Zomato Limited is seeking a post-issue valuation of Rs 64,365 crore on a fully diluted basis at the upper end of its public issue price band of Rs 72-76 a piece announced on Thursday.
The maiden offer from the online food ordering and delivery platform comprises a fresh issue of Rs 9,000 crore and an offer for sale of Rs 375 crore from existing investor — Info Edge. The public issue opens on July 14 and closes on July 16.
Following the public issue, Zomato estimates Rs 15,000 crore will be available with the company which could then be utilised to strengthen its current business and test the waters with new businesses such as grocery delivery and nutraceuticals.
According to the disclosed financial results in the prospectus, Zomato posted a total income of Rs 2,118.24 crore for the year ended March 2021. This is lower than Rs 2,742.73 crore a year ago with the first wave of Covid lockdown affecting operations. The losses, however, narrowed to Rs 816.42 crore during 2020-21 compared with Rs 2,385.60 crore in the previous fiscal.
“The losses in the business are currently low and, hence, we can continue to invest in the business that we build, both in what we do today and the newer areas which we might explore going forward as well,” Zomato CFO Akshant Goyal said while announcing the company’s IPO.
He added that the company expects a revival in the topline with business on a recovery path after the initial impact of Covid pandemic last year and apprehensions around transmission of the virus.
“If we take the impact of the first one or two quarters out, business is going well now...and that will reflect in our results going forward,” Goyal said.
Earlier this month, Zomato had approached the Competition Commission of India to acquire a 9.3 per cent stake in online grocery start-up Grofers. The estimated investment is around $100 million.
“Online grocery in India is nascent now but is growing rapidly. We are experimenting in that space. Once we have full conviction in the business model that works for India in the online grocery context, we will expand in this space,” said Goyal. He added that the investment will give exposure to Zomato in the segment and help build its strategies around it.
Kotak Mahindra Capital, Morgan Stanley India and Credit Suisse India are the global coordinators and book running lead managers to the issue.