Zomato to Review Fundraising Plans in Upcoming Board Meeting

According to a regulatory filing, Zomato’s board of directors will meet on October 22, 2024, to consider raising funds through a qualified institution placement (QIP). The company has not disclosed the exact amount it intends to raise.

The filing stated, "A meeting of the 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." 

Additionally, the board will review and approve Zomato’s financial results for the second quarter (Q2) of the financial year 2024-25 (FY25).

If approved, this will mark Zomato's first fundraising event since its stock market listing three years ago. The timing is significant as competition within the food delivery and quick commerce sectors intensifies. Zomato’s key competitor, Swiggy, is preparing for an initial public offering (IPO) and aims to raise up to $450 million through fresh capital.

As of the first quarter of FY25, Zomato holds cash reserves of Rs 12,539 crore (approximately $1.5 billion). Industry experts suggest that this potential fundraising move could be a strategic play to counter Swiggy's upcoming IPO.

In the first quarter of FY25, Zomato reported a consolidated profit of Rs 253 crore, up from Rs 175 crore in the previous quarter and Rs 2 crore in the same period last year. The company's revenue from operations grew by 74 percent year-on-year to Rs 4,206 crore, compared to Rs 2,416 crore in the previous year. 

Zomato's food delivery business is now profitable, and its quick commerce unit, Blinkit, is also nearing break-even, according to the company's management.

Meanwhile, Zepto, another player in the quick commerce sector, is looking to raise between $100 million and $150 million, following a series of fundraises amounting to over $1.2 billion in the past 14 months.