Zomato Prospectus - Summary

[maninan]

Link to Draft Red Herring prospectus_20210428025429.pdf)

Key Stats (INR Millions)

Particulars
9M 2021
FY2021*
FY2020
FY2019
Revenue
Services
11,204
14,938
22,908
12,814

Goods
1,244
1,658
1,075
148

"Platform Services"?
564
752
2,063
162
Total Revenue 13,013 17,530 26,047 13,125 Key Expenses
Salaries (excl ESOP)
4,397
5,862
7,003
5,007

ESOP
1,093
1,457
985
1,000

Advertisement
3,069
4,092
13,384
12,359

Outsourced Support Cost
3,633
4,844
20,937
13,300

Payment Gateway
420
560
737
606
Loss before exceptionals (3,561) (4748) (22,635) (22,101)
Exceptionals
(3247)
(3247)
(1220)
11,999
Key Cash Flow
Sale of MF Units
17,687
23,582
40,127
28,246

Purchase of MF**
60,794
81,058
21,478
40,868

Issue of Shares
45,808
45,808
3916.1
22,644
Net Cash Flow 826 1102 (495) (1133) Cash Balance 2,482 2,482 1672 2124

*The info published is 9 Month FY 2021 (April 20 to December 20) so the FY2021 figure is a simple 4/3 of 9 month figures.

**Purchases has been shown as positive only to avoid confusion. CFS presents it as a negative (Outflow).

Link to LivMint Article

 

[resjudicata]

@maninan Most of the Indian unicorns are huge loss making companies despite increasing revenue.

No doubt it will be over subscribed by huge numbers, remains to be seen when will they actually be profitable

 

[kenjisan70]

@resjudicata So just like unicorns in the USA...

 

[pollyb]

@kenjisan70 Understand this thing very carefully. In the earlier times where the promoters used to hold more than 51% equity in companies, they would not take in a lot of private equity. It would be family money or cash accrued from business. After the company would become profitable, the promoters would list it and help unlock value for all stakeholders.

But with tech companies, the promoters end up with hardly 2-8% after so many series of funding. Hence they don't easily list the company.

Tech companies list only after every drop of growth has been exhausted and then it's time for private equity people to milk the cow.

 

[ray34iyf]

@pollyb Very well put. What we've seen is, with a few exceptions like Tesla, most tech companies that got listed were already at their peak or past that.

 

[durantula87]

@ray34iyf Companies generally go public when they have to, before law change in (i believe) 2015 under Obama the limit was of 500 private investors before going public e.g. Google went public because it had 500 investors, now the limit has changed to 2k and hence more companies can remain private if they choose to. And, since being public attracts more scrutiny they remain private if they can.

 

[theinformant]

@pollyb I think there's another side to promoter driven listings - family driven businesses hold a lot of control over the company. When the company starts performing like shit, ordinary shareholders have little control over corporate governance. The board rarely has the powers to remove bad promoters.

Not saying that venture listed companies can't have the same problem but generally corporate governance tends to be better when there are multiple stakeholders to whom the promoter is accountable to.

Tech companies list only after every drop of growth has been exhausted and then it's time for private equity people to milk the cow.

This is a more recent phenomenon but is still the exception rather than the rule. Plenty of venture backed tech companies have generated value for shareholders after going public - Google, Microsoft, Amazon, Apple just to name a few. In the last decade, you have Facebook, Snapchat, Alibaba and a ton of SaaS companies that did really well.

At the end of the day, look at the fundamentals of the business and the market before you decide to invest.

 

[lovemygod]

@resjudicata Waiting for Postman IPO, if ever

 

[resjudicata]

@lovemygod They have no such plans atm, postman, razorpay ...

 

[lovemygod]

@resjudicata Yep, extremely profitable and expanding operations with a very small team and small operating expenses.

 

[kingz]

@resjudicata mindtickle

 

[jesuschristismylord33]

@lovemygod Postman will very likely list in US.

 

[cindydoody]

@resjudicata

Most of the Indian unicorns

True for any unicorn focusing first-to-market, market-share and user acquisition.

 

[resjudicata]

@cindydoody There has to be a way to make profit.
Companies can’t run for decades chasing revenue going into huge loses, if there is no profit margin to be made, no matter how much market share you acquire, you will keep operating a loss making business.
Zomato, ola, flipkart, Swiggy (looks promisable but still not profitable)
At one stage investors would demand a profitable business.

 

[cindydoody]

@resjudicata They do. Once the market capture is complete, monetization starts. Like Flipkart. Initially they were in a lot of losses. Now they are profitable.

 

[resjudicata]

@cindydoody Nope, their revenue is growing but they are still not making profit...

 

[cindydoody]

@resjudicata Sorry, my bad. They are still in the Red, but that line gets thinner every year. FY20m their losses dropped 18%.

Perhaps the example of Facebook will convince you.

 

[resjudicata]

@cindydoody I am sure on day they will make profit, but they need to get better at planning.
PayTM could have been much better, look how phonePe overtook it, Indian startups need to make huge money as well , just valuations won’t run the companies