Zomato juice: Indian unicorn’s proposed IPO could drive regional startup liquidity

The IPO parade that has continued in 2021 is not a strictly domestic affair. Other countries are getting in on the unicorn liquidity rush.

This week, India-based food-delivery unicorn Zomato filed to go public. As TechCrunch reported, the company intends to list “on Indian stock exchanges NSE and BSE.”

The Zomato IPO is incredibly important. As our own Manish Singh reported when the company’s numbers became public, a “successful listing [could be] poised to encourage nearly a dozen other unicorn Indian startups to accelerate their efforts to tap the public markets.” So, Zomato’s debut is not only notable because its impending listing gives us a look into its economics, but because it could lead to a liquidity rush in the country if its flotation goes well.

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At this point, we’ll pause and note that India is currently enduring a COVID-19 surge that may be without precedent. You can provide help here. May the pandemic abate quickly and with as little pain as possible.

Back to Zomato: The company’s IPO filing paints the picture of a quickly growing company derailed by the pandemic. However, the unicorn has posted rapid recovery in recent quarters, and its economics are maturing to the point when it can begin to craft a path to long-term profitability. This morning, let’s dig into its numbers and try to sort out why the company is going public now and how investors may vet its recent performance.

Zomato’s business

Zomato was last valued at around $5.4 billion in a February 2021 round that put $250 million into its operations. The unicorn has raised more than $2 billion to date, per Crunchbase data.

In business terms, Zomato offers more than merely food delivery. Per its IPO filing, the company’s food delivery business is supplemented by its “dining-out” capability that facilitates in-person eating, a raw materials business called “Hyperpure,” and Zomato Pro, a consumer offering that provides food discounts to its 1.4 million subscribers.

So we can’t merely compare the firm to, say, Uber Eats — the India operations of which Zomato bought back in the day — on a one-to-one basis.

But what we can track is the company’s aggregate financial performance through the end of 2020. The Zomato filing does not appear to include information regarding the company’s calendar Q1 2021 performance; that period, for reference, is the fourth quarter of the company’s fiscal 2021.

Let’s start from a very high level:

• Fiscal year ending March 31, 2019: $187.4 million in total revenue, and a loss before exceptional items of $296.3 million.
• Fiscal year ending March 31, 2020: $367.8 million in total revenue, and a loss before exceptional items of $303.5 million
• Nine-month period ending December 31, 2020: $183.4 million in total revenue, and a loss before exceptional items of $47.8 million
  
  
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