The IPO Help Zomato Beat COVID-19 Blues | 3 Point Analysis
Online food ordering from zumato is now getting set to go public in fy21. let’s do a three-point analysis to find out what this could mean for the company going forward.
- why is zomato’s ipo significant
Well zomato is flush with new investor capital and is closing back from the pandemic hit business. while many analysts are still skeptical about it if the ipo does happen it will be a landmark development for the Indian startup ecosystem. It will be the first among India’s modern consumer internet startups to get listed and that too despite being affected by covid 19. although whether it will list in India or in the us is still unclear.
Now in case it lists in India it will make zomato the only big local unicorn to tap the stock markets here. other internet-based companies which are listed here are info edge which owns nokri.com and make my trip. now info edge is also a shareholder in zamato. Now earlier this month an hsbc global research report had said that zomato could add two billion dollars in market cap to the info edge to info edge for over three to four years.
- what do zomato’s financials reflect right now
Well Zomato in its annual report has said that it has more than doubled its year-on-year revenue to 394 million dollars in f520 even as its losses have also widened to 293 million dollars from 277 million dollars a year ago. Now covid-19 induced lockdown in march had severely impacted the food delivery business in India as several restaurants remained shut during the period. Now in the June quarter the company reported a revenue of 41 million dollars within a bidder loss of 12 million dollars.
- will the ipo help zomato beat the Covid-19 blues
Well in the last week of march this year zomatos food delivery gross merchandise value hit its lowest point with an 80 decrease compared to the mid February numbers. Now as of now the food delivery gross merchandise value has recovered to 60 percent of the pre-covid levels and as lockdowns ease and offices open up. The company now expects a quick recovery in the order volumes as well however many analysts believe that looking at the current economic scenario. It will be very difficult for zomato to launch a successful ipo given the kind of impact we have seen on restaurants and on hospitality firms.
Now they also point at incidences where we have seen global ipo’s of companies such as wework and uber fail miserably on account of inflated valuations.