Don’t invest in the Zomato IPO before knowing these 12 facts
What is Zomato and How it started?
Zomato is a technology platform that connects customers, restaurant owners and delivery partners, serving their multiple needs. It was founded by Pankaj Chaddha and Deepinder Goyal in 2008. They are present in more than 526 cities in India. According to RedSeer, Zomato has consistently gained market share over the last four years to become the category leader in the food delivery space in India in terms of Gross Order Value (GOV) from October 1, 2020 to March 31, 2021.
What are the main offerings of Zomato?
- FOOD DELIVERY – Discover restaurants and order food at home
- DINING OUT – Book a table and make payments while dining out using the Zomato platform
- HYPERPURE – Zomato supplies high quality ingredients and kitchen products to restaurant partners.
- ZOMATO PRO – It is a customer loyalty program which encompasses both food delivery and dining-out
What are the important metrics used to understand food delivery business?
Gross Order Value (GOV) – Sum of all transacted orders minus cancellations and returns. It has gone up by 7 times from 2018 to 2020
- 2018: 1300 crores
- 2019: 5400 crores
- 2020: 11200 crores
- 2021 (9M): 6200 crores
Average Order Value – It was Rs. 278 in 2020. In the last 9 months of 2021 it has been Rs. 397. This looks like a positive sign. As an increase in Average order value positively impacts the bottom line.
Average Monthly Active Users (MAU) – 29.6 million
Average Monthly Transacting Units – 5.8 million
Is Zomato a listed company?
No. It is still not a listed company. It filed its DRHP on 28th April 2021. It is one of the most anticipated IPO of 2021.
What will the offer size of the Zomato IPO?
Total size – Rs.8250 crore
Fresh issue – Rs.7500 crore
Offer for sale – Rs.750 crore
Who is a selling shareholder in Zomato IPO?
What is the Revenue of Zomato?
In march 2020 it had revenue of Rs. 2600 crore, up 5.5 times from 2018 when it had revenue if Rs. 466 crores.
Is it a profit making company?
It reported loss of Rs. 2385 crores in 2020, the losses were doubled due to the pandemic. In 2019 zomato made a loss 1010 crores.
What is shareholding Pattern of Zomato right now?
Infoedge – 18.5%
Uber BV – 9.5%
Alipay Singapore – 8.3%
Antfinancial Singapore – 8.2%
What are the Strengths of Zomato?
Strong Structured Content
Zomato has listings of more than 3,50,000 restaurants in India. Content includes photos of the menu, photos of the restaurant premises, timings, address, average cost for a meal, free parking availability, indoor/outdoor seating, free Wi-Fi availability, whether the restaurant offers live entertainment, has a smoking room, whether table booking is recommended by others.
Huge network of delivery partners
Zomato has more than 1,60,000 delivery partners in the month of December 2020. Technology and partner strength are very important to deliver perishable food items in time. Zomato’s median delivery time was less than 30 minutes in fiscal 2020
Technology driven Company
Zomato is a technology driven organization. It enables its restaurant partner also with fully automated order management systems. Machine Learning is a key focus are for the company.
Strong brand recall in India
Zomato enjoys a huge brand-recall in India. Giving it a competitive edge over current and upcoming competition.
What is the long term growth strategy of Zomato?
Repeat Purchases / GOV retention by COHORTS – Old customers giving repeat orders. This will reduce the advertising cost drastically in future. Advertising and Sales promotion has already come down from 88 percent of total income in 2018 to 48 percent in 2020.
Expand all the 3 categories – Food Delivery, Dineout and Hyperpure
Invest in new products and technologies – Plan of rolling out nutraceutical products
What is Zomato betting big on?
Growing Internet Penetration in India – In India we currently have 60 crore people with internet access. This is going to be 97 crore people with internet access by 2025. A 60 percent jump!
Growth in Urbanization and consumption – Food consumption is a quarter of India’s GDP but non home cooked food is just 10 percent of the total food consumption in India. With rising income levels this is going to change. People are going to eat more outside food. In U.S. and China 54 and 58 Percent of the total food consumed is from restaurants respectively.