Zomato Launches Rs 8,500-Crore QIP, Sets Floor Price

Food delivery major Zomato Ltd. on Monday announced the opening of its qualified institutional placement issue, which is aimed at raising a total sum of Rs 8,500 crore.

The company has fixed the floor price for the QIP at Rs 265.91 per share, according to a regulatory filing. The floor price is 2.8% lower as compared to the stock's current market price.

Zomato, in the exchange filing, said the fund raising committee of its board approved and authorised "the opening of the issue today, i.e. Nov. 25, 2024".

The company had received nod from its board of directors on Oct. 22 to raise capital up to Rs 8,500 crore through the QIP route.

The funds will be raised by the company towards setting up of dark stores and warehouse, which will aid in the expansion of its quick commerce arm Blinkit.

The proceeds will also be used for advertising, marketing and branding initiatives, along with investment in the company's technology infrastructure and capabilities, including cloud infrastructure.

The launch of QIP was announced by Zomato after the market hours on Monday. The company's scrip surged 7.6% to its highest in over three months, as investors welcomed its inclusion in the BSE Sensex. Zomato will replace JSW Steel Ltd. in the benchmark index with effect from Dec. 23.

The food delivery aggregator's shares peaked to a high of Rs 284.34 apiece on the NSE, before paring some of the gains and closing 3.45% higher at Rs 273.31. In comparison, the benchmark Nifty 50 advanced by 1.32%.

Zomato's stock has risen by 120.5% on a year-to-date basis, and by 140.1% over the past 12 months.

Among the 27 analysts tracked by Bloomberg, 24 have a 'buy' rating on the stock, whereas only three recommend a 'sell'. The average of 12-month analysts' price target implies a potential upside of 10.3%.