Zomato in Focus as Board Considers Fundraising via QIP and Q2 Financials

Shares of Zomato have become a focal point in the market as the board of the food delivery aggregator is set to deliberate on raising funds through a qualified institutions placement (QIP) on October 22. The company has not disclosed the amount it intends to raise. Concurrently, the board will also review and approve the financial results for the quarter ending September 2024.

According to Zomato’s filing with the stock exchange, “Zomato board will consider and approve raising of funds by issuance of equity shares by way of qualified institutions placement, as may be permitted under applicable laws, subject to such regulatory/statutory approvals, including the notice for the postal ballot for obtaining the shareholders’ approval in this regard, as may be required.” If the proposal gets the nod, this will mark the first time the Gurugram-based company raises funds since its public listing in 2021.

This financial move coincides with the activities of its competitor, Swiggy, based in Bengaluru, which is on the brink of launching its initial public offering (IPO). Swiggy aims to raise as much as $450 million in new capital through this public offer.

In the April to June quarter, Zomato recorded a consolidated profit of Rs 253 crore, a significant rise from Rs 2 crore in the corresponding period of the previous year. The company’s revenue from operations increased by 74% year-over-year to Rs 4,206 crore, compared to Rs 2,416 crore a year prior. As of the first quarter of fiscal year 2025, Zomato holds cash reserves amounting to Rs 12,539 crore, equivalent to roughly $1.5 billion.

Zomato’s core food delivery division is already profitable, and the company’s senior management has indicated that its quick commerce segment, Blinkit, is approaching break-even.

During the previous trading session, Zomato’s stock fell by 1.4% to Rs 270.30 on the National Stock Exchange (NSE). Nevertheless, the stock has achieved a 117% surge this year, dramatically outperforming the Nifty index, which recorded a 14% gain. Over the past year, Zomato’s shares have climbed 138%, more than doubling investors’ investments, whereas Nifty increased by 25% during the same timeframe.