MINOR PROJECT

A Case Study on Zomato: From IPO To Market

Master of Business
Administration (MBA)
Batch (2021-23)
Guru Gobind Singh Indraprastha
University

MBA SESSION (2021-2023)

Submitted to: Submitted by:
Dr. Shalini
Garg Vidhi Bansal
Professor 10216603921
USMS, GGSIPU MBA -CD

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 DECLARATION

I, Vidhi Bansal (102) a students of University School of Management Studies, Batch

(2021-2023) declare that every part of the Project Report “ A case study on zomato from
IPO to market” submitted by me is original and solely done by me.

I was in regular contact with our faculty guide and contacted infinite number of times for
discussing the project through phone, email or visits. I hereby certify that all the Endeavour
put in the fulfilment of the task are genuine and original to the best of my knowledge and I
have not submitted it earlier elsewhere.

Vidhi Bansal
MBA 1st year
10216603921

Date of project submission:

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 CERTIFICATE OF AUTHENTICITY

TO WHOM SO EVER IT MAY CONCERN

This is to certify that the project work “A Case Study On Zomato : From IPO To
Market” made by Vidhi Bansal, MBA, 1st year, 10216603921 is an authentic work
carried out by her under guidance and supervision of Dr. Shalini Garg.
The project report submitted has been found satisfactory for the partial fulfilment of the
degree of Master of Business Administration.

Dr. Shalini Garg

Professor
USMS, GGSIPU

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 ACKNOWLEDGEMENT

Guidance, inspiration and motivation have always played a key role in the
success of any venture. I would like to pay my sincere regards to all those who
guided me in my project work. I would like to avail this opportunity to pay my
sincere gratitude and regards to Dean and Professor A.K Saini, HOD, University
School of Management Studies for providing me such a wonderful opportunity
to widen the horizons of my knowledge. I would also like to express my
heartfelt thanks to my Project Guide Dr. Shalini Garg, professor for giving her
support, guidance and encouragement throughout the project work.
Last but not the least I would like to thank my parents, family and friends who
have directly or indirectly contributed in making this project a success.

Name of the Student - Vidhi Bansal

University Enrolment No: - 10216603921
Programme and Section: - MBA CD
Batch: - 2021- 2023

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 TABLE OF CONTENTS

Content Page No.

Abstract 6

Chapter 1 – Introduction
1.1 About Zomato
1.2 Strengths and risks
1.3 About Finance 7 - 15
1.4 IPO meaning, steps for implementation,
advantages and disadvantages

Chapter 2 –
2.1 Literature review 16 - 18
2.2 Research Gaps

Chapter 3 –
3.1 Objectives
3.2 Research methodology 19 - 21
3.3 Limitations

Chapter 4 – Data analysis and interpretation

22 - 28

Chapter 5 – Findings and Conclusion

29 - 33

References 34

Annexures
35 - 37

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 ABSTRACT

This research focuses on discovering how different procedures carried out by a

firm effect its IPO.
The story of Zomato from IPO to market is detailed in this project. Zomato's
initial public offering (IPO) was a big success due to the hype around Zomato,
however as time passed, it broke and investors are now suffering losses.
Investors who were eager to participate in Zomato are suddenly removing their
hands from the table.

This project is divided into several pieces. First, we'll go over what an IPO is, as
well as financial statements and ratios. We also have a synopsis of Zomato. The
second section is a review of the literature by many scholars who have
investigated and studied in relevant subjects to make this study more
compatible. Our research methodology, which covers the research design
employed throughout the study, is presented in the following section. Then
there is data interpretation, in which we used ratio analysis to analyse the
company's present status. Then we have our conclusions and recommendations.

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 CHAPTER – 1
INTRODUCTION

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1.1 ZOMATO
Zomato is an fair play innovation platform that interfaces clients, eatery
accomplices, and conveyance accomplices. Its clients utilize its foundation to
look and locate cafés, recite and assemble audits created by clients, visualise as
well as transmit images, and make food requests conveyance, make eat in
reservations and make installments through its application. Then again, the café
accomplices are catered with different promoting apparatuses to assist them with
expanding client commitment and obtaining and give the last-mile conveyance
administration.

The organization's business is worked around the possibility that over the long
run, individuals in India are effectively eating out, and hence to catch this change
in conduct, zomato has been offering different item contributions, for example,

Food conveyance: The organization has near 1.7 lakh conveyance accomplices
through whom it takes special care of the conveyance administration of around
1.5 lakh dynamic food conveyance cafés. The organization created the greater
part of its incomes from food conveyance and related commissions charged to
cafés for utilizing its foundation.

