Food-delivery major Zomato has launched its initial public offering (IPO) today. This makes Zomato the first Indian unicorn start-up to feature on the
bourses. It is expected that the IPO will boost Zomato’s market valuation by $9
billion.

The company fixed its price band at Rs72–76
per share at the face value of Rs1 each. Ahead of Wednesday’s IPO, the anchor
portion of the offer opened on Tuesday and Zomato raked in over Rs4,196 crore
from 186 anchor investors.

Also Read | Zomato IPO opens for subscription today. All you need to know

Among the anchor investors are JP
Morgan, Morgan Stanley, Tiger Global Investment Fund and Blackrock.

Rising market share

Zomato’s core business offers two
segments — food delivery and dining out. In its draft red herring prospectus
(DRHP), Zomato said that it has consistently gained market over the last four
years and leads the food delivery space in India. Online food orders with the
company surged from 30.6 million in 2018 to 403.1 million in 2020.

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On the road to recovery

The COVID-19 pandemic severely impacted
Zomato’s business. Lockdowns and curbs on movement made the food delivery business
plunge to its lowest in two financial years. However, the company witnessed
strong recovery in subsequent quarters with number of online food orders rising
significantly.

The gross order value during the third
quarter was Rs29,810 million — highest for the company in any quarter till
December 2020.   

Smart unit economics

One of Zomato’s biggest achievements is
the company’s unit economics. Having good unit economics means Zomato is at a
better stage in achieving its break-even point and turning a profit on each
order placed by the user. This happens when the average order value keeps
rising. This happened during the pandemic.

Also Read | Zomato to launch grocery section on its app

Should you invest

The food delivery major and restaurant
aggregator’s IPO will remain open till July 16. Retail applicants can bid for a
minimum of one lot of 195 shares and in multiples thereof, up to a maximum of
13 lots.

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The Zomato story

Incorporated in 2008, Zomato is an
Indian start-up backed by China’s Ant Group. Zomato has a presence in 24
countries outside of India. The company seeks to use its IPO proceeds to fund
its organic and inorganic initiatives and for general corporate purposes.