Along with it’s Q2 FY 25 results,. Zomato’s board has approved a QIP raise.
- QIP is for Rs 8,500 cr
- Raise is to strengthen the balance sheet
As per Company –
“While the business is now generating cash (vis-a-vis a loss making business at the time of IPO), the company believes that it needs to enhance cash balance given the competitive landscape and the much larger scale of our business today.
“We believe that capital by itself does not give anyone the right to win (and that service quality is the key determinant of success), but we want to ensure that we are on a level playing field with our competitors, who continue to raise additional capital,”
The company added that it’s cash balance reduced by Rs 1,726 crore, compared to the previous quarter on account of the deal consideration for the acquisition of Paytm’s entertainment ticketing business.
“Our cash balance has reduced from Rs 14,400 crore to about Rs 10,800 crore (mainly on account of funding past quick commerce losses and some equity investments and acquisitions),” it said.
The fund raise clearly seems to be aimed towards taking advantage of the currently prevailing high valuations of the stock.