The food delivery magnate Zomato has successfully amassed ₹8,500 crore through a Qualified Institutional Placement (QIP), issuing 33.65 crore equity shares at ₹252.62 per share. This pricing reflects a 5% markdown from the floor price of ₹265.91, symbolizing the company’s most substantial capital infusion since its IPO debut in July 2021.
The QIP garnered robust enthusiasm from institutional buyers, culminating on November 28, 2024. Approved by Zomato’s Fundraising Committee, this marks a pivotal step for the firm’s ambitions to solidify its standing in competitive markets.
Strategic Fund Allocation and Growth Endeavors
Zomato has earmarked a notable portion of the proceeds—₹2,137 crore—for the establishment and operation of dark stores and warehouses. These infrastructural investments are envisioned to strengthen the company’s dominance in food delivery and the burgeoning quick commerce arena.
A sizeable allocation is also directed towards amplifying advertising and marketing initiatives to sustain Zomato’s competitive position. CEO Deepinder Goyal affirmed that this financial maneuver aims to fortify the company’s balance sheet while fueling growth trajectories.
In its QIP disclosures, Zomato highlighted Goyal’s extension of his salary waiver until March 31, 2026. Initially implemented in April 2021, this waiver complements his 4.2% equity stake in the company, valued at ₹10,150 crore as of November 28, 2024.
Market Performance and Inclusion in F&O
On the same day, Zomato’s stock saw a modest uptick, closing at ₹285.2—a meteoric 145% climb over the past year. This rally has propelled its market capitalization to ₹2.4 lakh crore, bolstered by heightened profitability metrics.
Moreover, the stock’s inclusion in the National Stock Exchange’s futures and options (F&O) segment is anticipated to bolster liquidity and furnish investors with hedging mechanisms. Analysts predict Zomato’s entry into the Nifty 50 index during the March 2025 reshuffle, following its scheduled addition to the BSE Sensex on December 23. Notably, brokerage firm Jefferies has placed a ‘Buy’ recommendation on Zomato, targeting a price of ₹335 per share.
Introducing ‘District’: A New Frontier
In a bid to diversify its offerings, Zomato has unveiled an innovative application named ‘District.’ This platform aspires to become a comprehensive hub for dining and entertainment activities. While its initial focus remains on dining reservations and ticketing, the app is poised for expansion into ancillary segments, addressing gaps in a supply-restricted market.
Industry experts regard this strategic move as a potential game-changer, unlocking fresh revenue streams and reinforcing Zomato’s competitive edge.
Competitive Dynamics: Zepto and Swiggy
In the quick commerce domain, competitors like Zepto and Swiggy are intensifying their footprints. Zepto aims to establish over 700 dark stores by FY25, while Swiggy Instamart plans to increase its count to 741, up from 557 as of June 2024.
Swiggy’s recent filings outline a ₹1,179 crore investment dedicated to scaling its quick commerce division, signaling heightened rivalry in the sector.
