{"id":797,"date":"2021-07-08T15:04:21","date_gmt":"2021-07-08T15:04:21","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=797"},"modified":"2021-07-10T09:45:31","modified_gmt":"2021-07-10T09:45:31","slug":"zomato-ipo-is-coming-soon-its-time-to-deep-dive-into-its-financials","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/zomato-ipo-is-coming-soon-its-time-to-deep-dive-into-its-financials\/","title":{"rendered":"Zomato IPO is coming soon! It\u2019s time to deep dive into its financials."},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div>\n<p>Digital-based food delivery platform is all set to list on the Indian bourses and its popularity is gaining a lot of strength. IPO of Zomato is one of the most-awaited issues in the primary market and it is going to material in July. The aggregator platform has received approval from SEBI and its issue size has been finalized. Issue size of Zomato is a mix of Offer For Sale and Fresh Issue. Offer For Sale is an aggregate of Rs. 375 cr. by Info Edge while the fresh issue of Rs. 9,000 cr. will be utilized for funding organic and inorganic growth.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"counter-hierarchy counter-decimal ez-toc-grey\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list\"><li><a href=\"#Products_of_Zomato\" title=\"Products of Zomato\">Products of Zomato<\/a><\/li><li><a href=\"#Investors_response_for_Zomato_IPO\" title=\"Investor\u2019s response\nfor Zomato IPO\">Investor\u2019s response\nfor Zomato IPO<\/a><\/li><li><a href=\"#Revenue_Mix_of_Zomato\" title=\"Revenue Mix of Zomato\">Revenue Mix of Zomato<\/a><\/li><li><a href=\"#Per_Unit_Mathematics_of_Zomato_and_it_is_profitable\" title=\"Per Unit Mathematics of Zomato and it is profitable\">Per Unit Mathematics of Zomato and it is profitable<\/a><\/li><li><a href=\"#Zomatos_Annual_Results\" title=\"Zomato\u2019s Annual Results\">Zomato\u2019s Annual Results<\/a><\/li><\/ul><\/nav><\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Products of Zomato<\/strong><\/h2>\n\n\n\n<p>Zomato is a B2C aggregate platform and its <strong>core-product<\/strong> is to help<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>customers to find restaurants<\/li><li>Provide reviews by customers to support the food\norder from any restaurants.<\/li><\/ul>\n\n\n\n<p><strong>Other products: <\/strong><\/p>\n\n\n\n<p><strong>Dining Out: <\/strong>Zomato\noffers dining at some restaurants where dining focuses on three things\u2014a\ncontactless menu, contactless ordering and contactless payment.<\/p>\n\n\n\n<p><strong>Hyperpure: <\/strong>Delivery\nbased operations in which small trucks are filled with neatly packed containers\nof high-quality fresh produce &#8211; fruits, vegetables, grain, poultry, dairy, and\nfresh meats.<\/p>\n\n\n\n<p><strong>Zomato Pro: <\/strong>Exclusive paid-membership program that unlocks flat percentage discounts for the customers at select restaurant partners across both food delivery and dining-out offerings. <\/p>\n\n\n\n<p>Must Read: <a href=\"https:\/\/www.invest19.com\/blog\/one-size-fits-all-doesnt-work-anymore-every-sector-has-different-parameter-to-scrutinize\/\">\u2018One size fits all\u2019 doesn\u2019t work anymore! Every sector has different parameter to scrutinize.<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Investor\u2019s response\nfor Zomato IPO<\/strong><\/h2>\n\n\n\n<p>Market participants are betting on the success of Zomato\nissue due to strong growth drivers and funding by various institutional\ninvestors. Rising penetration of smartphones in the Indian market and a country\nwith 2<sup>nd<\/sup> largest population claims to provide strong growth to a\nfood delivery platform perpetually. Zomato is backed by big institutions and involvement\nof various investors display strong future prospects of the business. It is\nworth mentioning that the company has not been able to generate profits. Well,\nfuturistic digital platform startups usually display losses in early years due\nto high expenditure on advertising and lucrative schemes to attract customers\nand largely bank upon funding from institutional investors to augment their\ncapital requirements. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Revenue Mix of Zomato<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"504\" height=\"245\" src=\"https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/07\/Untitled-design-5.png\" alt=\"\" class=\"wp-image-803\" srcset=\"https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/07\/Untitled-design-5.png 504w, https:\/\/www.invest19.com\/blog\/wp-content\/uploads\/2021\/07\/Untitled-design-5-300x146.png 300w\" sizes=\"auto, (max-width: 504px) 100vw, 504px\" \/><\/figure>\n\n\n\n<p><strong>Total Revenue:\n2,604.73 crores<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>2,290.8 crores\/88% revenues from sale of\nservices from platform such as Food ordering, zomato pro and dining out.<\/li><li>107.58 crores\/4.13% revenues from delivery of\ntraded goods such as \u2018Hyperpure\u2019.<\/li><li>206.34 crores\/7.92% revenue from other operating\nincome.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Per Unit Mathematics of Zomato and it is profitable<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"\"><tbody><tr><td>Per\n  Order Mathematics of Zomato<\/td><td>FY20<\/td><td>FY21<\/td><\/tr><tr><td>Gross Order Value (Rs. In millions)<\/td><td>112209<\/td><td>94827.8<\/td><\/tr><tr><td>Total Orders (Millions)<\/td><td>403<\/td><td>238.9<\/td><\/tr><tr><td>Average Order Value<\/td><td>278<\/td><td>397<\/td><\/tr><tr><td>Restaurant partner&#8217;s commission<\/td><td>43.6<\/td><td>62.8<\/td><\/tr><tr><td>Customer Delivery Charges<\/td><td>15.3<\/td><td>27<\/td><\/tr><tr><td>Total Revenue<\/td><td>58.9<\/td><td>89.8<\/td><\/tr><tr><td>Delivery Cost<\/td><td>52<\/td><td>45.7<\/td><\/tr><tr><td>Discount<\/td><td>21.7<\/td><td>8.3<\/td><\/tr><tr><td>Other Variable Cost<\/td><td>15.7<\/td><td>15.3<\/td><\/tr><tr><td>Total Varable Cost<\/td><td>89.4<\/td><td>69.3<\/td><\/tr><tr><td>Contribution (Per Unit)<\/td><td>-30.5<\/td><td>20.5<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\"><li>Commissions from restaurants for fetching\nbusiness in the form of food order has surged from Rs. 43.6 to Rs. 62.8, an\nincrease of 44% shows the rising Zomato\u2019s strength of bargaining on\nrestaurants.<\/li><li>Customer delivery charges are increased from Rs.\n15.3 to Rs. 27, which states that Zomato is operating with higher efficiency.<\/li><li>Delivery cost has been reduced from Rs. 52 to\nRs. 45.7 clears that Zomato is efficiently reducing their cost by maintaining\ntheir delivery partners.<\/li><li>Initially, Zomato has offered heavy discounts on\nfood orders to attract customers. However, company has reduced their discount\ncost from Rs. 21.7 to Rs. 8.3 as customers are become habitual to food\nordering.<\/li><li>The theoretical framework of Variable costing has\nturned Zomato profitable on per order basis.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Zomato\u2019s Annual Results<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"\"><tbody><tr><td>Income Statement (In Millions)<\/td><td>FY21<\/td><td>FY20<\/td><td>FY19<\/td><td>FY18<\/td><\/tr><tr><td>Gross\n  Operating Income<\/td><td>21184.24<\/td><td>27427.39<\/td><td>13977.20<\/td><td>4045.63<\/td><\/tr><tr><td>Cost of\n  Employee &amp; Inventory<\/td><td>9326.34<\/td><td>9078.01<\/td><td>6173.78<\/td><td>2904.93<\/td><\/tr><tr><td>Other\n  Expenses<\/td><td>15283.22<\/td><td>40016.38<\/td><td>29386.91<\/td><td>2679.75<\/td><\/tr><tr><td>EBITDA<\/td><td>-3425.32<\/td><td>-21667<\/td><td>-21583.5<\/td><td>-1539.05<\/td><\/tr><tr><td>Depreciation<\/td><td>1377.44<\/td><td>842.36<\/td><td>431.15<\/td><td>291.47<\/td><\/tr><tr><td>Interest&nbsp;<\/td><td>100.82<\/td><td>126.36<\/td><td>86.89<\/td><td>63.49<\/td><\/tr><tr><td>Exceptional\n  