what is ipo & fpo, zomato ipo explained: should you invest in hindi/english
WHAT IS IPO ?
When we have to establish a new company, we use our own servicing as a capital
Or we take a loan from our close friends, as the handover grows, then we have a
requirement of more funds, for which we approach the loan from the bank or different
corporation investors or venture capital if even after that our funds are exhausted. and we
also need more funds then we Ultimately the capital raises from the general public which
we call IPO.
so when a company that has never issued shares to the public, does it for the first time it is
called an initial public offer, Normally, an IPO is a mechanism for an unlisted company to
raise fresh funds from the primary market and also list the stock in the stock exchange.
With the advent of IPO, an unlisted company gets listed, which we buy as a share and whatever funds it makes, the company invests them in its growth.
important point about IPO
- Generally when we buy shares of listed company then price is decided through buyer and seller But in case of IPO, the price is determined by the owner of the company.
𝗢𝗙𝗦
•𝐖𝐡𝐚𝐭 𝐢𝐬 𝐎𝐅𝐒?
Look many times some companies lunch their IPO
through OFS means through "Offer for Sale" due
to the pressure of SCBI. Before moving forward I want
to tell you what exactly OFS is? In an OFS, promoters of
a company dilute their stake by selling their shares on
an exchange platform. Anyone including retail
investors, companies, Foreign Institutional Investors
(FIIs), and Qualified Industrial Buyers (QIBs) can bid on these shares.
•𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧:-
SCBI introduces this mechanism just because promoters
can decrease their shareholdings. An OFS only results
in a transfer of ownership from one shareholder to
another and doesn't increase the share capital of the
company. Let's understand all these through an
example of the CAMS IPO pattern.
•𝐄𝐱𝐚𝐦𝐩𝐥𝐞:-
Recently when CAMS IPO launched then they issued
through "Offer for Sale". In Offer for Sale, the promoters
of the company liquidate their shares by offering them
to the General public. The major of this company was
NSEIL who liquidates their shares which is 37.48% in
the market. They have to do that because they didn't
take the permission from SCBI for the investment just
because of that further they have to liquidate their IPO through OFS.
𝗙𝗣𝗢
•𝐖𝐡𝐚𝐭 𝐢𝐬 𝐅𝐏𝐎?
Now let's talk about FPO means "Follow on Public Offer"
as we have seen before when the company issues
shares first time through the public that's called IPO but
FPO (Follow on Public Offer) is a process by which a
company, which is already listed on an exchange, issues
new shares to the investors or the existing
shareholders. FPO can be done for any reason just like
if any company either needs funds for new projects or
they want to do an expansion then they can offer FPO.
Some people thought FPO is similar to "Right Issue" but
there is a slight difference between them.
In "Right Issue" the existing shareholders can only
participate but in 'FPO' anyone can invest doesn't
matter if he is an existing shareholder or not.
•𝐃𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞:-
FPO can increase a company's capital but chances of
dilute EPS too. If we differentiate between both of them
then FPO is a much safe and cheaper option as
compared to an IPO because you already have an idea
about the company, business, management strategy,
financials, and all other parameters so here it's much
easier to analyze either we need to invest or not.
profits of investing in the zomato IPO
Now let us discuss the pros of investing in this IPO...
Zomato has covered nearly all aspects of the restaurant food chain, from procurement to
online delivery to advertisements and expected payment mechanism Zomato has shown 7x
growth from FY18 as compared to the industry growth of only 3.6x Now let us discuss the
network effect which is the benefit one gets when more and more people use it The more
people use Zomato, the more restaurants will be listed and will create a network
In fiscal 2021, Zomato's delivery partners fulfilled 94.1% of all orders with a median time
of 30 mins in FY21 The company has an efficient and high demand hyperlocal deliver
a network that can be monetized very well Zomato is a strong consumer brand recognized
all over India, People think of food as soon as they listen to Zomato
Zomato was started in 2008 as a restaurant discovery website and today it is one of the biggest food delivery app in India
And when they started delivery in 2015, they were not alone, there were many companies already doing that
Like Swiggy, TinyOwl, OLACAFE, foodpanda, runnr, and scootsy
but today the main competition is between two companies, Zomato and Swiggy
but to give them competition another big player is coming, Amazon
ZOMATO REVENUE MODEL
Zomato was a restaurant discovery platform that used to tell us everything like dishes, menu, location, etc
It is the largest food-focused restaurant listing, reviews, and online table reservation platform in India
It makes money through those restaurants that pay them to improve their visibility
As of Dec 2020, it had 3.5 lakh active listings on its platform.
Other than this, it has an exclusive paid membership named Zomato pro which provides flat discounts on selected restaurants and dine outs
Hence, Zomato makes money from this membership too and as of Dec 2020, it had 1.4 million such members.
Zomato has a subsidiary company called hyperpure which provides raw materials to restaurants
It not only helps them to forecast demand but to source raw materials such as grains, fruits, and vegetables on a larger scale
but is a part of the bundle services aligned with food delivery
This business was started in 2019 and as of Dec 2020, it has supplied raw materials in 6000 restaurants
in 6 cities And lastly, it makes money through food delivery. It acts as a delivery agent between
restaurants and customers They take a commission from restaurants and delivery charge from
customers They have operations in 23 countries other than India like UAE, Australia, New Zealand,
Philippines, Indonesia, Malaysia, USA, Lebanon, Turkey, Slovakia, and Poland
But the company's 90% revenue is generated from India only.
Industry overview
If we see the food delivery business, in FY21, India saw contradictory moves
The first quarter saw a very bad time, it was at its lowest, whereas in the 3rd quarter, it was
on its all-time high Since people were not able to go out and eat, they tried making up for it
by ordering home online I was so happy when I could start ordering food online again.
Anyways, the Indian food market is divided into 3 channels- dine-in, takeaway, and delivery
According to CLSA, food delivery will see the highest growth out of these 3.
The market size is expected to increase to $11 billion by FY26 from $3.5 billion in FY20
Increasing population, smartphone penetration, expansion to new markets, and higher
frequency from existing customers Zomato's biggest competition is Swiggy and the newest
is Amazon. None of them are listed, whereas Zomato is bringing its IPO.
Zomato and Swiggy, both are in the food delivery business but they have different strategies
Zomato is trying to focus on every aspect of the restaurant business, whereas Swiggy
focuses on the food delivery aspect The delivery of food, grocery, alcohol, meat, medicine
and delivery and pick-up of every other item It has a membership of Swiggy Super where it
gives discounts with free delivery Amazon has started test marketing of food delivery last
year At first they started food delivery only for their employees in Bangalore and then till
1/4th of the city And has a network of 2500 restaurants vs 15000 offered by Zomato
Zomato and Swiggy need to watch out. Lets see what happens in the food delivery section
impact of Covid-19 on the company.
In the first quarter of 2021, there was a significant impact on its business. It hit its lowest
GOV, meaning gross order value in a quarter in two FY After which the food delivery
business saw a good recovery. In Q1 of 2021, its GOV was Rs.11000 million, wherein in
the 3rd quarter, it was Rs. 30000 million which was more than the 3rd and 4th quarter of
2020.
- price per share of zommato ipo
- ipo size and listing company
- HAS ZOMATO IPO GOOD?
- zomato ipo listing date when can you buy the share?
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