SUMMARY
- Zomato shareholders approved a ₹8,500 crore Qualified Institutional Placement (QIP) to enhance its cash reserves amidst fierce competition in the quick commerce sector.
- As of September 30, Zomato reported a cash balance of ₹10,813 crore, down from ₹12,539 crore in June due to its Paytm Events acquisition for ₹2,048 crore.
- The company, profitable since Q1 FY24, posted a 68% YoY revenue rise and a five-fold jump in net profit in Q2 FY24.
Zomato, the Gurgaon-based food and grocery delivery firm, announced that its shareholders have overwhelmingly approved a plan to raise ₹8,500 crore through a Qualified Institutional Placement (QIP). Over 99.7% of the shareholders voted in favor of the resolution, the company revealed in a regulatory filing on Saturday.
The QIP proposal, initially cleared by Zomato’s board on October 22, aims to bolster the company’s cash reserves as it navigates the competitive quick commerce industry.
“While our business is now generating cash, we need to further enhance our cash balance given the competitive landscape and the larger scale of operations,” said Deepinder Goyal, Zomato’s founder and CEO.
CFO Akshant Goyal emphasized that the final fundraise amount would depend on market conditions and the timing of the QIP launch.
As of September 30, Zomato’s cash balance stood at ₹10,813 crore, down from ₹12,539 crore in June, primarily due to the ₹2,048 crore acquisition of Paytm’s events and ticketing business.
Zomato has turned profitable since Q1 FY24, with Q2 FY24 operating revenue surging 68% YoY to ₹4,799 crore and net profit jumping five-fold to ₹176 crore.
The company also continues its expansion of Blinkit, its quick commerce subsidiary, planning 1,000 dark stores by the fiscal year’s end and 2,000 stores by 2026.
Competitive Landscape Heats Up
The quick commerce industry is witnessing an escalation in funding:
- Swiggy recently raised ₹4,499 crore through an IPO.
- Zepto secured $350 million in fresh investments and raised $1 billion in the past five months.
Both competitors are expanding their dark store networks, with Zepto aiming for 700 stores by FY25 and Swiggy Instamart targeting 741 stores by the end of FY24.
With this QIP, Zomato aims to solidify its position as a market leader, preparing to tackle the intensifying cash burn and maintain competitive unit economics.
