Food delivery company Zomato has decided to launch its own IPO. This year a lot of companies have launched their IPOs. At the same time, Zomato is also preparing to launch its IPO. Apart from this, big IPOs are expected to be launched this year. Among these, India’s state-owned LIC is also one. Today we are going to talk about Zomato IPO.
Zomato Company is the largest food delivery company in the country. Apart from this, Zomato is the other business of the company. Which is related to food delivery only. Zomato is considered a specialist for selling its service as a bundle. However, in the last few quarters, Zomato has not benefited yet. But due to the size of the company, the issue of IPO by Zomato may prove to be beneficial. Which investors are going to invest in Zomato’s IPO. Birthdays and profits can be expected for them.
starting of Zomato company
Whenever we talk about Zomato, food comes in front of us. But do you know that Zomato started as a restaurant discovery platform. Zomato’s Restaurants Discovery website was launched in 2008. But today Zomato is one of the largest food delivery companies in the country.
When in 2015, Zomato started as a food delivery app. Then other companies in the market were also available as competitors. Of which Foodpanda Runner Swiggy, is the chief. Apart from this, Uber Eats is also prominent.
But looking at the current situation, only two big companies are available in the Indian food market. The first is Jomato and the second is Swiggy.
But Amazon Food Delivery is also coming to give competition to these two companies. Amazon is soon to launch its food delivery service in India. And its testing has also started. First of all Amazon Food Delivery started with its employees.
Amazon initially delivers food delivery to its employees. After this started the Amazon food delivery service in Bangalore city. However, till now it is still in the testing phase. But it is expected that Amazon may soon start a food delivery service in India.
Zomato Revenue Model
The most important thing for any company is what is its revenue model? Now here we will try to know how Zomato earns money.
Zomato started as a restaurant finding platform. On this, restaurants got their listings done and people used to easily find restaurants for themselves from there. Restaurants had to pay the company to get their listings done. And in this way Zomato started earning. You will be surprised to know that Zomato is the largest restaurant listing website in India.
As of December 31, 2020, Zomato had a list of over three million 50,000 restaurants. Zomato also runs a membership exclusion program. Which is known as Zomato Pro. Under this membership, customers are given flat discounts on some selected restaurants. Apart from this, the facility of free food delivery is also provided. Apparently Zomato makes money from this as well. As of 31 December 2020 Zomato had 1.4 million such customers.
Zomato also has a subsidiary company. Whose name is Hyperpure. Zomato supplies raw materials to restaurants via Hyperpure. Which includes vegetable spices and other ingredients. This helps Zomato keep up with new restaurants. And also help to advance its revenue model.
Zomato has helped create a stable revenue model due to this subsidiary company. Through HyperPure, Zomato is supplying roe material to its 6000 restaurant partners in 6 cities across the country so far.
Most important, Zomato’s revenue model is as an agent. Zomato works as a delivery partner between the customer and the restaurant. Zomato charges a fixed commission from the restaurant for delivery of the food. He also charges the delivery charge from the customer. This has made a stable revenue model available to Zomato.
Apart from India, Zomato provides its services in 23 countries around the world. Which includes countries like America, Indonesia, Malaysia, Lebanon, New Zealand. However 90% of Zomato’s revenue comes from India.
Corona virus effect on Zomato
The corona virus has affected businesses around the world. Even Zomato could not escape it. However, corona virus has also had a positive effect on Zomato.
The company’s revenue reached its lowest level in the first quarter of 2021. The company’s gross order value also reached its lowest level. However, there was a recovery in the company’s revenue after this.
In the first quarter of the financial year 2021, Zomato Company’s revenue was about 11 thousand million rupees. At the same time, in the third quarter of 2021, the company’s revenue increased to 30000 million rupees.
Overview of food delivery market in India
Talking about the first quarter of the financial year 2021, the food delivery market in India was shrinking. This was not a good sign for India’s food delivery market at all.
India’s food delivery market reached its lowest level in the last 2 years in early 2021. However, by the third quarter of 2021, a tremendous recovery was seen. And it reached its 2-year high. All this effect was due to corona virus on India’s food delivery market.
An overall lockdown of about 2 to 3 months was imposed in India. In such a situation, people were not able to go out. And they had no other option but to order food online. Due to this, the food delivery market of India saw tremendous growth.
Talking about the food liver market of India, it is divided into three parts. The first is to go to the restaurant and have dinner. The second is of Pack & Movers. In which people go and get food packed and brought home. The third part is the food delivery market. Where food delivery companies deliver food orders to the customer.
Experts are hoping that in the coming time, the biggest growth of these three will be seen in India’s food delivery channel.
The size of India’s food delivery market is about 3.5 billion dollars by the year 2020. Which is expected to reach $ 11 billion by 2026.
