From Dal Street to Dalal Street – Zomato journey

Zomato, an Indian food delivery company has valued at over one lakh crore in market capitalization. There was a huge response from the investors soon after Zomato announced an IPO to go for public funding. 

That made Zomato the only Indian internet based company to get listed in the stock exchanges. Two IIT graduates Deepinder Goyal and Pankaj Chaddah have founded Zomato (earlier known as Foodiebay) in 2008. Foodiebay became the largest restaurant online directory within nine months in Delhi NCR. They were frustrated with giving pizza orders when they were as students and got the idea of online food service. Two students have collected numbers and menus of good restaurants nearby onto their online intranet.

Their attempt turns to great response from the companies for getting food orders. Zomato has been listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Its share price has increased by 66% on the first day of the trading from Rs. 76 (listing price) to Rs. 126. Zomato IPO of 9,375 crore was oversubscribed more than 38 times and online food delivery company valued for 60K crores before listing. They are aiming for 9K crore and got 60K. Zomato is the 43^rd largest company of India in terms of market cap and it is more valuable than 15 Nifty companies (Total 50 companies in Nifty). Zomato paid record fees of 229 crores to its investment bankers for handling the IPO.

The reason for the success of its IPO is the confidence and trust of the people. Of Course! The company has some setbacks and backlash from the customers. Zomato gets around 85% of its revenue from its food delivery business.  It is India’s largest food delivery App used by its customers. Zomato is twice larger in size when compared to jubilant foods (owned by Domino’s Pizza). Sequoia Vy Capital and Jack Ma’s Ant Financial have invested in Zomato. Ant Financial made $200 million in 2017 that led Zomato to surpass $1 billion valuation. 2016 and 2020 have seemed to be bad financial years for Zomato. The company laid off hundreds of its employees and stopped its operations over 10 nations. This led to some disturbances from the delivery boys and distributed agencies in respective countries. Zomato losses stood at Rs. 6.82 billion in 2020 because of the coronavirus pandemic.