The board of directors of Zomato on Tuesday approved the plans to raise ₹8,500 crore in a bid to strengthen the balance sheet of the company.

Peer rival Swiggy is also lining up an IPO with a potential size of ₹10,000 crore.

“The board has constituted and authorised a fund raising committee to decide the structure, form of issuance, price, discounts and the terms and conditions,” Zomato said in a stock exchange filing.

Deepinder Goyal, founder MD and CEO of Zomato, said there is a need to raise the company’s cash balance and strengthen the balance sheet.

“Zomato’s consolidated annualised adjusted revenue has grown 4x in a period of about three years — from around ₹4,640 crore at the time of IPO in July 2021 to ₹20,508 crore now (Q2FY25 annualised). In the same time period, our cash balance has reduced from around ₹14,400 crore to about ₹10,800 crore (mainly on account of funding past quick commerce losses and some equity investments and acquisitions),” said Goyal.

“While the business is now generating cash, (vis-a-vis loss making business at the time of IPO), we believe that we need to enhance our cash balance given the competitive landscape and the much larger scale of our business today. We believe capital by itself does not give anyone the right to win, but we want to ensure that we are on a level playing field with our competitors, who continue to raise additional capital,” he said.

The company on Tuesday reported a consolidated net profit of ₹176 crore for the quarter ended September 30, 2024 compared with ₹36 crore in the corresponding quarter previous year. Adjusted revenue was ₹5,127 crore compared with ₹3,240 crore in the year-ago period.

While food delivery continues to generate a steady adjusted ebitda of ₹341 crore in Q2FY25, the quick commerce business is close to breakeven with an ebitda loss of ₹8 crore.

Akshant Goyal, the chief financial officer at Zomato, said the company is not seeing margin expansion because of scaling up of infrastructure, mostly under Blinkit.

Paytm profit at ₹928cr

One97 Communications, the parent of Paytm, on Tuesday posted a net profit of ₹928.3 crore in the quarter ended in September 2024 compared with a ₹290.5 crore loss it incurred a year ago, as an exceptional gain from sale of the entertainment ticketing business to Zomato improved the fintech firm’s Q2 scorecard.