Experts also give some reasons behind the growth in food delivery market in India. Smartphone penetration in India is steadily increasing. Almost every person in India has a smartphone. At the same time, higher-priced food is being ordered online by existing customers.
Apart from this, food delivery companies are also expanding their business to new cities. There is still a lot of potential for growth in the food delivery market in India. Because of this India’s food delivery market will take time to reach its all-time high. In such a situation, there may be a tremendous growth in the Indian food delivery market in the coming time.
Competition in India’s food delivery market
Talking about competition in the Indian food delivery market, Swiggy and Zomato are two companies present at the moment. However, the revenue model of the two companies is different. In such a situation, both cannot be explicitly called competitors. The latest competitor is Amazon Food Delivery Service. Which has not been fully launched in India yet.
Talking about Zomato’s revenue model and marketing model, it wants to strengthen its hold in all departments related to food delivery. Which includes departments such as supplying raw materials to food delivery restaurants.
Talking of Zomato competitor Swiggy, his focus is more on food delivery and delivery of other goods. Swiggy has started delivering food as well as medicines, medical equipment books and other items.
In addition, Swiggy also has its own membership program. Under which Swiggy gives its customers free food delivery on a fix charge as well as special discounts on some restaurants.
If you talk about Amazon food delivery service, nothing much can be said about it right now. But this much is certain that the Amazon food delivery service will initially focus on strengthening its delivery model. In which food delivery will play the main role. However, its size is expected to grow even later. Another advantage with Amazon food delivery is that it has no shortage of money. Amazon can survive in the Indian market for a long time even with food delivery losses.
Talking about the restaurant partner near Amazon, their number is about 1500. Talking about the same Zomato, at present it has about 25000 restaurant partners. Here we are talking about Bengaluru region only. But nevertheless, Amazon is going to give an even tougher competition to Zomato in the coming times. There are no two opinions in this.
Zomato Economic Situation
Talking about the economic situation of Zomato, Zomato has suffered in the last 3 years and 3 quarters. So far Zomato has not shown a single profit. The company currently has almost no debt.
Talking about the food delivery orders received by Zomato Company, their number was 155 million. Whose value was about 6169.9 crores. In the fiscal year 2020, Zomato received around 403 million orders. Whose value was about 11220.9 crores. You can easily understand the effect of corona virus on the company by looking at the number of orders.
Zomato has also seen an increase in the order value. Where the average value of each order to the company in the financial year 2020 was ₹ 278. Which increased to ₹ 398 in the first 9 months of the financial year 2021.
Now here we will talk about the advantages and weaknesses of Zomato’s business model. First of all, we will talk about the features of Zomato’s business model here.
In the business world, the network effect is a phenomina. In which more value increases. When more people use that business. If we see in the case of Zomato, when more people use it, then there will be more restaurant lists in it. So that more customers will come to Zomato. With this you can understand the effect of network effect.
Till 31 December 2020, the company had 161337 active food delivery partners. In the fiscal year 2020, Jomato’s food delivery partner fulfilled 94.9% of food delivery orders. Delivery time in the first 9 months of the financial year 2021 was less than 30 minutes.
This shows that the company has a strong delivery network and partner network.
Zomato is a strong brand. Which is appreciated all over India. Zomato has managed to retain its customers. Over time, online food spend is also large for most customers.
It is not that the company does not have some weaknesses. Zomato Company The company has also seen some weaknesses in its food delivery. Which we are going to talk about now.
Zomato company’s business weaknesses
We have already told you that the company has still not recorded a profit. This can also be seen in the coming times. Because the company has put its emphasis on advancing the business and expanding it.
We have already told you that Zomato and Swiggy still exist in the Indian food delivery market. But now Amazon is also going to enter the food delivery market. Which is a danger for both these companies.
In addition, Zomato also has the capital of Ant Group of Chinese industrialist Jack Ma. Zomato has said that it will always be a foreign-owned company. For this reason, the company has to follow the rules related to FDI. And other rules will also have to be followed by the Zomato company. Which can make it difficult for the company to grow its business.
Zomato IPO launch date
Now we are going to talk about what we know about Zomato IPO. And what can be its launch date?
Zomato intends to fetch 8250 crore rupees from the market through this IPO. 7500 crores of which will be taken through Fresh Equity Shares. The rest wants to be taken through the company ofs.
The company’s largest shareholder Info edge will sell shares in the market through an offer for sale of Rs 750 crore. Apart from this, with the advice of its partners and other experts, Zomato also wants to raise money through a free private placement of Rs 1500 crore.
At present, no information has been given about the date price band etc. of Zomato IPO. As soon as any information will be given about this, we will add it further in this post.