Zomato Starts Raising INR 8,500 Cr From QIP, Floor Price is Set At INR 265.91

Zomato, a leading foodtech company, has launched an INR 8,500 crore qualified institutions placement (QIP) at a floor price of INR 265.91 per equity share, a 2.8% discount to its current closing price.

In an exchange filing, the business stated that its board’s fund-raising committee approved the QIP’s opening on Monday (November 25).

Zomato stated that the QIP issuance price would be determined in cooperation with the book running lead manager, and that it may offer a reduction of no more than 5% off the floor price.

Related: Zomato Releases New ‘District’ App For Users To Dine Out & Book Events, Available On Android & IOS

This comes just two days after Zomato secured shareholder permission to raise INR 8,500 crore (about $1 billion) through the QIP.

The company announced plans to do its first fundraise after listing in October of this year. In Zomato’s second-quarter shareholder letter, founder and CEO Deepinder Goyal stated that the financing will increase the company’s cash reserves.

“We believe we need to improve our cash balance given the competitive landscape and the much larger scale of our business today. We think that capital alone does not confer the right to win, but we want to ensure that we are on a level playing field with our competitors, who are continuing to raise capital,” he said.

Since October, the company’s main competitors, Swiggy in the food delivery and quick commerce market and Zepto in the 10-minute delivery space, have received significant funding.

Swiggy became a publicly listed firm earlier this month, raising INR 11327.43 crore through the issuing of new shares in its initial public offering (IPO). Swiggy Instamart intends to use the funds to expand its dark store network, invest in its logistics business Scootsy, and pursue brand marketing and acquisitions, among other things.

Meanwhile, rapid commerce upstart Zepto raised an additional $350 million last week. With this, it became the most heavily funded company of the year, raising more than $1.3 billion in 2024 alone. Zepto plans to use the new cash to extend its dark store network, challenging Zomato-owned Blinkit’s position in the 10-minute delivery industry.

Zomato, on the other hand, has enjoyed positive stock market performance in recent weeks. Last Monday, the BSE stated that the company would be added to the benchmark index, the BSE Sensex, beginning December 23. Earlier in November, the NSE added the company’s stock to the futures and options (F&O) segment.

On the financial front, Zomato posted a net profit of INR 176 Cr in Q2 FY25, up 389% from INR 36 Cr in the previous year. Operating revenue increased by 68.5% to INR 4,799 crore during the quarter, from INR 2,848 crore in Q2 FY24.

Zomato shares closed today’s trading session up 3.58% at INR 273.60.

However, the company’s cash reserves fell to INR 1,726 Cr at the end of the September 2024 quarter as a result of the acquisition of Paytm Insider for INR 2,048 crore.

Following the acquisition, the business established a new app for its “Going Out” sector called ‘District’. The app, which was released on November 16, allows clients to find and reserve tables at restaurants, as well as book tickets for movies, sports, live performances, and other events.