Dining-out: The organization's application is one of the favored objections for

eating out-related administrations. Be that as it may, this help has been seriously
affected because of the Covid-19 related limitations on eating out, in contrast to
the food conveyance business. The café accomplices pay promoting charges for
improved perceivability on its foundation.

Hyperpure: Apart from its over two B2C contributions, the organization
additionally gives B2B administration under which it sources supplies for its café
accomplices, assisting them with dealing with their inventory chains all the more
really. The organization began this assistance in 2019 and presently supplies to
in excess of 9,000 eateries across six urban areas in India. Income from this
section developed from Rs 15 crore in FY19 to Rs 200 crore in FY21.

Zomato Pro: This is an elite paid participation program that gives limits and
offers to its individuals for a decent charge. This permits the café accomplices to
showcase themselves to a select gathering of crowd.

1.2 Strengths
•The organization isn't simply into food conveyance. It has a presence over the
food biological system, and with hyperpure administration, it has additionally
expanded its traction. Its start to finish food administration makes it an interesting
foodservice stage universally.
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•Online food conveyance is a profoundly underpenetrated market in India. Out of
the dynamic web clients, just 8% request food on the web, which is exceptionally
low contrasted with 38% in the US and 53 percent in China.
•Expanding cell phone and web entrance in India will prompt expanded interest
for online food requesting administrations, which will be profoundly gainful for
the organization for its development later on.
•According to Redseer, Zomato has reliably acquired piece of the pie throughout
recent years to turn into a leader in the food conveyance space in India.

Risks
•The organization has been bringing about misfortunes in the last three
monetary years and can keep on doing as such sooner rather than later. The
organization hopes to give limits to its clients and see it has a choice to
develop, which might prompt further misfortunes.
•Food conveyance market is a profoundly serious market in India,
portrayed by low section costs, moving client inclinations, and successive
presentations of new administrations and contributions.
•The organization rivals other food conveyance organizations, for
example, Swiggy, chain eateries with their own conveyance armadas, and
other café conveyance administrations.
•Public Restaurant Association of India (NRAI) has as of late declared
plans to send off their foodservice application to take on Zomato and
Swiggy. NRAI addresses in excess of 5,00,000 cafés over the nation.

Logo:
• The Zomato logo essentially addresses the strapline and demonstrates
adoration for culinary delights. Its main goal is to ensure that "Nobody has
a bad meal."

Achievements:
•The CEO was named Leading news Indian of year.
• In the fiscal year 2013, Zomato generated 95.1% of its revenue from
business advertising.
•Zomato is ranked 77th among the list of top startups in India.

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1.3 FINANCE

Finance is defined as the management of money and includes activities such as

financial planning, acquiring, lending, intending, saving, and evaluating. Personal
money, corporate funding, and government funds are the three main types of
money.

Monetary investigation alludes to an examination of money related

projects/exercises or an organization's budget summaries, which incorporates an
asset report, pay proclamation, and notes to accounts or monetary proportions to
assess the organization's outcomes, execution, and its pattern, which will be
helpful for taking critical choices like speculation and arranging ventures and
supporting exercises. In the wake of surveying the organization's exhibition
utilizing monetary information, an individual presents discoveries to the top
administration of an organization with suggestions about how it can work on from
here on out.

An investigation comprises of some important regions, each containing its own

organisation of data of interest and magnitudes.

1. Earnings
Your company's principal source of funding is probably income. Long-term
success can be determined by the volume, calibre, and timing of earnings.
Income last period income development (income this period - income last period).
Exclude one-time incomes when calculating income development because they
can skew the analysis.

• Income fixation (client income versus total income). If a single customer

accounts for a significant portion of your revenue, losing that customer could put
you in financial danger. No client should account for more than ten percent of
your total earnings.

• Per-worker income (income divided by the average number of representatives).

This ratio represents the efficiency of your company. The better the ratio, the
higher it should be. Many incredibly successful organisations make more than 1
million dollar each year.

2. Advantages

If you are unable to consistently provide high-quality benefits, your company

might not be able to survive in the long run.

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• Net overall revenue: earnings less costs of goods sold. With a healthy net overall
revenue, you may continue to absorb income or product cost shocks without
jeopardising your ability to cover rising expenses.

