Zomato will spend $100 million in Grofers and start its grocery distribution service.
Second Chance To Win grocery Market
Chief financial officer Akshant Goyal announced that the brand is exploring the under-penetrated space, presenting an ample opportunity and growth potential.
With the investment, it will increase its grocery delivery exposure and roll out a grocery marketplace on its platform as a trial.
In 2020, it launched an e-grocery business but failed to succeed due to intense competition from Swiggy, BigBasket, and others.
Tata Digital has also entered the fray after acquiring a majority stake in BigBasket.
It is unclear, however, whether they will fully buy out the grocery delivery company.
Upcoming IPO
The announcement comes on the heels of its first IPO launch on July 14. The company hopes to raise Rs 9,375 crore through shares, which will cost Rs 72-76 each. It will close on July 16 and succeed SBI Cards and Payments System’s offer worth Rs 10,355 crore in March 2020 as the most significant offer. It has also reserved 65 lakh shares for its employees.
Reason Behind IPO Decision
Having been developed locally and enjoying customer popularity, it made sense to go public.
The company plans to invest more in customer acquisition, which will benefit its retail participation.
Its post-money valuation at the upper band will be Rs 64,365 crore.
Future Prospects
Based on the brand’s current business strength and its future potential, this valuation was created.
In the future, Zomato’s growth drivers will be organic and inorganic since it is not mainly focused on one channel of growth and would instead do “whatever makes sense.”
Zomato co-founder Gaurav Gupta said they would keep optimizing the drivers and improving their economics in the last 2-3 years.