India’s biggest food tech unicorn, Zomato caught everyone’s attention when it announced its plans to list itself in the domestic bourses by the first half of FY 2021. The Sequoia, Info Edge, Alibaba, etc. backed food tech startup plans to raise money by listing its shares in the Indian stock market.
In this blog, we are going to discuss whether investors should invest in Zomato’s mega IPO. We will analyze Zomato’s business model, its future expansion plans, profitability, and investor lists to determine whether Zomato valuation is really worth for the “Wolf of D-Street”
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STAY TUNED AND READ THE ENTIRE POST - IF YOU FEEL HUNGRY THEN ORDER ONLINE ON ZOMATO
The IPO of Zomato will also help Swiggy in discovering whether it should think of launching its IPO after Zomato.
In Jan 2020, Zomato and Swiggy were having a tough battle for acquiring one of its biggest contender “UberEats”. However, Zomato overtook Swiggy and acquired UberEats
Zomato Market Value - What is the future “Market Value of Zomato & Food Tech Startups”
The news of Zomato’s initial public offering came just after it raised $102.5 million from VC firm Tiger Global Management valuing the unicorn startup at $3.4 billion.
Hence, as per the latest funding round, “Zomato Valuation” stands at $3.4 billion.
According to Redseer, India’s total online food delivery “Gross Merchandise Value” is expected to reach $13 billion by 2024 with per day delivery reaching 11 million, as more and more people are expected to take advantage of the “Digital India” initiative
As per WODS, Zomato currently has a 55% market share in India’s food delivery business and it also has a presence across the globe giving a chance to clock triple-digit revenue growth annually.
Also read Vodafone Idea, Bharti Airtel, Reliance Jio AGR Dues Case - Detail Analysis.
Mat Kar Iccha Control Zomato Khol - COMPANY PROFILE: ZOMATO
About the Company
Zomato Media Private Limited is an India-based provider of online food delivery and menu guide sharing platform. The Company operates in the name of the Zomato website and mobile app that provides home delivery, menu, contact details, pictures, directions, ratings, and reviews for a huge number of restaurants across the globe.
Zomato is present in 24 countries and 10000+ cities globally
Former Name: DC Foodiebay Online Services Pvt Ltd
Founded: 2008
Sector: Communications, Hotel, Travel, and Leisure
Industry: Media and Internet-Based Services
Address: Twr C, Vipul Tech Sqr, Sect 43 Ground Floor, Golf Course Road New Dehli, 122009 India
Website:- www.zomato.com
No. of employees: 4000
Zomato current valuation: $3.4 billion
Zomato Founder & Executives
Deepinder Goyal (DG) is the Co-Founder and CEO of Zomato. Butter chicken with naan is his favorite food and his favorite words are “focus and now.”
Gaurav Gupta (GG) is the Co-Founder and COO of Zomato. He loves to play tennis at the weekend
Mohit Gupta (MG) is the Co-Founder and CEO of Zomato’s delivery business. He is a food lover
Gunjan Patidar is the CTO of Zomato
Do read - VODAFONE- IDEA IS NOW VI - Vodafone and Idea can survive?
Zomato Financial Analysis - Can the financials impress the bulls - WODS Analysis
While Zomato has been able to maintain its topline growth it miserably failed in successfully surviving its bottom line.
Revenue has grown nearly three-folds i.e. 3X times the revenue in FY 2018 - 19.
Zomato’s revenue for FY 2019 surged 203 percent to $206 million from $68 million in FY 2018, mainly due to increased market share in India after it acquired its rival UberEats.
Zomato’s current annual revenue run rate is $350 million
So, topline growth has been quite impressive for Zomato.
However, the total cost has seen a massive surge of 525% from $80 million to $500 million in FY 2019 - 20.
Zomato suffered a loss of $294 million on account of the food delivery business in India. Zomato had tremendous growth triggered by promotional marketing spends to acquire new customers and to enter new markets. The promotional spending and advertisement costs have significantly increased its overall spending
However, WODS believes that promotional spending in FY 2019 will increase its intangible assets and goodwill. Zomato has created a significant amount of brand awareness among its customers. The assets generated will have a positive impact on its earnings in the long-term
After the IPO, Zomato valuation may reach $5 billion
Zomato has also been trying to realign its business stream in order to diversify its revenue streams. Three years ago Zomato was only focusing on advertisement as their only source of revenue. However, now Zomato has been focusing on the delivery, transaction, and dining out as their sources of revenue.
Segment Wise Performance
Delivery Segment
The delivery revenue generated for FY19 stood at $155 million compared to $38m in FY18 (4x annual growth). Delivery revenue contributes 75% of its total revenue in FY 2019 which stood at 55% in FY 2018. Zomato operates delivery service in more than 200 cities in India, up from 15 cities in FY18
Dining out
Zomato Investors and Valuation
| Round Number | Investor Name | Investor Type | Amount | Valuation |
|---|---|---|---|---|
| 1st Round - Jan 2010 | Info Edge | Corporation | $1 Million | NA |
| 2nd Round - Sep 2011 | Info Edge | Corporation | $3 Million | NA |
| 3rd Round - Sep 2012 | Info Edge | Corporation | $2.3 Million | Raised $2.3 million through convertible cumulative preference shares. Info Edge gets a 48.5% stake in Zomato with this investment |
| 4th Round - Feb 2013 | Info Edge | Corporation | $10 Million | $55 Million - The fresh infusion of funds takes Info Edge’s total investment into Zomato to Rs 86.06 crore and its holding has risen to 57.9 percent |
| 5th Round - Nov 2013 | Info Edge and Sequoia Capital | Venture Capital | Raised $37 million in Series D Investment from Sequoia Capital and Info Edge | $90 Million - Info Edge's stake has reduced to 50.1% from 57.9%, it had during the previous investment round |
| 6th Round - Nov 2014 | Sequoia Capital, India Vy and Info Edge | Venture Capital | $60 Million | $660 Million - Zomato closed a further $60 million in funding, giving the company a post-money valuation of $660 million |
| 7th Round - Apr 2015 | Info Edge | Corporation | $50 Million | NA |
| 8th Round - Sep 2015 | Singapore based Temasek Holdings and existing Indian VC firm India VY | Venture Capital | $60 Million | $945 Million |
| 9th Round - Apr 2017 | Sequoia Capital, Vy Capital, Info Edge, along with two new investors, including WhatsApp’s Neeraj Arora | VC and Angel Investor | $20 Million | $960 Million |
| 10th Round - Feb 2018 | Ant Financial (Subsidiary of Alibaba) | Venture Capital | $200 Million | $1.1 Billion |
| 11th Round - Dec 2018 | Alipay (Subsidiary of Alibaba) | Venture Capital | $210 Million | $2.1 Billion |
| 12th Round - Feb 2019 | Glade Brook Capital | Private Equity | $40 Million | $2.6 Billion |
| 13th Round - Jan 2020 | Temasek Holdings | Venture Capital | $150 Million | $3 Billion |
| 14th Round - Apr 2020 | Pacific Horizon Investment Trust | VC Fund managed by Baillie Gifford | $5 Million | $3.25 Billion |
| 15th Round - Apr 2020 | Temasek Holdings | VC Fund | $62 Million | $3.4 Billion |
| 16th Round - Sep 2020 |
Tiger Global Management | VC Fund | $102.5 Million | $3.5 Billion |
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