• Total working income (earnings - cost of products sold - working costs). Interest
and expenses are not included in working costs. Without regard to how users
finance tasks, this determines your organization's ability to make a profit
(obligation or value). Better if it's higher.

• Net revenue (earnings minus sales costs, labour costs, and any other costs)
incomes. The remainder will be used to fund future investments in your company
and will be distributed to the owners.

3. Practical Effectiveness

Functional proficiency calculates how well you're using the resources of the
company. Lack of functional productivity leads to more small development and
small advantages.

• Accounts receivable turnaround (normal records receivable minus net credit

agreements). This measures how effectively you manage the credit you extend to
customers. A higher number indicates that your company is managing credit
effectively; a lower figure is a warning that you need to improve the way you
collect information from customers.

• Turnover ratio (cost of sales minus standard inventory). This shows how
effectively you manage stock. A higher figure is a good indication; a smaller
number indicates that either your sales aren't fantastic or that you are generating
a lot for your continuous volume of deals.

4. Capital Effectiveness and Solvability

Moneylenders and financial supporters value capital competence and

dissolvability.

• Return on value, or total pay divided by investor value. This relates to the
financial benefit that investors are deriving from your company.

• The duty to value (duty value). Obligation and value might have different
connotations, but generally speaking, this reveals however much influence you're
using at work. Impact needn't go beyond what's practical for the company.

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5. Availability

The liquidity analysis focuses on your potential to generate ample money to pay
for cash expenses. Unfavorable liquidity cannot be compensated for by any
indicator of improvement or perks.

1.4 INITIAL PUBLIC OFFERING

IPO alludes to some of the most common method of releasing sections of a
confidential collaboration towards the public at large in some other stock
issuance. An IPO allows a company to raise valuable cash from public financial
backers.
The changeover out of a closed to a public entity can be a crucial juncture for
private financial backers to recognise advantages from their involvement because
that extensively comprises an incentive premium for present .

▪ Initial public offering is the most common way for offering portions of
confidential enterprise to the general population as another stock issuance.
▪ Organizations should meet all the criteria and requirement as denoted by
securities and Exchange Commission.
▪ It furnish organizations with a way to acquire capital by offering shares
through help of the essential market.
▪ Consulted firm enlist speculation banks for showcase, measure interest,
setting the IPO cost etc.
▪ IPO should be visible as a technique for the organization's pioneers and
financial backers, keeping in mind the full benefit from the confidential
venture.

Steps to IPO
1. Proposals- Financiers puts up their proposal in which he talks about different
characters such as safety to issue, span of time required as well as offering in the
market.
2. Underwriter- The organization chooses its financiers to guarantee terms
through understanding.
3. Team- Initial public offering groups are shaped containing guarantors, legal
advisors, affirmed public bookkeepers (CPAs), and Securities and Exchange
Commission (SEC) specialists.
4. Documentation- Data in regards to organization is assembled for IPO
documentation. The S-1 Registration Statement is the essential part of IPO
recording report. It has two sections
o the plan
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 o secretly held recording information.
5. Marketing and Updates- In order to lead in the market they need to make
awareness among potential investors so marketing and updates help to promote
the upcoming IPO.
6. Board and Processes- Structure a top managerial staff and guarantee
processes for detailing auditable monetary and bookkeeping data each quarter.
7. Shares Issued- The organization gives its portions on IPO date. In that report
they mentions how much they have received form the investors.
8. Post IPO- Financiers might make some predefined memories casing to
purchase an extra stock after IPO date.

ADAVANTAGES OF IPO

More prominent Liquidity

When an organization opens up to the world, financial backers can sell the
organization's stock on the open market. This permits financial backers to
understand their benefits without trusting that their portions will be repurchased.
Since an organization's portions can be traded whenever, it increments liquidity
for financial backers.

Diversification

At the point when an organization opens up to the world, they exchange divides
among financial backers on a trade. This makes more prominent variety among
financial backers, as nobody financial backer winds up with a greater part portion
of the organization's remarkable stock. Thusly, claiming the supply of a public
corporation gives a type of broadening to speculation portfolios.

More prominent Capital Markets Access

A first sale of stock permits organizations to raise capital from institutional

financial backers, which is frequently inaccessible from private sources like
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investors or private supporters because of legitimate and administrative
limitations under protections regulations.

