Zomato Limited, a leading foodtech company, has raised Rs 8,500 crore through a Qualified Institutional Placement (QIP) of equity shares, marking its first major fundraising since its 2021 IPO. The proceeds from the issuance, which involved over 33.6 crore shares priced at Rs 252.62 each, will bolster Zomato’s financial strength and fund its expansion into the quick commerce sector, primarily through Blinkit. With significant participation from institutional investors like Motilal Oswal and ICICI Prudential, the capital infusion enhances Zomato's competitive edge against rivals like Swiggy. This move also positions Blinkit to adopt an inventory-led model, reinforcing Zomato’s dominance in the growing quick commerce market.

Details of the Rs 8,500 Crore Fundraise

1. Structure of the QIP
Zomato issued 33,64,73,755 equity shares at Rs 252.62 per share, reflecting a 5% discount from the floor price of Rs 265.91. The fundraising received shareholder approval last week and opened on November 25, closing on November 28.

2. Notable Investors
Prominent institutional investors participated in the QIP, with Motilal Oswal acquiring 6.92 crore shares, accounting for 20.81% of the total issue size, and ICICI Prudential securing 12.78%. Other major participants included HDFC and Kotak Funds.

Capital Deployment: Strengthening Blinkit and Quick Commerce

1. Focus on Quick Commerce
A significant portion of the raised capital will fund Blinkit, Zomato’s quick commerce unit, enabling investments in dark stores and warehouses for efficient inventory management. This shift toward an inventory-led model will enhance Blinkit’s operational efficiency and product control.

2. Marketing and Advertising
Additional funds will be directed toward advertising and marketing initiatives, aiming to solidify Zomato’s leadership in food delivery and quick commerce amid growing competition.

Operational and Financial Growth

1. Robust Revenue Growth
For Q2 FY25, Zomato reported an operating revenue increase of 68.5%, reaching Rs 4,799 crore compared to Rs 2,848 crore in Q2 FY24.

2. Significant Profit Gains
The company achieved a 4.8x rise in net profit, climbing to Rs 176 crore during the September quarter, showcasing its financial resilience and growth potential.

Market Impact and Competitive Landscape

1. Market Performance
Following the fundraising announcement, Zomato’s stock price surged by 6.8% to Rs 282 per share as of November 29, 2024. The company’s market capitalization now stands at Rs 2,35,481 crore ($28 billion), significantly outpacing Swiggy’s Rs 90,712 crore ($10.7 billion).

2. Competitive Positioning
Blinkit continues to dominate the quick commerce sector with a 46% market share, followed by Zepto at 29% and Swiggy Instamart at 25%. The fundraising reinforces Zomato’s ability to outpace competitors in this high-growth segment.

Key Implications of the Fundraising

1. Strengthened Financial Position
Zomato’s cash balance rises to Rs 19,300 crore, significantly enhancing its ability to pursue strategic investments and sustain competitive parity.

2. Domestic Company Status
By reducing foreign ownership below 50%, Zomato achieves domestic company status, enabling Blinkit to operate under a more flexible inventory-led business model.

Challenges Ahead

1. Rival Swiggy’s IPO
Swiggy’s Rs 11,000 crore ($1.35 billion) IPO earlier this month underscores the intensifying competition in India’s food delivery and quick commerce sectors.

2. Execution Risks
While the fundraising strengthens Zomato’s growth strategy, effectively deploying the capital to scale Blinkit and other initiatives will be critical to maintaining market leadership.

Zomato’s Strategic Leap

Zomato’s Rs 8,500 crore QIP represents a decisive step toward solidifying its dominance in India’s foodtech and quick commerce markets. With Blinkit positioned to lead the quick commerce sector, this capital infusion strengthens Zomato’s balance sheet, operational capabilities, and competitive edge. However, the path forward demands flawless execution to fend off rising competition from Swiggy and emerging players like Zepto.