Most awaited IPO of 2021 is here: IPO of Zomato opens next week.

IPO News 12 July 2021 12:13:PM

ZOMATO-IPO ZOMATO-IPO

Yes, you heard it right one of the most awaited IPOs of 2021 opens next week and Its IPO of Zomato. And, today we are going to discuss How big this zomato IPO is going to be. From July 14th, 2021 IPO will be live for subscription and this issue will continue till July 16th, 2021. The face value of Zomato IPO is Rs. 1 per equity share. The price of IPO is Rs. 72 to Rs.76 per equity share with the market lot of 195 shares. 


After SBI Card (Rs 10,355 crore), which was launched in March 2020, it is the largest IPO in the recent 16 months. A reserve of up to 65 lakh equity shares for firm employees is included in the public offering. 


How to apply for the IPO of zomato 2021:- 

With GEPL Capital’s IPO portal you can easily apply for the Zomato IPO as well as the other active IPOs. Being paperless is not enough in today's world cause pace is the key today. Click here and apply with few clicks and few minutes. #ItsEasier with our IPO portal.  Click here to read the report. 

Company profile of Zomato:- 


Incorporated in 2010, Zomato Limited is one of the leading online Food Service platforms in terms of the value of food sold as of Dec 31, 2020. Customers can search and discover restaurants, order food delivery, book a table, and make payments for dining out at restaurants through its B2C offerings, while it generates revenue from Hyperpure (supply of high-quality ingredients and kitchen products to restaurants) and Zomato Pro, a customer loyalty program, through its B2B offerings.


Customers, restaurant partners, and delivery partners are all connected through Zomato's technological platform, which caters to their various demands. Customers utilize the company's platform to find and book restaurants, read and write customer reviews, see and upload images, order food delivery, book a table, and make payments while dining out.  On the other side, the company gives industry-specific marketing tools to restaurant partners, allowing them to engage and acquire customers in order to develop their business while also offering a dependable and effective last-mile delivery service.


Hyperpure, the company's one-stop procurement service, offers high-quality ingredients to its restaurant partners. It also allows delivery partners to make money in a transparent and flexible manner. As of March 2021, RedSeer claims to be one of India's biggest food services platforms in terms of the value of food sold. In India, the company's platform attracted 32.1 million average monthly active users (MAU) in FY21. With 3,89,932 active restaurant listings as of March 2021, the company was present in 525 cities across India. According to App Annie's estimates, its mobile app has been the most downloaded food and beverage app in India for each of the last three fiscal years (FY19-FY21) on the iOS App Store and Google Play combined.

Some strengths to consider before applying for IPO of Zomato:- 


Strong network effects are driven by their unique content and transaction flywheels:-

  • The end-to-end Food Services approach makes Zomato the most unique Food Services platform globally combining the offerings of platforms such as Yelp, DoorDash and OpenTable in a single mobile app. They had 389,932 Active Restaurant Listings across 525 cities in India, as of March 31, 2021. Their focus on content attracts a large number of customers to their platform organically. During Fiscal 2021, 68% of their new customers were acquired organically and not through any paid advertisements. Their customers value the rich content of the restaurant listings on their platform and further enhance the richness of the restaurant listing content by adding their own reviews and photos to the platform which leads to a virtuous cycle of more new customer acquisition.

A technology and product-first approach to the business:-

  • They enable restaurant partners with fully automated order management systems. These systems offer dashboards that have features such as, order transmission, order processing, menu synchronization, payment reconciliation, content promotion, marketing tools and invoice management features.


Continuous focus on unit economics and growth:-

  • Zomato has made significant investments in marketing and promotions to accelerate customer adoption of food delivery in India and promote their brand. All these investments have contributed towards category creation and resulted in customers coming back to their platform organically for repeat purchases. As a result of an increase in the share of repeat customers, their advertisement and sales promotion expenses per Order have reduced over time. The ad expense has fallen from 88% in FY19 to 25% in FY21 as a % of the top line.


Expand and strengthen the community across the three businesses – food delivery, dining-out, and Hyperpure:-

  • They will continue to deepen their relationships with restaurant partners by innovating to increase their platform’s value proposition for their restaurant partners, expanding the suite of services offered to them, and driving differentiated partnerships with restaurants. To continue to provide a seamless delivery experience for their customers, they will continue to invest in their delivery infrastructure and expand their delivery partner base, providing them flexible earning opportunities. Zomato will invest in new products, technologies and features for the benefit of their customers. They are in the process of rolling out nutraceutical products on their platform.


Important things related to Zomato IPO 2021:- 

IPO Opening Date

Jul 14, 2021

IPO Closing Date

Jul 16, 2021

Issue Type

Book Built Issue IPO

Face Value

₹ 1 per equity share

IPO Price

₹ 72 to ₹ 76 per equity share

Market Lot

195 Shares

Min Order Quantity

195 Shares

Listing At

BSE

Valuation & Recommendation:-


FY20 was a defining year for food delivery in India. While FY19 saw hyper-competition between 4

well-funded food delivery players, FY20 ended with a two-player market structure. Zomato’s foray into new verticals (groceries, nutraceuticals) and possibilities of new players entering the market will continue to put pressure on the bottom line. Over time, we expect the contribution margin per order to normalize between ?15-20 per order.

On a post-issue basis, Zomato is valued at ~30x Price to FY21 Sales. This we believe is rich as compared to other consumer technology platform startups listed in developed markets (Uber ~7.6x P/S, Door Dash ~16.5x P/S for the same period). 

Although the addressable market in India is much larger where ~92% of the meals consumed are home-cooked food, we believe it will be an uphill battle for Zomato in terms of marketing to change consumer behavior. Listed peer doordash had an average order value (AOV) of ~$55 as compared to Zomato’s ~$5, in spite of the pandemic induced bump up in Zomato’s AOV.

We recommend a SUBSCRIBE rating to the issue for risk-taking investors for potential listing gains but would wait for sustained profitability and FCF breakeven as an investment as current valuations will limit the upside in the medium term.

Where to apply for Zomato IPO


With GEPL Capital’s IPO portal you can easily apply for the Zomato IPO as well as the other active IPOs. Being paperless is not enough in today's world cause pace is the key today. Click here and apply with few clicks and few minutes. #ItsEasier with our IPO portal. 


Stay tuned for more updates on the IPO of zomato. Click here to apply now. To explore more investment opportunities visit here.  Click here to read the report.


source:- moneycontrol, Chittorgarh.


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