Zomato board to consider raising funds via QIP ahead of Q2 results

Food delivery major Zomato’s board of directors will consider raising funds through a qualified institutions placement (QIP) on October 22, the company said in a regulatory filing on Thursday.

However, the company did not disclose the quantum of funding it is looking to raise.

“…this is to inform that a meeting of the board of directors of the company is scheduled to be held on Tuesday, October 22, 2024, inter-alia, to consider and approve raising of funds by issuance of equity shares by way of qualified institutions placement, as may be permitted under applicable laws, subject to such regulatory/statutory approvals, including the notice for the postal ballot for obtaining the shareholders’ approval in this regard,” the filing stated.

Furthermore, the board will also approve its financial results for the second quarter (Q2) of the financial year 2024-25 (FY25).

If approved, this will be the first fundraise by the food delivery giant since its stock market debut three years ago.

This comes at a time when competition in the food delivery and quick commerce spaces is heating up. Zomato’s rival Swiggy is headed for an initial public offering (IPO). The Bengaluru-based firm has disclosed that it plans to raise as much as $450 million in fresh capital through the IPO.

As of Q1 FY25, Zomato is sitting on cash reserves of Rs 12,539 crore (roughly $1.5 billion). Hence, its fundraising attempts might be a strategy to throw a spanner in the works for its IPO-bound rival, said people familiar with the matter.

Zomato reported a consolidated profit of Rs 253 crore in Q1 FY25, up from Rs 175 crore a quarter ago and Rs 2 crore in the year-ago period. The firm’s revenue from operations rose 74 per cent year-on-year (Y-o-Y) to Rs 4,206 crore in Q1, up from Rs 2,416 crore a year ago.

Its food delivery business is already profitable, and senior management at the firm has indicated that its quick commerce arm Blinkit is also close to reaching break-even.

Meanwhile, quick commerce firm Zepto is also eyeing a $100-150 million fundraise after raising over $1.2 billion over the past 14 months.