Zomato Sets the Floor Price at INR 265.91 Per Share, Launches an INR 8,500 Crore QIP Offering

Nitin Konde, Varun Bhardwaj

Nov 27, 2024 — 3 min read

Zomato Sets Floor Price at INR 265.91 for INR 8,500 Crore QIP

On November 25, Zomato Ltd., a food delivery aggregator, launched its INR 8,500 Qualified Institutions Placement (QIP) offering. The floor price for each equity share was INR 265.91. The indicative price is INR 252.62 per share, which is 7.6% less than the closing market price of INR 272.9 per share on 25 November. 33.65 crore shares, or 3.8% of the total stock, are up for grabs.

On November 23, 2024, the company declared that a plan to raise money through a Qualified Institutions Placement (QIP) had been authorised by its shareholders. Its board authorised a qualified institutions placement (QIP) last month, raising up to INR 8,500 crore. The company stated in a filing that the goal of the fundraising is to enhance the balance sheet at this time.

Levelling Up the Reduced Cash Balance

Due to the INR 2,014 crore agreement consideration for the purchase of Paytm's entertainment ticketing business, Zomato said that its cash balance had decreased by INR 1,726 crore from the previous quarter.

Zomato has announced that its equity shares, which have a face value of INR 1 apiece, are being issued in accordance with the applicable requirements of the Companies Act of 2013 and the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. In its announcement, the business also stated that, with shareholder approval, it may provide a floor price discount of up to 5%.

How Zomato Plans to Utilise Proceeds?

Zomato intends to use the money raised mostly for marketing and advertising, as well as for growing the reach of its rapid commerce division Blinkit, according to the QIP's preliminary placement document. INR 2,137 crore will be used for "expenditure towards setting up and running operations of dark stores and warehouses," according to the statement. By the conclusion of the current fiscal year, Blinkit plans to have 1,000 dark stores—micro warehouses from which 10-minute deliveries are made—and 2,000 of these stores by the end of 2026. The company is currently engaged in a large expansion exercise. By the end of FY25, Zepto also plans to run more than 700 dark stores, and Swiggy Instamart wants to increase the number of its dark stores from about 557 as of June 30 to 741.

In its prospectus, Swiggy stated that it intended to invest INR 1,179 to grow its rapid commerce business. Additionally, Zomato announced that it would invest INR 2,492 crore in "branding, marketing, and advertising initiatives across our business offerings."

Staying Ahead in the Race

Zomato operates a business-to-business (B2B) grocery supply division called Hyperpure, a live events and ticketing vertical through its District app, and meal delivery, which is the company's major business section. This is Zomato's first fundraising effort since its July 2021 IPO, and it coincides with a period in which its competitors have raised substantial sums of money.

Zepto, a 10-minute delivery service, has acquired more than $1.3 billion in the last four to five months, while its largest rival, Bengaluru-based Swiggy, collected INR 4,499 crore in primary capital through its first public offering (IPO) earlier this month. Deepinder Goyal, the founder and CEO of Zomato, announced last month that the company was gathering funds to fortify itself in the market.