DISADAVANTAGES OF IPO

Time Commitment

The IPO cycle is an extended and tedious one that might start as long as two years
prior

Interruption from Business and Missed Opportunities

At the point when a pre-IPO organization finishes various required undertakings

and holds gatherings during the IPO interaction, worker responsibilities will grow
past the standard work. A few errands won't be finished, or mix-ups will be made.
It's conceivable that the IPO cycle will bring about an open door cost of botched
learning experiences Staffing levels should be expanded to moderate these
dangers.

Cost of Issuing Shares in an IPO

The venture financier organization filling in as guarantors gets a strong rate based
endorsing expense for shares sold in the IPO. The significant measure of capital
brought up by the IPO organization alleviates this hindrance in light of the fact
that endorsing expenses are deducted from IPO gross returns.

Overseeing for Short-Term Quarterly Results rather than Long-Term Goals

Public organizations should have techniques to meet momentary income and

benefit (or misfortune) gauges as opposed to zeroing in on long haul marketable
strategies. Missing monetary gauges for the most part cause steep drops in the
stock cost. This transient center might be baffling for organization the executives.

Public Information Scrutiny

Privately owned businesses, used to keeping data classified, need to set

themselves up for offering monetary reports and divulgence data to the general
population, including contenders. On the off chance that openly sharing data is
an immovably held issue with opening up to the world, the organization might
rule against having an IPO.

Chance of Not Completing the IPO Process

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Assume capital business sectors are not helpful for finishing an IPO. Then time
spent and costs caused by an organization for Public Company Accounting
Oversight Board (PCAOB)- consistent reviews and administrations from
specialists, conspicuous CPA and protections law offices can't be legitimate in
the event that the organization will not get IPO continues.

Higher Weighted Average Cost of Capital

The expense of value, decided utilizing the capital resource estimating model
(CAPM), is higher than the expense of obligation. Raising new open value will
expand the organization's weighted typical expense of capital (WACC). WACC
is an obstacle rate for decision-production to assess capital use projects expected
to add to development. This complaint is counterbalanced overwhelmingly of
capital that can be brought up in an IPO.

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 CHAPTER – 2
LITERATURE REVIEW

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2.1 LITERATURE REVIEW

Hawaldar, Naveen.k, and Mallikarjunappa.(2018) “discovered that journal IPOs

are undervalued when compared to set IPOs due to their smaller size.” Malhotra
and Premkumar (2017) investigated IPO shortfalls over time. They discovered
there is indeed absence of negative impact of firm age, business size, or delay in
the exhibition of the IPO subject.

Hoechle, Karthaus, and Schmid.(2017) observed underachievement of developed

firms over a two-year period. Poornima, Haaji, and Deepha.(2016) discovered
that IPOs can be used as both a long-term investment tool and a speculative tool.
Ambily (2016) discovered that the majority of IPOs provided good outcomes, and
that interest in these IPOs was generally completed based on the organization's
picture rather than central examination.

Devarajappa and Tamragundi. (2014) observed that the vacillations in the profits
from a specific stock are impacted by different factors like the presentation of
organizations, hypothesis as well as external factors. Mittal, Gupta and Sharma
et al. (2013) concentrated on the exhibition of IPOs across different areas,
throughout various time spans and attempted to decide the effect of performing
areas on non-performing areas. The aftereffects of the review demonstrated that
the public area stocks performed well in petite run and elongated run and
outflanked different areas. The assembling area had all the earmarks of being
playing out the most un-in the petite run as well as over the elongated haul.

Sahoo and Rajib.(2010) concentrated on the value execution of more than 90 up

to a time of three years including posting day. The investigation discovered that
Indian IPOs were undervalued by 46 percent on posting day when contrasted with
market record. The concentrate likewise exposed that financial backers who put
resources into the IPOs through direct membership acquired +ve returns all
through the three years and the financial backers who put resources into IPOs on
posting date procured negative return as long as a year after which they acquired
+ve returns.

Sabarinathan (2010) concentrated on the progressions in the attributes of

organizations which opened up to the world during the periods 1993 as well as
2008. That's what the review inferred albeit, throughout the long term, just lesser
firms were opening up to the world, the area of the organizations was expanding
at the same time.

Takeh Ata and Navaprabha Jubiliy (2015) studied that capital design is an
autonomous variable whose worth is estimated by utilising four distributions in
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specific, monetary obligation, absolute undertaking value, total resource
obligation, and interest inclusion proportion, whereas monetary execution is a
dependent variable whose wealth get guesstimated through implicating four
portions as recompense on re - sources, return on value, workin Specialist has
selected 13 significant steel businesses and used various calculable apparatuses
like standard deviation, relationship lattice, anova, and so on for testing
speculation with the assistance of SPSS22.

