Zomato has announced plans to fundraise Rs 8,500 crore through a QIP (Qualified Institutional Placement), marking its first major fundraising since its IPO in July 2021. The company has set a floor price of Rs 265.91 per share for the offering, slightly lower than its recent closing price of Rs 273.60 on the BSE. This move comes as competition in the quick commerce sector intensifies, with rivals Swiggy and Zepto also aggressively expanding.
Zomato Fundraising Through QIP
A significant portion of the funds will be used to expand Zomato’s quick commerce arm, Blinkit. The company plans to invest Rs 2,137 crore in setting up and operating dark stores and warehouses to support Blinkit’s 10-minute delivery model. Blinkit aims to establish 1,000 dark stores by the end of this fiscal year and double that number by 2026.
Additionally, Zomato will allocate Rs 2,492 crore to enhance marketing, advertising, and branding across its businesses. This includes promoting its food delivery service, live events via the District app, and its B2B grocery supply platform, Hyperpure.
Rising Competition in Quick Commerce
The quick commerce sector is seeing heightened competition, with Swiggy and Zepto making significant strides. Swiggy recently raised Rs 4,499 crore through its IPO, while Zepto has secured over $1.3 billion in funding. Both companies are rapidly increasing their dark store networks, with Zepto targeting 700 stores by FY25 and Swiggy Instamart already reaching 741 stores this year.
This fierce competition has resulted in higher spending by companies in the sector, raising concerns about long-term profitability.
Financial Growth Amid Challenges
Despite the competitive pressure, Zomato has shown remarkable financial improvement. The company reported a 68% year-on-year increase in operating revenue for the second quarter of FY24, reaching Rs 4,799 crore. Its net profit for the quarter surged fivefold to Rs 176 crore, maintaining a profitable trajectory since the fiscal year began.
Zomato’s CEO, Deepinder Goyal, has also extended his salary waiver until March 2026, showcasing his commitment to the company’s growth.
Zomato’s Rs 8,500 crore fundraising marks a bold step in its expansion strategy. With investments in Blinkit, dark stores, and marketing, the company is positioning itself to lead the quick commerce sector. However, with rising competition and increased spending, sustaining profitability will remain a challenge.
