Zomato Limited successfully raised ₹8,500 crore through a Qualified Institutions Placement (QIP) of equity shares, which marks a significant step in the strategic funding of the company. The offer opened on November 25 and closed on November 28. Zomato’s Fund Raising Committee approved the offering before its closure. This capital infusion is expected to improve Zomato’s financials, which will help the company in its expansion and strategic moves, especially in the rapidly growing quick commerce segment through its subsidiary, Blinkit.
PC: Aaj Tak
The QIP included the issuance of 33,64,73,755 equity shares at ₹252.62 per share, which carries a premium of ₹251.62 per share. The price is 5% lower than the floor price of ₹265.91 per share. Considering this significant growth in recent quarters of Zomato, a recent capital raise becomes pertinent in the present scenario. Q2 FY25 recorded its operating revenue up at a 68.5 percent quarter-on-quarter rate into ₹4,799 cr from ₹2,848 cr during the same time last fiscal. Even with net profit at an 4.8 times count, Zomato delivered ₹176 crore for its September quarter.
The QIP garnered a good response from the market, with big mutual funds like ICICI Prudential and Motilal Oswal being among the major allottees. Motilal Oswal alone picked up nearly 6.92 crore shares, which translates into 20.81% of the total issue size. This institutional investor appetite reflects confidence in Zomato’s growth trajectory as well as its future potential for profitability.
Through this fundraise, the paid-up equity share capital of Zomato has risen to ₹917.28 crore. It is expected that capital thus raised will be utilized towards the growth initiatives in a manner that is expected especially within the quick commerce category. In which Blinkit commands a significant 46% market share of the quick commerce market. A distance ahead of the market rivals, such as Zepto, which holds an equivalent market share of just 29%, and Swiggy Instamart, which holds a share of 25%.
Following the QIP announcement, the share price of Zomato went up by a notable 6.8% to ₹282 per share on November 29, 2024, with the market seemingly optimistic. The market capitalization of the company has now crossed approximately ₹2,35,481 crore or around $28 billion. It has left behind its closest rival, Swiggy, trading at ₹470 per share with a market cap of ₹90,712 crore or $10.7 billion.
In short, the successful completion of the QIP is part and parcel of Zomato’s broader strategy to strengthen itself in the competitive food delivery and quick commerce markets. With the additional capital in hand, the company now aims to enhance its operational capabilities, expand its services, and improve customer engagement.
As of now, raising ₹8,500 crore through its successful QIP is one of the most crucial turning points in its journey. Zomato has now successfully strengthened the financial base for aggressive growth, especially into quick commerce. As long as this innovative and flexible company evolves according to changes in market conditions, there is very little reason it cannot enjoy sustainable growth well into the future.