Jothi, K. and Geethalakshmi, A. (2016) study aimed to examine the benefit and
financial position of selected organisations in the Indian automobile industry by
utilising factual apparatuses such as proportion evaluation, mean, variance, and
correlation.
Vong and Trigueirosn (2009) discovered that IPO returns level of performance in
terms of expected returns, and that, with the exception of small investors, the bulk
of investors were unaffected by the uncertainty rate of return and processing fees.
Anjana and Kunde (2009) examined 110 initial public offerings (IPOs) from 2006
to April 2007. They discovered that 104 IPOs out of 110 gained on the first day
of trading. They also discovered that IPOs fared well in both the short and long
term.

2.2 Research Gaps

1. To review and to provides benefits to various groups that implicitly or

explicitly collaborate with the organisation.

2. To provide to the organization's executives by providing a comprehensive view

of crucial components such as liquidity and benefit.

3. The review is additionally gainful to workers and builds morale by

demonstrating how efficaciously they add value to the organization's growth.

4. Funders who seem to be inclined to put funding into the firm's portions will
likewise benefit from going through the review and thus can easily decide
whether to pour money through into company's portion.

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 CHAPTER – 3
RESEARCH
METHODOLOGY

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3.1 OBJECTIVES
➢ To concentrate on the ongoing monetary framework at Zomato.
➢ To concentrate on the explanation for Zomato IPO failure.
➢ To determine the profitability and liquidity ratios
➢ To direct the expected investors for speculation.
➢ To determine the impact of IPO failure on Zomato.

3.2 A research methodology is a blueprint for completing a specific piece of

research. It describes the methods or techniques used to clearly differentiate and
categorise data in relation to a specific research topic. Thus, research
methodology is concerned with how a scientist organises their focus in order to
obtain legitimate and solid results while satisfying their examination objectives.

There are three vital sorts of exploration techniques:

•Qualitative Methodology: Qualitative examination includes

research that is directed utilizing words and literary information.
This technique for research is for the most part utilized in
exploratory examination where an examination issue that isn't
plainly characterized is being researched. It is valuable while
attempting to grasp conceptual ideas, discernments, non-verbal
communication, sentiments, and, surprisingly, visual information.

• Quantitative Methodology: Quantitative exploration depends on

the estimation and testing of mathematical information. Dissimilar
to subjective examination that is more exploratory in nature,
quantitative exploration is ordinarily utilized when the exploration
targets are corroborative in nature.

• Mixed Methods Methodology: As the name proposes, the blended

strategy system joins subjective and quantitative procedures to
incorporate both their assets and get rich outcomes.

Research methodology used

The data is congregated through auxiliary cradles during the task. That
information was used to determine execution assessment, and agreements were
reached as a result.
sources of additional information:
• The majority of the estimations are based on the monetary expressions of the
organization's given pronouncements.
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• A portion of the data for theoretical viewpoints was gathered by referring to
formal description and actually referred books.

• A technique is used to inspect the exhibition of the organization's strategic goals

for perception of work in the finance division.

NEED OF THE STUDY

• The review is crucially significant and provides benefits to various groups

who are generally compatible well with company.

• It assists the organization's executives by providing a perfectly smooth

portrait of important perspectives such as liquidity as well as benefit.

• The overview is also beneficial for both employees and provides

motivation by demonstrating how efficaciously they play a part to the
organisation's success.

• Funders who are eager to invest in the organization's portions will likewise
benefit from reading the review and will undoubtedly make a decision
whether to placing assets further into company's portion.

3.3 LIMITATIONS
• This review gives an understanding into the monetary, staff, advertising
and Zomato's various components Also every investigation will indeed be
constrained by specific parameters.

• One of such review's elements was the lack of access to adequate data.

• 3.The vast data and information has indeed been concealed, such as not
being assessed as a specialty of organisation ’s strategic.

• Time is a major constraint. The entire review was conducted in 58 days,

which is insufficient ready to achieve credible understanding as well as
examination. The investigation was completed in a limited capacity to
focus time, whereas the examination was unable to extend the review.

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 CHAPTER – 4
DATA ANALYSIS AND
INTERPRETATION

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CALCULATING EPS
Earning per share is the main measurement taken into consideration while
deciding a company's benefit on an outright premise. It is a significant part of
working out the cost to-income (P/E) in this, E is the EPS.

