7 things to know about the Zomato IPO
Namaskar dosto and welcome to another exciting podcast by Angel Broking. Doston IPOs toh logon ke liye bahut exciting rehte hai- inka soch and inka assumption yeh hai ki IPO ke samey they get shares at the lowest price possible and that from here on, the stock price will only increase. So IPOs are, by nature, exciting for investors. And then there's the fact Zomato is a popular name in the country.
Yeh dono facts mila ke it is easy to understand why there is so much buzz around the Zomato IPO.
If you are among those who are excitedly awaiting the upcoming Zomato IPO, then here are 7 must-know facts for you:
Number 1- Why is Zomato hosting this IPO?
According to Zomato's Red Herring Prospectus- a document that companies have to file with SEBI when they intend to host an IPO - the food delivery giant has the following reasons for raising capital from the public: growth and corporate purposes.
The larger chunk of the capital, that is 75% of the IPO proceeds, will be devoted to pursuing organic as well as inorganic growth. This amounts to Rs 5,625 crores that will go into acquiring new users and the development of its delivery and tech infrastructure.
Yeh toh banta hi hai - koi new player aa raha hai with the potential to disrupt the sector. We'll tell you all about it in a minute when discussing the food delivery sector.
Meanwhile, baki 25% will be channelled towards IPO related expenses and general corporate expenses.
Popular opinion yeh hai ki IPO ke proceeds should largely be used for growth and not for managing the company's running or settling its debts.
Number 2- Key figures related to Zomato's financial track record
I'll tell you this - they're a little bit surprising given that Zomato is everywhere. I mean don’t you get the feeling ki jab bhi ghar ke bahar dekho ek zomato delivery wala dikh hi jaata hain? It does seem they are everywhere nowadays. Anyways key figures ki baat kar rahe the:
. For the year that ended on March 31, 2018, Zomato clocked income of USD 65 million. Yeh toh acha hai lekin it was against USD 80 million total expenses
· Revenue at the end of December 2020, for the preceding 3 quarters, was Rs 1,301 crore
· Zomato registered a net loss of USD 320 million for the year ended March 31, 2020. Yeh you pichle saal ke losses se kaafi jaada hai. Are things getting worse? Okay so the revenue grew to USD 368 million, lekin total expenses multiplied about six times, reaching a whopping USD 672 million.
· Losses kaafi kam ho gaye hai in 2021 as compared to previous years lekin losses phir bhi kaafi hai
· Lekin us ke saath saath saath Zomato ka company size 3x badh gaya hain over the last four years
Number 3- How much will the IPO be for?
Zomato IPO ka total amount 1.1 billion rahega. Is mein se Rs 8250 crores ke shares public ke liye open hongein aur yeh amount mein se Rs 7500 crore ke shares fresh issue hongein aur Rs 750 crore ke shares Offer for Sale shares honge.
Additionally, the company is planning a 30 million share sale for employees and a pre IPO placement of Rs 1500 crore.
Offer for Sale is when existing stakeholders of the company divest their stock or sell their stock after having clocked targets. Sometimes an OFS also takes place to meet market cap norms. Zomato ke IPO mein, company ka ek anchor investor, Info Edge, apna stake in the company bechna chahta hai. Anchor investors are institutional investors and maybe funds like mutual funds or pension funds.
Chaliye next point, that is number 4 ko dekhe- What does the food delivery sector - or Zomato's field of operation - look like right now? And what is Zomato's role and position in it?
Abhi toh filial food delivery sector mein sirf 2 players hai namely Zomato and Swiggy. Swiggy holds the larger share of 47% while Zomato holds 45% share.
Zomato and Swiggy ko QSR brands jaise ki Dominoes air McDonald's se bhi competition mil jata hai.
Maine promise kiya tha juicy news about sector disruption. Ji haan Amazon has plans to enter the food delivery service sector. Bhoolna mat - amazon already has both the tech and the delivery infrastructure in place as Amazon is a giant with very deep pockets.
Now on to Number 5- What's so great about Zomato?
Well, besides being what is known as a Unicorn Company or one that is valued at over 1 billion, as we just discussed, abhi filhal food delivery service sector mein toh 2 hi companies hai - Swiggy aur Zomato. Kaafi uncrowded space hai toh obviously dono companies ko bahut attention mil jata hai.
Uber Eats tried to break into the market lekin Zomato ne toh UberEats ko acquire kar liya. January 2020 mein Zomato ne UberEats ka acquisition kiya tha.
Number 6- Anticipated share pricing or face value
The face value of the Zomato shares
is expected to be Rs 10.
Number 7- Retail portion of Zomato IPO
Maine bola tha ki Rs 8250 crore will be open to the public lekin public does not include investors like you and me, called retail investors. Institutional investors bhi yeh mix mein rehte hain. Different categories of investors get a certain allotment of the IPO. Zomato IPO mein retail portion 35% rahega meaning individual investors such as you and me only get to access a little over a third of the total IPO amount.
Toh yeh raha the key facts around the Zomato IPO. Doston koi bhi stock market investment karne se pehle aapko always company se related news aur financial records dhyaan se dekhna chahiye. Dusre ke kehne pe mat jao. View the Red Herring Prospectus of Zomato yourself. Stock market investments mein, risk is a constant, dost. Always invest with capital that you have managed to accumulate after accounting for daily expenses.
Now risk cannot be eliminated but it can be minimized by careful selection, doing your research and keeping tabs on your investment is a must, educate yourself constantly by leveraging such educational podcasts and content. Do remember this podcast is just for educating you, doesn’t mean ki aapko khudki research nahi karni chahiye.
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