in a loss of Rs 684 crore.

In a recent press conference, Zomato’s leadership informed that compared to the first wave of Covid, its business did not witness a negative impact during the second. Zomato's revenue grew by 96 per cent in FY 2020 from Rs 1,398 crore in FY 2019 and Rs 2,743 crore in FY 2020. Zomato has received at least 403 million online orders with a gross order value of Rs. 11,221 crore during the financial year 2020. Last year, Zomato provided delivery services in around 500 cities across India with over two lakh delivery partners.

Should you invest in Zomato IPO?

The company has witnessed strong growth in business owing to pandemic and increase in online orders. It will be important to understand how the company aims to maintain this growth after the situation normalise. Even as the online food segment still remains a high entry barrier for new players and growth can be expected as the market size expands. However, there will always be challenges and uncertainty in the market at every given time. Incase you are unable to buy shares then wait for a few days and understand the a consumer internet company
and interest of investors post-listing before you decide to invest. It becomes important to go through the quality of business, management and other fundamental aspects in details before you invest in any issue.