Having to look at EPS in absolute terms may not be of much interest to financial
backers because traditional investors do not have direct access to the profit. All
else being equal, investors will compare EPS and the stock's offer price to
determine the value of revenue as well as how investors feel about growth
prospects.

Earnings per share are not even positive, indicating that investors are losing
money and are not receiving dividends. This shows that company is in poor
health.

CALCULATING RETURN RATIOS

Return ratios are important for quantitative examination of an organization. It

informs us concerning how much return we get on the capital utilized or value or
resources or deals. Financial backers use them to contrast various organizations
with find which organization is more helpful or can likewise use to follow the
presentation of a specific organization. It lets us know how well an organization
is performing and the regions where execution can be improved. Here are a
portion of the ratios :-

1. Return on Equity :- It informs us concerning how much returns are

produced from investors venture or it lets us know how much return
financial backers can expect per rupee contributed .It is determined for
normal investors , favoured investors are not considered.
Return on Capital Employed :- It lets us know how well organization is
producing gets back from its capital. It lets us know how well organization is
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 utilizing its obligation as well as value .It is long haul benefit proportion. It is
the proportion of working benefit (EBIT) to the capital utilized.

Return on Assets :- It lets us know how actually organization is utilizing

its resources for produce benefit.

It indicates that there have been negative returns on investment, capital employed,
and assets. It's not a good indication for any business. It means that the company
is not receiving amount for the investments made in a specified time period.

LIQUIDITY RATIOS CALCULATING

Liquidity ratios are the kind of monetary dimension that is used to interpret a debt
holder's ability to meet periodic payment obligations without bringing up exterior
capital. Liquidity ratios compute measurements such as the current ratio as well
as quick ratio to determine an organization's ability to pay obligations and its side
of security.

It demonstrates that the corporation has a large amount of current assets on hand
to satisfy its current liabilities. And it's getting hike by the year.

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ESTIMATING LEVERAGE RATIOS
A leverage ratio is one of several monetary estimations that assesses an
organization's ability to meet its pecuniary obligations. It is also be used to
quantify an organization's mix of working costs for determining what changes
outcome would mean for working pay.

It demonstrates that the firm is in a bad state because it cannot even cover its
existing debt with current revenues.

CALCULATING TURNOVER RATIOS

A turnover ratio measures how many resources or liabilities an organisation
substitutes in comparable to its transactions. The concept is useful for
determining the productivity with which a company utilizes its resources. A high
resource turnover ratio is generally regarded as excellent because it denotes that
receivables are collected quickly, fixed resources are intensively used, and
minimal excess stock kept on hand. This implies a relatively insignificant
requisite for attributed reservoirs, and thus an exceptional return on investment.

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SUCCESS OF AN IPO IS INFLUENCED BY-

Here are some factors that can increase the likelihood of the IPO's success:

• A sizable and expanding potential market

• A unique and distinct business plan
• Share valuation must be accomplished with extreme caution.
• The company's CFO should be well-versed in IPOs.
• Transparency and forthright and clear disclosure of financial statements
• An enticing product/ service, preferably with a strategic edge or the first
status that generates revenue.
• Significant, sustainable, and visible projected revenue growth
• Understanding different investment banks' industry subsequent IPO
records and equity researcher desire to engage.

FAILURE OF AN IPO IS INFLUENCED BY-

• aggressive IPO pricing

• IPO that debuted with higher pricing than their peers are more likely to fail
in the future.
• If the company is unable to achieve the desired outcome, investors are
discouraged from investing further.
• Some people are hesitant to invest in the beginning, but once they see that
the company is doing well, they are willing to do so.
• Because firms that go public are more risky than they used to be, investors
look at profitability levels, and if profits are low, investors will not invest.
• Internal reasons, such as poor employee and CFO performance.

Zomato, an Indian online food-delivery company, began trading on the Sensex

on July 14, 2021, and its market debut is being watched for cues by a number of
other Indian online ventures waiting to go public.
The company's primary appeal to investors stems not from its current situation
(small revenues and large losses), but from its ability to capitalise on prospective
growth in the Indian food delivery industry.

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 Zomato shareholder base pre IPO

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 CHAPTER – 5
FINDINGS AND
CONCLUSION

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 FINDINGS

▪ Zomato collected '2,17.27 cr.' for an equity share offering of '71.95 cr.'
▪ The offering to international institutional investors was oversubscribed by
approximately 51.78 times.
▪ The offering tendered to the RI's was surpassed by 7.46 times.

