Zomato board to consider raising funds via qualified institutional placement on October 22

Food delivery giant Zomato on Thursday, October 17 announced that a meeting of its board of directors is slated for next week to consider raising funds via qualified institutional placement (QIP). The said meeting is slated to take place on Tuesday, October 22. 

“... a meeting of board of directors of the Company is scheduled to be held on Tuesday, October 22, 2024, inter-alia, to 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,” Zomato said in an exchange filing post-market hours today.

If approved, this will be the first capital raise via QIP by Zomato after its stock market debut three years ago. The fundraising comes at the time when its rival Swiggy is looking to hit the primary market for its initial public offering (IPO). Last month, Swiggy received the capital market regulator Securities and Exchange Board of India's nod for its $1.25 billion IPO.

The fundraising could provide Zomato with the capital needed to accelerate its expansion and strengthen its position amid increasing competition in the quick-commerce sector.

As part of its strategy to diversify beyond food delivery and quick commerce, the new capital raise through QIP could enable Zomato to expand and grow its 'going-out' segment. This is especially significant after its recent acquisition of Paytm's ticketing arm for ₹2,048 crore.

Meanwhile, the competition in the quick-commerce space is intensifying with the entry of giants like Reliance and Flipkart in the space in recent months.  

Zomato Earnings

The company’s board will consider the unaudited financial results for the quarter and half year ended September 2024 on the same day next week.

In the first quarter of the current fiscal, Zomato had reported a multi-fold jump in its profit at ₹253 crore while its revenue also recorded a strong growth of 74 per cent year-on-year (YoY) at ₹4,206 crore.

The gross order value (GOV) across its B2C businesses, which includes food delivery, quick commerce and going-out, accelerated to 53% YoY to ₹15,455 crore.

Led by strong results, Zomato's shares have seen an exceptional rally in the last one year, with the stock delivering multibagger returns to investors to the tune of 137 per cent. So far in 2024, the stock is up 118 per cent. 

On Thursday, the stock closed 1.44 per cent lower at ₹270.30 on NSE.