Items<\/td><td>-3247.67<\/td><td>-1220.29<\/td><td>11999.2<\/td><td>&#8211;<\/td><\/tr><tr><td>Profit\n  Before Tax<\/td><td>-8151.25<\/td><td>-23856<\/td><td>-10102.3<\/td><td>-1894.01<\/td><\/tr><tr><td>&nbsp;Tax<\/td><td>13.04<\/td><td>&#8211;<\/td><td>&#8211;<\/td><td>&#8211;<\/td><\/tr><tr><td>Profit\n  After Tax<\/td><td>-8164.29<\/td><td>-23856<\/td><td>-10102.3<\/td><td>-1894.01<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\"><li>Zomato\u2019s gross revenue has increased at a CAGR of 73% in last 3 years. Revenues have been declined this year due to restrictions on movement of men, materials and machine imposed by government to contain COVID-19.<\/li><li>The company has reduced their spending heavily on promotions and advertising and digital marketing. As a percentage of total income, the advertisement and sales promotion expenses were 24.88% in FY2021 compared to 48.80% in FY2020.<\/li><li>Other Expenses of the company includes Advertising and Sales promotion expenses are plunged by 61.8% that has narrowed down the losses of the firm.<\/li><li>EBITDA figure is still negative at Rs. 3,425.32 million; however it has narrowed down by 84%.<\/li><li>Net Losses are narrowed to Rs. 8,164.29 million from Rs.23,856 million.<\/li><li>The digital food delivery platform has free cash flows of Rs. 306.5 cr. and additional capital infusion of Rs. 9,000 cr. from net proceeds of fresh issue will support their operations further.<\/li><li>Zomato is a loss-making platform therefore valuation parameters are limited. Still, the Enterprise Value\/Sales stands at 20.5x while the unlisted peer Swiggy and global peer Amazon-backed British food delivery firm Deliveroo is trading at 7.5x and 4.4x respectively.<\/li><\/ul>\n\n\n\n<p>Also Read: <a href=\"https:\/\/www.invest19.com\/blog\/why-should-you-stick-to-investing-in-market-leaders-only\/\">Why should you stick to investing in market leaders only?<\/a><\/p>\n<div class='epvc-post-count'><span class='epvc-eye'><\/span>  <span class=\"epvc-count\"> 3,859<\/span><\/div><div class=\"pld-like-dislike-wrap pld-template-1\">\n    <div class=\"pld-like-wrap  pld-common-wrap\">\n    <a href=\"javascript:void(0);\" class=\"pld-like-trigger pld-like-dislike-trigger \" title=\"\" data-post-id=\"797\" data-trigger-type=\"like\" data-restriction=\"ip\" data-ip-check=\"0\" data-user-check=\"1\">\n                        <i class=\"fas fa-thumbs-up\"><\/i>\n                    <\/a>\n    <span class=\"pld-like-count-wrap pld-count-wrap\">12    <\/span>\n<\/div><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Digital-based food delivery platform is all set to list on the Indian bourses and its popularity is gaining a lot of strength. IPO of Zomato [&hellip;] <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/www.invest19.com\/blog\/zomato-ipo-is-coming-soon-its-time-to-deep-dive-into-its-financials\/\">Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":800,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[70,2,7,10],"tags":[],"class_list":["post-797","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ipo","category-stock-market","category-investment","category-featured"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/797","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=797"}],"version-history":[{"count":3,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/797\/revisions"}],"predecessor-version":[{"id":805,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/797\/revisions\/805"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/800"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=797"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=797"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=797"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}