Zomato is a startup that offers a cafe/restaurant search and helps you find new food places via its application and site, giving inside and out data about eateries. Zomato is utilized by buyers to find, rate, and survey cafes, just as to make their very own organization of foodies for confided in suggestions.
Started in Delhi 12 years prior, Zomato has developed from a home venture to one of the biggest food aggregators on the globe. Zomato is in 24 nations and 10000+ urban cities worldwide, empowering our vision of better nourishment for more and more individuals. Zomato not only associates individuals with food in each specific situation yet works intimately with eateries to empower a sustainable environment.
Zomato Pvt is a food delivery startup upheld by Jack Ma’s Ant Group and has documented the draft outline prospectus (D)RHP on 28th April 2021 for its first public listing that could raise about Rs 8250 cr, as indicated by moneycontrol and livemint on the matter.
How does Zomato work?
Today, Zomato has different income channels other than online food delivery, which most purchasers would be acquainted with.
- Restaurant Listings/Ads:
In its first symbol, Zomato was only a posting/advertisement stage and a restaurant registry. This acquired promoting incomes from restaurants that joined the stage.
Broadening this further after the dispatch of food delivery and restaurant reservations, Zomato presently charges, commissions from restaurants to be set on top of the feed. Restaurants can pay to have their Ads or offers on home feed advanced just like their general flag, which brings improved permeability and engagement from Zomato clients.
- Food Delivery:
Regardless, through its food delivery business, Zomato charges a commission to the restaurants based on orders. While clients pay a delivery charge, Zomato procures through restaurants that pay a commission for every delivery, which is then parted among the delivery accomplice and the organization.
Commissions from restaurants fluctuate depending on whether Zomato is satisfying the delivery or whether the restaurant utilizes its own riders. This is said to contribute in a little manner to the organization’s all-out pay because of heavy competition and the requirement for profound limits and so forth.
- Subscription-based plans:
With Zomato Gold for buyers and clients, membership is a great solution for restaurants, and for Zomato they have opened up a constant flow of income.
While clients pay a membership amount to get into the Zomato Gold membership program which brings selective offers, restaurants likewise pay a month-to-month charge to be important for Zomato’s bundle of offers.
Restaurants additionally pay Zomato a month-to-month expense for various administrations features like the live tracking, Zomato-marked carefully designed bundling, and then some.
- Events:
With Zomaland, Zomato entered the marked live events market a year ago. Zomato charges clients a passage expense to go to Zomaland, where other than food, they can observe live music, stand-up acts, and different demonstrations.
In 2018, it coordinated the diversion amusement park in Delhi, Pune, and Bengaluru, where Zomato guaranteed over 100K individuals appeared. In 2019, Zomaland went to Pune, Delhi, Bangalore, Hyderabad, Mumbai, Jaipur, Pune, Chandigarh, and Kolkata.
- Zomato small Kitchens program:
To have the option to give kitchen framework administrations to choose restaurant administrators, Zomato works with entrepreneurs to set up and work Zomato Kitchens under various brands.
This assists entrepreneurs with subsidizing restaurants in the correct area with an investment of INR 35 Lakh and the sky’s the limit from there. Zomato claims it offers returns in the scope of INR 2 Lakh to INR 4 Lakh each month to the financial backers, with 180+ associate kitchens effectively going.
As it has scaled in size, Zomato has attempted to lessen the dependence on cash-burning models and smoothed out to enter enablement and other client-based streams of income.
Zomato’s money burning is for the most part in holding its users against its competitor Swiggy. In any case, being in the line of fire for profound limiting practices, Zomato may before long have the option to acquire from different pieces of its plan of action.
How can you Invest in Zomato?
Now, you can apply for the IPO through the normal IPO application process using Zerodha, Upstox or any other broker and if you don’t know how to apply for IPO read our blog on ‘Easy Step by step guide to apply for IPO in India’.
But, honestly speaking getting allotted for an IPO is like winning a lottery and it depends on your luck. If you do get allotted then read our blog on ‘How to make money using IPO in India’.
So how can you get a piece of the action, if the IPO is not allotted? You can invest in Zomato even before it offers the IPO. There is a publicly listed company that has 18% ownership in Zomato and that company is infoedge also known as naukri.com.
Infoedge is a type of holding company that holds a lot of other companies as well. Infoedge has an 18% stake in Zomato at the valuation of $5 billion which makes the company the largest shareholder in Zomato.
Why apply for the Zomato IPO?
- It’s an internet company which has more expenses at the start, but also comes with a strong chance of exponential growth.
Let’s see the growth potential of Zomato:
According to many analysts, the annual growth of the online food delivery industry should grow at 25-30% CAGR.
Currently, India’s penetration in the online foodservice industry is only 4.0%. The table below shows the comparison with other markets.
| Countries | Penetration in the markets |
| India | 4.0% |
| UK | 9.4% |
| US | 9.8% |
| China | 12.0% |
Zomato has been growing at a very fast pace but how much headroom does the company have? This table comparing the total addressable markets in India, US & China may give us some indication:
- Most internet companies attain sustainability, now according to the data china’s food industry is 27X times the Indian. So even if the Indian food delivery industry grows 3-4 times, it will have exponential growth and sustainability. This will directly benefit big players like Zomato.
- Zomato has global ambitions and it is present in many international markets which gives it an advantage over its competition.
The table given below shows the presence of Zomato in international markets.
| Countries | The user base in % |
| India | 31.87% |
| US | 13.79% |
| Turkey | 7.57% |
| Australia | 6.49% |
What is the Release date of Zomato IPO ?
The much-awaited IPO of online food delivery and restaurant platform Zomato will open for subscription on July 14 and will be open till July 16.
Conclusion:
Zomato is a good company but if you are planning to apply for the IPO, then you have to keep in mind that it is an internet company that can post losses/no profit for quite a few years. So you have to invest for the long-term growth perspective. You can also apply for the listing gains if the IPO covers all the parameters.
