Zomato IPO review – Everything you need to know about Zomato IPO |
This year there has been a line of IPOs and Zomato is one of its most important dates, the price band, and bulk size have not been finalized, but they have installed DHRP via SEBI So we thought to tell you all the important updates like business, revenue model, earnings and impact of covid.
Let’s talk about Zomato as a company, whenever you hear of Zomato you feel like eating certain foods but you knew it was started in 2008 as a restaurant access website and today it is one of the biggest food delivery apps in India.
And when they were first introduced in 2015, they were not alone, there have been many companies doing that like Swiggy, TinyOwl, OLACAFE, foodpanda, runnr, and scootsy but today the biggest competition is between two companies, Zomato and Swiggy but give competition to another great player coming, Amazon I will tell you about this further in the article but let me first talk about Zomato’s financial model and how they make money.
Zomato was a restaurant discovery platform that used to tell us everything like dishes, menu, location, etc. It is a restaurant menu that focuses on food, reviews, and online table booking in India. Make money from those restaurants that pay them to improve their visibility As of December 2020, it has had a 3.5lakh active listing on its platform.
Apart from this, it has a special paid membership called Zomato pro which offers more discounts on selected restaurants and restaurants Therefore, Zomato is making money through this membership and since December 2020, it has 1.4 million such members.
Zomato includes a hyperpure company that provides raw materials in restaurants. It not only helps to predict demand but also to obtain raw materials such as grains, fruits and vegetables on a large scale but can be part of the bulk services associated with food delivery.
The business was started in 2019 and from December 2020, has provided supplies to 6000 restaurants in six cities And lastly, it is making money from food delivery. It acts as a delivery agent between restaurants and customers They take a commission from restaurants and delivery costs to customers.
They can operate in 23 countries outside of India such as UAE, Australia, New Zealand, Philippines, Indonesia, Malaysia, USA, Lebanon, Turkey, Slovakia, and Poland. But 90% of the company’s revenue is generated only from India.
Let’s take a look at the impact of Covid-19 on the company. In the first quarter of 2021, it had a huge impact on its business. It beat its low GOV, which means the total number of orders per quarter in two FY After that the food delivery business saw a positive recovery.
In Q1 of 2021, its GOV was Rs.11000 million, while in the third quarter, it was Rs. 30000 million which was the third and fourth quarters of 2020.
Let’s take a look at the overall look of the industry. When we saw the food delivery business, at FY21, India saw contradictory measures. The first quarter saw the worst time, we were at the lowest level, and in the third quarter, we were always at the top. Since people could not go out to eat, they tried to do it by ordering at home online.
I was so excited when I started ordering food online again. However, the Indian food market is divided into 3 channels- food-in-house, take-off, and food delivery.
According to CLSA, food delivery will see significant growth for those 3. The market size is expected to reach $ 11 billion per FY26 from $ 3.5 billion to FY20. Increasing value, smartphone penetration, new market expansion, and higher frequency from Zomato’s largest customer competition are Swiggy and Amazon’s newest.
None of that counts, while Zomato submits its IPO.
Zomato and Swiggy, both in the food delivery business but have different strategies Zomato tries to focus on all aspects of the restaurant business, while Swiggy focuses on food delivery Delivery, groceries, alcohol, meat, medicine and delivery and everything else.
It has a Swiggy Super membership where it offers discounts on free delivery. Amazon has started marketing food delivery testing last year, initially they started delivering only food to their employees in Bangalore and then reached 1/4 of the city, and they have a network of 2500 vs 15000 restaurants offered by Zomato.
Zomato and Swiggy need to be careful. Let’s see what happens in the food delivery section. Considering its finances, Zomato reported losses in the first 9 months of FY21.
The company has no debt at all. The company received 155 million orders in the first 9 months of FY21 with a total order total of 6169.9 Crores. and received 403 million orders in FY20 up to 11,220.9 Crores will measure the impact of covid on the number of orders.
The median amount of the order increased from Rs. 278 on FY20 to Rs. 398 in the first 9 months of FY21. Monthly active users increased from 9 lakh on FY18 to 1 CR in 2 years but decreased to 58 lakhs in the first 9 months of FY21. And the restaurant business is still going strong as people are not going out because of Covid.
If we look at this table, we can see the total revenue per order and the total cost per order. In addition to all commissions and other costs, fees have increased.
From 58.9 per order to FY20 to 89.6 per order in the first 9 months of FY21, If we see the total cost, from increasing delivery costs, discounts and variable costs have decreased. From 89.4 per order to 66.7 per order. They lost 30.5 per order on FY20 with a profit of 22.9 per order, but it should be noted that the costs of marketing, advertising and branding are not included in this.
Now let’s talk about its strengths and weaknesses.
Powerful startup, first and foremost as a result of a network, is a situation where a product / service gains more value when more people use it. The more people use it, the more restaurants will be listed in Zomato which will attract more customers.
As of December 31, 2020, the company has 161637 active delivery partners who have completed 94.9% of total orders and the average delivery time was less than 30 minutes. It has a comprehensive and efficient hyperlocal delivery system.
Powerful Product Availability
Zomato is a strong species known throughout India As I said, people hear Zomato and remember the food. Zomato has been successful in keeping customers up to date. which is a major competitive advantage.
If we see a weakness, the company is not making a profit at the moment and is expected to stay the same as the money grows There were more players, but now only Zomato and Swiggy are left and now Amazon is a major threat to both companies.
Zomato is backed by Chinese billionaire Jack Ma’s Ant Group, which means it will remain a foreign-owned company and state that they will have to meet many requirements under FDI policy and regulations. They also say that they may not be able to do certain commercial work without government approval.
Now, what do we know about IPOs so far?
Zomato wants to raise dollars. 8250 Crore per IPO, where 7500 Cr will be from the new and all OFS InfoEdge which are the first investors to sell shares worth Rs 750 Cr per sale offer. Zoom will also be looking at a pro-IPO set of 1500 Cr IPO Days, the price band and bulk size have not been disclosed and as soon as we receive any updates we will notify you.
Tags: Zomato IPO review – Everything you need to know about Zomato IPO, Zomato IPO review,