Zomato’s journey is nothing short of a modern-day tech fairytale. As the food delivery giant’s market capitalization soars to a staggering Rs 2 trillion, its co-founder Deepinder Goyal finds himself catapulted into the coveted billionaire club. This milestone not only confirms the large-cap company Zomato’s position as a titan in India’s growing technological landscape but also serves as a demonstration of the country’s startup ecosystem.
Join us as we deeply look into Deepinder Goyal’s life journey and Zomato’s success recipe, explore the implications of this valuation for Zomato, and discuss how the platform fee hike will impact the company’s financials. Let’s begin!
About Deepinder Goyal’s Life
Deepinder Goyal was born on January 26, 1983, in Muktsar, Punjab, India. He completed his education at the Indian Institute of Technology (IIT) in Delhi, graduating with a B.Tech. in mathematics and computing in 2005. After graduation, he joined Bain & Company as a management consultant, his first job in the corporate world. He noticed his colleague’s difficulty ordering food from restaurants and recognized the need for an online food delivery platform that provides comprehensive information about restaurants.
In 2008, Deepinder Goyal and Pankaj Chaddah joined together to launch FoodieBay.com, a website for restaurant discovery and reviews. Later, it was renamed to Zomoto in 2010. The startup initially focused on menu aggregation and restaurant information before expanding into food delivery. Zomato’s rapid growth and international expansion were fueled by several rounds of funding from investors, including Info Edge, Sequoia Capital, and Ant Financial.
Note: If you want to learn Candlesticks and Chart Trading from Scratch, here’s the best book available on Amazon! Get the book now!
In March 2024, Deepinder Goyal will have 4.26% of the shares held in Zomato which around 36.95 crores shares. His net worth is approximately Rs 8,400 crore at Zomato Limited. Deepinder Goyal has recently joined the billionaire groups in India. Because of the rally of the Zomato to an all-time high. Currently, Deepinder Goyal’s real-time net worth is $1.4 billion as of July 19, 2024.
Company Overview of Zomato and Segments
Zomato operates an online food delivery business. Customers can use the platform to browse and find restaurants, read and submit customer-generated reviews, watch and upload images, order food delivery, book a table, and make payments while dining out. Zomato Limited has diversified its business into food delivery & going out (Zomato App), quick commerce (Blinkit), and B2B supplies (Hyperpure).
The food delivery segment was started in 2015 and operated in more than 800 cities. It has a gross order value (GOV) of ₹32,224 crore, which is to be 63% of its business. The going-out segment was launched in 2022 and operated across 41 cities. It has a GOV of ₹3,225 crore, which is 6% of its business. The next one will be the B2B supply segment, established in 2019 and operated in 8 cities. It has a GOV of ₹3172 crore, which is 6% of its business.
The final and most significant segment of quick commerce is the delivery of products within less than 15 minutes. In this segment, Blinkit will be the main player. It was acquired in August 2022 and operated 526 stores in 26 cities. This segment has a GOV of INR 12469 crores, which is 24% of its business.
How did Zomato perform after being listed in the stock market?
In 2021, Zomato Limited came with an IPO of ₹9,375 crore, which included a fresh issue of ₹9000 crore and an offer for sale of ₹375 crore. It was subscribed by 38.25 times and had a price range of ₹72-76 per share.
Zomato Limited was listed in the stock market at a premium of ₹40 and a listing price of ₹116 on July 23, 2021. After the listing IPO, Zomato Limited reached an all-time high of ₹169 on November 16, 2021. This surge was driven by investor confidence in the food delivery sector’s growth potential, entering the fintech space with new digital payments, and Zomato’s market leadership.
Furthermore, the Zomato share price has dropped from ₹169 to ₹40.60. The reasons for the drop will be that Zamoto was continuously making losses and profitability issues, the company’s high cash burn rate, and negative EBIT margin. Additionally, the end of the post-IPO lock-up period allowed early investors to sell their shares, adding downward pressure.
Turnaround of Zomato
Zomato Limited has reported its first-ever quarterly profit in Q1 FY2024. This will be a turning point in converting cash-burning into sustainable business operations. The company’s strategic cost-cutting measures and improved unit economics help to shape future perspectives. Later, the company expanded its operations to quick commerce through its Blinkit acquisition, and the value will be Rs. 4447 crores ($569 million).
Zomato Limited is also planning to use AI for personalized service and grow in smaller towns. People now see Zomato as an important part of India’s online business world for the long run. As Zomato keeps coming up with new ideas and adjusting to what customers want, its stock price keeps going up.
Zomato’s reaching a market capitalization of Rs 2 trillion is a significant achievement for the company. This valuation demonstrates investor confidence in Zomato’s business model, growth potential, and its position as a market leader in India’s food delivery sector. The company’s ability to expand its operations, enter new markets, and diversify its services has contributed to the future growth of the company.
What will be the impact of raising the platform fee by Zomato Limited?
Zomato Limited has increased the platform fee from ₹5 to ₹6 for each order. Platform fees will be advantageous for the company to generate income and increase profit margins in the face of rising operational costs. The platform fee could be a strategy that decreases the operating expenses related to supplying the delivery services.
These costs go toward covering the wages of the delivery staff, maintaining the app’s infrastructure, and providing rapid customer service. Zomato Limited will try to balance the operating expenses by increasing the platform fee.
However, from the customer’s point of view, those who depend on the platform for easy meal delivery may pay a high price for every order. The order value includes the cost, GST, delivery charge, handling fee, and the recently increased platform fee. This will impact an increase in the overall cost of the order.
Also read…
Financial performance of Zomato
Zomato Limited’s revenue has increased from ₹7079 crore to ₹12114 crore in FY24 and grown by 71.13%. The company has turned its net loss into net profit from -₹971 crore to ₹351 crore in FY24. The company’s revenue has grown at a CAGR of 55.96% over the last three years. The company had an OPM of 21.57% and an NPM of 20.70% in FY24. The company has boosted its gross order value in B2C business from ₹32308 crore to ₹47918 crore in FY24 and grown by 48%.
Key Metrics of Zomato
Some of the key financial metrics of Zomato Limited are given below.
Conclusion
In conclusion, Deepinder Goyal’s leadership has been instrumental in Zomato’s growth. Now the company is diversifying its operations into quick commerce and focusing on profitability. Zomato Limited may currently seem overvalued, but its future looks promising due to strategic expansions and operational improvements. The focus on AI and quick commerce will drive long-term growth.
However, challenges remain for the competitors of Swiggy and the price-sensitive Indian people. Zomato’s success will depend on balancing innovation with financial prudence to achieve sustainable profitability. What do you think about Zomato Limited and its CEO, Deepinder Goyal? Let us know in the comments below.
Written By Nikhil Naik
By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.
Start Your Stock Market Journey Today!
Want to learn Stock Market trading and Investing? Make sure to check out exclusive Stock Market courses by FinGrad, the learning initiative by Trade Brains. You can enroll in FREE courses and webinars available on FinGrad today and get ahead in your trading career. Join now!!
