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Why did Zomato Ltd share price move today?collapse benzinga

Why did Zomato Ltd share price move today?

Zomato shares are trading lower after Kotak Securities issued a Sell recommendation.

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Shareholding Info
  • Foreign institutions-FII
    56.74 %
  • Other domestic institutions
    1.84 %
  • Retail and other
    35.83 %
  • Mutual Funds
    5.59 %

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About Zomato


One of the fastest growing restaurant discovery websites, Zomato Ltd. was incorporated in 2008 by Pankaj Chaddah and Deepinder Goyal. Initially named Foodiebay, they rebranded to Zomato in 2010. Through its app and website, the brand not only provides information related to restaurants nearby but also facilities such as placing an online order, table reservations and management. Currently serving 10,000 cities across 36 countries, the company flaunts a customer base of 80 million foodies every month and over  1.2 million popular restaurants. It can be used in 10 different languages and has over 10 million reviews and 18 million bookmarks, which allows restaurant owners to serve a larger audience with good quality food. Headquartered in Gurugram, Haryana, with over 5,000 employees, the tech platform is used by customers to not only search and discover restaurants but also read and write customer-generated reviews, order online food delivery, book a table, and make payments while dining out at collaborating restaurants. Moreover, the company helps restaurant partners with industry-specific marketing tools that enable them to engage as well as acquire new customers to grow their business, while also providing a reliable and efficient delivery service. The company also operates a one-stop procurement solution, Hyperpure, that supplies high-quality kitchen products and ingredients to restaurant partners. The brand also ensures transparent and flexible earning opportunities for its delivery partners.

Core Activities & Services


  1. For users: The brand offers a tech platform that allows its users to search for restaurants and their details, book a table, order food online, pay their bills when dining out, and provide reviews for their restaurant experiences.
  2. For restaurants: The brand provides specialised marketing tools and detailed insights into customer behaviour for restaurants to reach newer audiences as well as understand their customer better. Additionally, it also provides high-quality kitchen products and ingredients, apart from an army of delivery partners to make food delivery easy.
  3. Delivery Partners: The company offers a decent revenue source income by providing part-time and full-time opportunities to its partners.


Board of Directors


  1. Mr.Kaushik Dutta: Chairman & Independent Director
  2. Mr.Gunjan Tilak Raj Soni: Independent Director
  3. Mr.Sutapa Banerjee: Independent Director
  4. Ms.Namita Gupta: Independent Director
  5. Ms.Aparna Popat Ved: Independent Director
  6. Mr.Deepinder Goyal: Managing Director & CEO
  7. Mr.Sanjeev Bikhchandani: Non-Executive Director
  8. Mr.Douglas Lehman Feagin: Non-Executive Director


Key Executives


  1. Deepinder Goyal: Founder & CEO
  2. Mohit Gupta: Co-founder
  3. Surobhi Das: COO
  4. Gunjan Patidar: CTO
  5. Akriti Chopra: People Development
  6. Daminee Sawhney: HR Head
  7. Akshant Goyal: CFO
  8. Rahul Ganjoo: Product Lead
  9. Sandhya Sethia: Company Secretary
  10. Damini Bhalla: Legal


Presence


As of August 2022, Zomato is present in more than 20 countries around the globe, with over a million restaurants partnered with the brand. The company receives about 1.25 million orders every day, with a total consumer base of more than 1 million users that place orders from around the world.
Corporate Office:42c, Golf Course Rd, Sector 42, Gurugram, Haryana 122002

Strengths


The strengths of the company that have had effect on the Zomato share price are:
  1. First Service Providers : Being one of the first companies in this industry in India, Zomato received a lot of first mover’s advantage, which allowed it to quickly establish its foothold in the market.
  2. Evergreen nature of the Restaurant Industry: The company’s decision to build itself in an evergreen industry allows it to stay strong even during tough times.
  3. User-friendly Interface: Having won several awards for its design and user-friendliness, Zomato makes it easy and fast for all customers to use its app.
  4. Well Connected: The company’s large network and database allow it to develop quickly based on the feedback of both consumers and restaurants.
  5. Strong funding: Given the brand’s global expansion over the years and simple growth plan, it received excellent funding and backup from different organisations.
  6. Brilliant Marketing Strategy: Taking its marketing strategy online as well as offline. Zomato has become well known for its quirky and humorous ads, notifications, and trends.


CSR and Sustainability


Through the company’s CSR projects and policies, Zomato Ltd aims to focus on several social causes including: 
  • Eradicating hunger, malnutrition, and poverty while promoting health care through contributions to schemes such as the Swach Bharat Kosh that was set up by the Central government.
  • Promoting education, including special education, for children, women, elderly and the differently abled.
  • Empowering women and promoting gender equality.
  • Ensuring the sustainability of the environment and maintaining a delicate ecological balance.
  The brand has upheld their focus through several activities, such as contribution to the Prime Minister's National Relief Fund (PMNRF) for socio economic development, campaigns in collaboration with Child Rights and You (CRY), and acquiring the non-profit organisation ‘Feeding India’.

Criticism


In the past, Zomato has only had criticism over security issues, inefficient expansion and comparison with competition. Over the last decade, the company app has been hacked many times and with data that scores over 17 million users was put at risk.  The app, now established in over 24 countries, has huge funding but is criticised of not using it well and letting competitors pave their way. As a matter of fact, the competition is increasing in this sector with many apps like swiggy catching up very fast.

