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ZOMATO LTD

Zomato is the first unicorn tech company to be listed on exchanges with a market cap of ₹59,623 crs (at upper band) taking it into top 100 listed entities in India. The company is one of the leading players in the food tech industry in India with a market share of ~45%. Zomato offers multiple services through its food platform in the form of search and discovery, food delivery, customer generated contents, Hyperpure and loyalty program such as Zomato Pro. With the changing dynamics, the need for outside food has seen an increase which gets fulfilled by either going out to the restaurant or ordering food from the restaurants. The millennial population have a greater tendency to eat and explore different cuisines across restaurants. Zomato is the one stop app which provides these customers with details such as photos of the menu, photos of the restaurant premises, address and GPS coordinates, phone number, website, social media presence, cuisine, opening timings, average cost for a meal, free parking availability, indoor or outdoor seating availability, free Wi-Fi availability, whether the restaurant offers live entertainment, has a smoking room, whether table booking is recommended, among others.

Zomato is a growth oriented company focused on increasing its presence further into every part of the country. FY21 revenues fell by 24% to ₹1,993 crores, the number of orders declined by 41% to 239 mn, but order value increased by 43% YoY to almost ₹400. Increase in frequency and number of food delivery by customers due to lockdowns along with lower customer discounts and fees to delivery partners led to contraction in losses in FY21 to 490 crs (excluding exceptional item) from ₹2,251 crs in FY20. Zomato’s unit economic cost has seen an improvement in last four quarters which increased to ₹20.5 in FY21 from loss of ₹30.5 in FY20. 

Zomato is being listed at a revenue multiple of 27x its FY21 revenues whereas global peers trade in the range of 3-19x price to sales. However, the opportunity and scope of further growth is significant for Zomato.

Company Overview

Incorporated as “DC Foodiebay Online Services Private Limited” as a private limited company, later the name was changed to “Zomato Limited (Zomato)”. Zomato is India’s Leading Food technology platform company which connects its three major stakeholders - customers, restaurant partners and delivery partners.

Client Reach

As of March 31, 2021, Zomato is present in 525 cities in India, with 3,89,932 Active Restaurant Listings. The company also has a footprint across 23 countries outside India as of March 31, 2021.

Zomato has three key stakeholders:

1. Customers: The Company has created an entire food ecosystem on its platform where a customer can search and discover restaurants, read and write customer generated reviews and view and upload photos, order food delivery, book a table and make payments while dining-out at restaurants.

2. Restaurant Partners: The platform also helps the restaurant partners with industry-specific marketing tools to generate better visibility and attract more customers to grow their business.

3. Delivery Partners: The third stakeholders are independent delivery partners who earn their livelihood through food deliveries where the company provides them with transparent and flexible earning opportunities.

Other Services offered

Apart from the B2C business, Zomato also provides B2B business of one-stop procurement solution, Hyperpure, which supplies high quality ingredients to restaurant partners. The company also offers exclusive paid-membership program-Zomato Pro, which unlocks flat percentage discounts for the customers at select restaurant partners across both food delivery and dining-out offerings.

Leadership & Dominance

According to a third party research, Zomato is India’s leading Food Services platforms in India in terms of value of food sold. Also, the company’s mobile application is the most downloaded food and drinks application in India in each of the last three fiscal years since FY19 to FY21 on iOS App store and Google Play combined. Zomato has one of India’s largest hyperlocal delivery networks in terms of number of delivery partners as of March 31, 2021. The delivery network collected food from the restaurant partners and delivered it to customers with a median delivery time of approximately 30 minutes in FY21.

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