▪ It was 38.97 times oversubscribed on the final day.

▪ The highest share price recorded on 25 November 2021 has been Rs

160.48, whereas the lowest price achieved on July 2022 was Rs 44.95 per
share.

▪ EPS is -1.5 for the current year which is indicating that the investors are
not getting any return from their investment. Shareholders are the main
person for a company and they should try their best to keep them
satisfied by giving them profits from their investments.

▪ Return ratios of the Zomato are negative which is indicating that either
they have made investments which will yield result in upcoming future or
they were not getting returns from the investment they made.

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 ▪ The quick ratio or the liquidity ratio for the previous financial year is 11.06
which states that the company has a lot of cash or the assets which can
be easily converted into the cash in hand.

▪ Interest coverage ratio is -205 which denotes that the company are not
able to cover up its debt with the revenues they are earning.

▪ We analysed that the Zomato assets turnover ratio is 20.6 which is a good
indicator especially for a food delivery company like Zomato.

CAUSE FOR ZOMATO IPO FAILURE-

1. The emphasis is solely on increasing platform transactions through discounts

and lower delivery charges. The cost of acquiring users can result in significant
cash burn.
2. The Zomato IPO subscription is really being investigated as being overpriced.
3. Investment decision in Zomato IPO seems to be extremely risky, and any profit
made will be in the long run

HOW COMPANY COPE UP WITH IPO FAILURE-

Most businesses have brought up venture funding at some juncture. It's not a bad
idea to invite current investors if they'd be eager to participate in another round
of funding. Conversely, the company could open up the previous round of venture
capital and raise new funds.

Owners may be able to obtain a private loan without having to give up a stake in
the company. This has the advantage of giving owners more control over decision
making. Similarly, if the company does not require major capital, a revolving
credit line can be beneficial.

A government grant may also be available. The advantage of this is that you do
not have to repay it. You'd have all of the financial information readily available
because you'd completed all of the paperwork for the IPO.
Another popular option is to sell the business. This will help investors cash out
and provide a comfortable retirement for founders. The purchase price would
contribute to growth and allow for a profit. Sellers may choose to allow founders
to stay on and manage the business, or the company may grant them stock.

Finally, a failed IPO may actually purchase some other company that is a player
in the industry or is related. The incoming funds may be sufficient to cover the

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fundraising requirements. To make this work, the company would have to find
investors who specialise in funding m&a deals. Once again, the interim IPO
documentation would be a valuable asset in locating a willing investor.

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 CONCLUSION

I accept that while Zomato is a cash losing, cash consuming venture now, it has
guarantee and is on target to conveying a practical plan of action. It will confront
a lot of difficulties on that way, both at the miniature level (the executives, rivalry)
and at the full scale level (monetary and political improvements in India).

I accept that the organization is overrated, given its true capacity. The main
motivation that Zomato is losing cash is on the grounds that a youthful
organization is attempting to exploit a market with massive development
potential, not on the grounds that it can't bring in cash.
In the event that Zomato cut back on client acquisitions and, as a matter of fact
stage ventures, my supposition is that it could show a bookkeeping benefit, yet
on the off chance that it did as such, it would merit a small portion of what it is
today.

There are great contentions to made against put resources into Zomato at is
proposed offering cost, yet quite possibly of the emptiest, what's more, laziest, is
that it is losing cash.

I know that for some worth financial backers, prepared to trust that anything that
exchanges at more than 10 or multiple times profit or at well above book esteem,
this contention does the trick, yet considering how seriously this contention has
served them throughout the course of recent many years, they ought to return to
the contention.

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 REFERENCES

Standard, Business. “What Is IPO, IPO Definition, IPO News, How to

Invest in IPO.” Business Standard, www.business-standard.com,
https://www.business-standard.com/about/what-is-ipo. Accessed 29
July 2022.

Sweety, and Disha Harshadbhai Mehta. “Initial Performances of IPOs

in India: Evidence from 2010-14 by Sweety , Disha Harshadbhai
Mehta :: SSRN.” Initial Performances of IPOs in India: Evidence from 2010-
14 by Sweety , Disha Harshadbhai Mehta :: SSRN, papers.ssrn.com, 25
July 2016,
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2708995.

【 IPO Watch | Upcoming IPOs in India 】Latest IPO Details, Latest

IPO.” Nirmal Bang, www.nirmalbang.com,
https://www.nirmalbang.com/nb-research/ipo-watch-and-
research.aspx. Accessed 30 July 2022.

