Zomato IPO: Price Band, Revenue, Losses, Monthly Users And More

Zomato IPO: Revenue, monthly users dive; losses set to rise.

An autorickshaw passes a Zomato food delivery courier in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
An autorickshaw passes a Zomato food delivery courier in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Zomato Ltd. is seeking a valuation of up to Rs 60,000 crore as the food ordering and delivery platform looks to raise capital for expansion.

The maiden offer comprises a fresh issue of Rs 9,000 crore and sale of shares worth Rs 375 crore by existing investors, according to its red herring prospectus.

The company, in a separate statement, said it will sell shares at Rs 72-76 apiece in the IPO that opens on July 14. That will give it a market value of up to Rs 59,623 crore (about $8 billion).

Backed by the likes of Info Edge India Ltd. and Ant Financial, Zomato is looking for capital to expand business as the pandemic has accelerated digital shift. The online delivery platform recently agreed to invest in Grofers, entering the online grocery market for a second time.

Key Numbers From Zomato's RHP

  • Delivery partners: 1,69,802.

  • Active restaurant listing: 3,89,932.

  • Active food delivery restaurants: 1,48,384.

  • Present in 525 cities in India and 23 countries outside India.

  • 15 lakh Zomato Pro members and 25,443 Pro restaurant subscribers.

The pandemic, however, did impact Zomato's business as the nation remained locked down in the first couple of months of the last fiscal before the economy reopened gradually. “There was a significant adverse impact on our operations in fiscal 2021 due to the Covid-19 pandemic,” the company said in the prospectus.

  • Revenue dropped 23.4% to Rs 1,994 crore in the year ended March 2021.

  • Loss, however, narrowed to Rs 812 crore from Rs 2,363 crore the year before. That came as it cut discounts and cost per order.

These Restaurants Take Fight To Zomato, Swiggy With A Dash Of Secret Ingredient

Highest-Ever Gross Orders In Q4

While gross orders hit the lowest level in two years in the first quarter of FY21, the business saw a strong rebound. Gross orders rose 91.6%, 42.3% and 11.1% in the second, third and fourth quarters.

At Rs 3,313 crore, the metric hit a record in the fourth quarter, according to its prospectus. And the second wave of Covid-19 pandemic did not impact the company's food delivery business in India, it said.

  • Overall, the gross orders fell to Rs 9,483 crore in FY21 from Rs 11,220 crore a year earlier.

  • Zomato’s average order value has come down to Rs 394 in the quarter ended March from Rs 407.8 in the preceding three months.

  • The number of monthly active users fell 23% to 3.2 crore in FY21, down from 4.1 crore a year earlier.

  • Monthly transacting users are have not gone back to pre-pandemic levels.

Making Money On Every Order, But..

Zomato charged 75% more on delivery and earned 44% more commission in FY21. And as orders surged, delivery costs fell 12% and it also slashed discounts by 62% per order.

From making a loss of Rs 30.5 per delivery in FY20, it earned Rs 20.5 in FY21.

Zomato, however, expects losses to increase given its investment in growing its business.

“We have expanded and expect to continue to expand substantial financial and other resources on advertising and sales promotion costs to attract customers and restaurant partners to our platform,” the company said in the RHP. The platform will invest adding offerings, develop or acquire new features and services, expand into new markets in India, and add more delivery partners.

Zomato has sought the Competition Commission of India’s approval for acquiring around 9% stake in grocery startup Grofers. It's also in the process of rolling out a grocery delivery pilot.