Covid-19 Impact


Though the Covid 19 pandemic had an adverse effect on the restaurant industry due to severe lockdowns, it allowed for an acceleration of adoption of online food delivery services by wider audiences. The brand announced a growth in the revenue in FY20, rising from Rs 466 crore in FY18 to Rs 2,604 crore, signifying an approximate 5.5X growth over the three-year period. The company’s efforts towards providing quick and healthy meals for those infected by the virus and/or quarantined without any access to home cooked meals also contributed to the people’s outlook of the brand and acceptance of its services.

Future Prospects


Though the food giant is incurring net losses at the moment due to heavy marketing investments and discounts, the brand is expected to earn $110 billion by the year 2025. Zomato’s future growth and profitability is dependent on two main features, order volumes and contribution margin per order. If the company reaches an annual order volume of 1 billion (2.5x FY20 levels) and a contribution margin of around ₹21 per order, then it is expected to turn profitable by 2025.

Did You Know


The Zomato logo simply reads out the company’s name and is indicative of their love for good food. The brand’s mission is to ensure that ‘nobody has a bad meal’. The brand generated over 95% of its revenues through commercial advertising in 2003 and has since grown to take the 77th position in India’s top 100 startups.

Initial Public Offering


With the goal of raising capital from the public, Zomato issued its IPO on July 23, 2021 and was listed at both BSE and NSE. The issue size was Rs. 9,375 crore, which consisted of a fresh issue component as well as an offer for sale. The Zomato share price was issued at Rs. 76 per share.

Equity Shares


The shares of food app, Zomato have been under a lot of pressure after their IPO ended. Ever since, the Zomato stock price has dropped by 18%, taking it down to Rs. 40. Some investors have even advised others to not invest in this stock, especially in the long-run. While the short run investors could profit as the price may rise to Rs. 50 - 55, generating almost 20% in returns. But even so, there are better options available and at the moment the scope of loss is very high.

Annual Financial Statement


BALANCE SHEET OF ZOMATO (in Rs. Cr.)MAR 22MAR 21MAR 20MAR 19MAR 18
12 mths12 mths12 mths12 mths12 mths
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital764.300.030.030.030.03
TOTAL SHARE CAPITAL764.300.030.030.030.03
Reserves and Surplus16,002.907,754.50601.412,792.091,172.31
TOTAL RESERVES AND SURPLUS16,002.907,754.50601.412,792.091,172.31
TOTAL SHAREHOLDERS FUNDS16,767.207,754.53601.442,964.521,244.77
NON-CURRENT LIABILITIES
Long Term Borrowings0.000.000.000.000.00
Deferred Tax Liabilities [Net]0.000.000.000.000.00
Other Long Term Liabilities18.4046.691,456.0648.962.53
Long Term Provisions52.0019.7312.8710.945.71
TOTAL NON-CURRENT LIABILITIES70.4066.411,468.9359.908.24
CURRENT LIABILITIES
Short Term Borrowings0.000.000.000.000.00
Trade Payables393.70274.07256.80315.6352.05
Other Current Liabilities252.90193.45400.83228.1131.50
Short Term Provisions16.504.854.952.291.73
TOTAL CURRENT LIABILITIES663.10472.37662.57546.0385.28
TOTAL CAPITAL AND LIABILITIES17,500.708,748.242,985.353,814.161,512.66
ASSETS
NON-CURRENT ASSETS
Tangible Assets58.3057.5493.3934.323.72
Intangible Assets1,289.201,392.971,486.120.130.48
Capital Work-In-Progress0.000.000.000.320.75
Other Assets0.000.000.000.000.00
FIXED ASSETS1,347.501,450.641,580.2835.195.48
Non-Current Investments3,535.60311.74200.31664.24417.59
Deferred Tax Assets [Net]0.000.000.000.000.00
Long Term Loans And Advances0.000.000.000.000.00
Other Non-Current Assets5,280.803,009.9122.7010.3350.69
TOTAL NON-CURRENT ASSETS10,163.904,772.291,803.29709.76473.77
CURRENT ASSETS
Current Investments1,600.802,194.11323.922,134.25819.66
Inventories0.000.000.000.000.00
Trade Receivables166.90123.71132.7262.6619.05
Cash And Cash Equivalents1,464.70765.18279.38152.51146.65
Short Term Loans And Advances375.0040.0031.024.160.02
OtherCurrentAssets3,729.40852.95415.03750.8353.52
TOTAL CURRENT ASSETS7,336.803,975.951,182.063,104.411,038.90
TOTAL ASSETS17,500.708,748.242,985.353,814.161,512.66
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities97.1092.942.000.000.07
CIF VALUE OF IMPORTS
Raw Materials0.000.000.000.000.00
Stores, Spares And Loose Tools0.000.000.000.000.00
Trade/Other Goods0.000.000.000.000.00
Capital Goods0.000.000.000.000.00
EXPENDITURE IN FOREIGN EXCHANGE
Expenditure In Foreign Currency0.000.000.000.000.00
REMITTANCES IN FOREIGN CURRENCIES FOR DIVIDENDS
Dividend Remittance In Foreign Currency----------
EARNINGS IN FOREIGN EXCHANGE
FOB Value Of Goods----------
Other Earnings----------
BONUS DETAILS
Bonus Equity Share Capital----------
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market Value----------
Non-Current Investments Unquoted Book Value3,066.70311.74200.31664.24417.59
CURRENT INVESTMENTS
Current Investments Quoted Market Value----------
Current Investments Unquoted Book Value1,600.802,194.11323.92----
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