“Zomato Ipo News | Latest News on Zomato Ipo - Times of India.” The
Times of India, timesofindia.indiatimes.com,
https://timesofindia.indiatimes.com/topic/zomato-ipo/news.
Accessed 30 July 2022.

“Analysis of Financial Statements - Free Financial Analysis

Guide.” Corporate Finance Institute, corporatefinanceinstitute.com, 15
July 2022,
https://corporatefinanceinstitute.com/resources/knowledge/finance/
analysis-of-financial-statements/.

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 Annexure
BALANCE SHEET OF MAR 22 MAR 21 MAR 20 MAR 19 MAR 18
ZOMATO (in Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 764.30 0.03 0.03 0.03 0.03

TOTAL SHARE CAPITAL 764.30 0.03 0.03 0.03 0.03

Reserves and Surplus 15,741.20 7,643.76 457.35 2,365.28 1,036.61

TOTAL RESERVES AND 15,741.20 7,643.76 457.35 2,365.28 1,036.61

SURPLUS

TOTAL SHAREHOLDERS 16,505.50 7,643.79 457.38 2,365.31 1,036.64

FUNDS

Minority Interest -6.60 -5.71 -6.50 -31.42 8.43

NON-CURRENT LIABILITIES

Long Term Borrowings 0.00 0.00 1.47 1.31 1.33

Deferred Tax Liabilities [Net] 0.00 0.00 0.00 0.00 0.00

Other Long Term Liabilities 51.30 66.89 1,458.09 48.96 2.53

Long Term Provisions 65.30 25.91 16.71 14.27 7.21

TOTAL NON-CURRENT 116.60 92.79 1,476.27 64.55 11.07

LIABILITIES

CURRENT LIABILITIES

Short Term Borrowings 0.00 1.36 0.00 0.00 0.00

Trade Payables 428.80 297.16 268.73 371.87 68.18

Other Current Liabilities 264.20 212.24 442.85 294.97 48.49

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 Short Term Provisions 18.50 6.98 9.25 5.12 2.53

TOTAL CURRENT LIABILITIES 711.50 517.74 720.83 671.96 119.20

TOTAL CAPITAL AND 17,327.00 8,703.54 2,900.38 3,314.12 1,349.71

LIABILITIES

ASSETS

NON-CURRENT ASSETS

Tangible Assets 131.40 83.85 103.24 39.77 4.86

Intangible Assets 0.00 207.42 278.02 68.93 60.21

Capital Work-In-Progress 0.00 0.00 0.19 0.32 0.75

FIXED ASSETS 131.40 291.39 382.22 109.44 66.36

Non-Current Investments 3,086.00 0.00 0.00 7.30 9.57

Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00 0.00

Long Term Loans And Advances 0.00 0.00 0.00 0.00 4.32

Other Non-Current Assets 5,355.30 3,013.82 45.53 15.22 52.77

TOTAL NON-CURRENT 9,782.00 4,553.00 1,637.03 320.45 239.14

ASSETS

CURRENT ASSETS

Current Investments 1,631.70 2,205.25 323.92 2,137.25 819.66

Inventories 39.70 14.80 3.73 2.13 0.00

Trade Receivables 159.90 129.87 123.12 70.34 26.08

Cash And Cash Equivalents 1,575.50 903.66 359.88 238.69 208.07

Short Term Loans And Advances 375.00 0.00 0.00 0.00 0.00

OtherCurrentAssets 3,763.20 896.97 452.71 545.26 56.75

TOTAL CURRENT ASSETS 7,545.00 4,150.54 1,263.36 2,993.67 1,110.57

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 TOTAL ASSETS 17,327.00 8,703.54 2,900.38 3,314.12 1,349.71

OTHER ADDITIONAL
INFORMATION

CONTINGENT LIABILITIES,
COMMITMENTS

Contingent Liabilities 0.00 93.89 0.66 0.00 0.07

BONUS DETAILS

Bonus Equity Share Capital 0.00 0.00 0.00 0.00 0.00

NON-CURRENT INVESTMENTS

Non-Current Investments Quoted 0.00 0.00 0.00 0.00 0.00

Market Value

Non-Current Investments 0.00 0.00 0.00 7.30 9.57

Unquoted Book Value

CURRENT INVESTMENTS

Current Investments Quoted 0.00 0.00 0.00 0.00 0.00

Market Value

Current Investments Unquoted 0.00 2,205.25 323.92 0.00 0.00

Book Value

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